' NASIR ASLAM ZAHID, J.--The petitioner owns and runs a textile mill at Faisalabad. Government of Pakistan issued a Notification No. S.R.O. 820 (1)/78, dated 29-6-1978 under section 19 of the Customs Act, 1969, which is reproduced hereinbelow:- "In exercise of the powers conferred by section 19 of the Customs Act, 1969 (IV of 1969), the Federal Government is pleased to direct that the plant and machinery as defined in this Ministry's Notification No. S.R.O. 695/(1)/77, dated 4th August, 1977, shall be exempt from the whole of the Customs duties chargeable thereon if imported for the projects approved by the Government for balancing, modernization or replacement of the existing textile units or for initial installation of factories for manufacture of made-up garments, subject to the condition that it is certified by the Ministry of Industries that such machinery is not being manufactured locally.
2. This notification shall take effect on this first day of July, 1978."
' The petitioner through their letter, dated 23-12-1979 applied to the Textile Commissioner, Ministry of Industries, Government of Pakistan, (respondent No. 3 herein) for scrutiny, approval and recommendation of the import of High Drafting System for Ring Frames, for installation at the mills under the Balancing, Modernization, Replacement Scheme (B.M.R. Scheme). Respondent No. 3 certified the case of the petitioner under the B.M.R. Scheme for import of the said machinery except for certain items for which approval was not given on the ground that those items were available locally. The petitioner then obtained an import licence dated 7-6-1980. The Notification, dated 29- 6-1978 was superseded by Notification No. S.R.O. 702(1)/80, dated 26-6-1980 but the second notification did not change the position as regards the exemption from custom duty on the import of high draft conversion system. The petitioner established an irrevocable letter-of-credit on 23-7- 1980 for the import of the machinery in question from West Germany. After the order had been placed by the petitioner and the irrevocable letter-of-credit had been opened, on 4-9-1980 the Central Board of Revenue (respondent No. 1 herein) issued Custom General Order No. 11 and one of the consequences of the issuance of the said Custom General Order No. 11 was that high draft conversion system of ring spinning frames was deleted from the list of machinery which was eligible for exemption from payment of custom duty. The said machinery arrived in Karachi in February, 1981 and a bill of entry was filed on behalf of the petitioner with the Customs Authorities wherein an exemption from payment of custom duty was claimed but the Collector of Customs (respondent No. 2 herein) demanded the payment of custom duty on the said consignment at the rate of 40 per cent ad valorem and endorsement to that effect was made on the bill of entry. On a reference made by respondent No. 3, the matter had been referred for decision to the Central Board of Revenue but the Central Board of Revenue has not yet decided whether in such circumstances the consignment imported by the petitioner is or is not exempt from payment of custom duty, However, the Collector of Customs, pending the decision of the Central Board of Revenue on the reference made by respondent No. 3 about the said exemption, decided that the said machinery of the petitioner be released on bank guarantee. Pursuant to this decision, the petitioner furnished a bank guarantee, dated 2-3-1981 in favour of Collector of Customs in the sum of Rs.4,41,681. Although the Central Board of Revenue did not decide the reference made to it by the respondent No. 3, Collector of Customs through a letter, dated 29-1-1983 asked the Dubai Bank Limited, who had furnished the bank guarantee on behalf of the petitioner to pay the amount of the said bank guarantee, In these circumstances the petitioner has filed the present constitutional petition.
' The only point which requires consideration in this petition is whether in the instant case where a contract for the import of the machinery had been made and irrevocable letter-of-credit had been opened prior to 4-9-1980, the date on which Custom General Order No. 11 had been -issued, the consignment in question is liable for custom duty as the consignment arrived in Karachi at a time when exemption was no longer available in respect of the machinery in question. We have heard Mr. H.A. Rehmani, learned counsel for the petitioner and Mr. A.A. Munshi, learned Deputy Attorney- General for Pakistan on behalf of the respondents.
2. It was contended by the learned counsel for the petitioner that in the instant case a vested right had been acquired by the petitioner inasmuch as it had entered into a contract with the foreign supplier and it had also opened an irrevocable letter-of-credit at a time when exemption was available for the machinery in question and by a subsequent Custom General Order whereby such machinery had been deleted from the list of the exemption cannot affect the vested right already acquired by the petitioner that the consignment in question will be cleared without payment of custom duty. On the other hand, it was argued by Mr. A.A. Munshi, learned Deputy Attorney-General that section 19 of the Customs Act, under which a notification of exemption can be issued subject to section 30 of the Customs Act which according to the learned Deputy Attorney-General, is the charging section. According to the learned Deputy Attorney-General a consignment is assessed for the purposes of payment of custom duty at the time the bill-of-entry is filed and in the instant case at the time the bill-of-entry was filed, the type of machinery that had been imported by the petitioner was no longer exempt and was subject to payment of custom duty. In support of his contention, Mr. H.A. Rehmani, learned counsel for the petitioner, relied upon the following reported judgments:-
(i) M. Afzal & Sons. v Federal Government of Pakistan PLD 1978 Lah.
468.
' In this case a learned Single Judge of the Lahore High Court observed that a notification allowing exemption does create a vested right and the same cannot be taken away by a subordinate legislation as it would amount to doing so with retrospective effect. It was further observed that it is a well-established proposition of law that an act of subordinate legislative authority cannot be applied retrospectively unless the law under which it acted confers expressly a power to do so. It was further observed that section 21 of the General Clauses Act, 1897 does not empower subordinate legislative authority to take away vested right by recalling or amending a previous notification.
(ii) Collector of Central Excise and Land Customs v. Azizuddin Industries Ltd. PLD 1970 SC 439.
' In this case before the Supreme Court the question was whether exemption from excise duty granted by the Central Board of Revenue by a notification, dated 30-6-1961 could be withdrawn or curtailed by a subsequent notification, dated 28-2-1964. The Supreme Court held as follows: - "The respondent had acquired vested right of exemption from the levy of excise duty on all the goods produced or manufactured by it for a period of 4 years under the notification of the Central Government referred to above. That vested right could not, therefore, be taken away by an executive action. The notification, dated 28th February, 1964 being completely destructive of the right vested in the respondent-Company was in this view without lawful authority and of no legal effect."
(iii) Mardan Industries Ltd. v. Government of Pakistan PLD 1965 Pesh.
47.
' In this case a Division Bench of the Peshawar High Court held that delegated legislative power cannot be exercised so as to issue a notification having effect retrospectively and affecting the rights already vested under prior notification. The term "vested right" was also considered and explained in the said judgment.
(iv) Reliance was also placed on a judgment of a Division Bench of this Court, dated 18-3-1982 in Constitutional Petition No. D-1401/80 in the case of M.E.M.Y. Industries v. Paskitan. The view taken by the Division Bench of this Court in this judgment is as follows:- "In cases before us the petitioners who were entitled to exemption from payment of custom duty under the notification, dated 29-6-1978 on the import of auto-cone-winders, imported these goods by opening letters-of-credit and the consignments of auto-cone-winders were shipped before the issuance of second notification withdrawing the exemption of duty. The petitioners thus having taken the effective steps for import of auto-cone winders under the earlier notification had acquired a vested right and these goods were dealt with and cleared in accordance with the notification under which they were imported and this vested right of petitioner could not be taken away by the subsequent notification which withdrew the exemption of duty on these goods. We accordingly grant the declaration that the consignments of auto-cone-winders' imported by the above petitioners under notification, dated 26-9-1978 were exempt from payment of custom duty and the respondents are not entitled to demand the same on the basis of the subsequent notification of Government, dated 26-8-1984."
' On the other hand, the learned Deputy Attorney-General placed reliance on a recent judgment of a Division Bench of this Court in the case of Dada Steel Mills v. Collector of Customs PLD 1984 Kar.
94. In this case, section 30 of the Customs Act was considered and it was observed as follows:- "It may be noticed that under clause (a) of the above-quoted section 30, the rate of duty applicable to the imported goods cleared for home consumption under section 79, is the rate of duty obtaining on the date of presentation of a bill-of-entry to the customs authorities and in the case of goods cleared from a warehouse under section 104, the rate prevalent on the date of payment of custom duty. However, it is subject to the condition that if a bill-of-entry under section 79 has been filed in advance of the arrival of the conveyance by which the goods have been imported, the relevant date for the purpose of the above section shall be the date on which the manifest of the conveyance is delivered."
3. It is now very well-settled that delegated legislative power cannot be exercised retrospectively to affect the rights which have already A vested in the citizen/subject. Where an exemption had been granted b the competent authority vide a notification issued under power vested in the authority by section 19 of the Customs Act, 1969 and an importer acquired a vested right under the said notification, such vested right cannot be taken away by issuance of a subsequent notification withdrawing the exemption. This proposition of law stands confirmed by the following judgments cited by the learned counsel for the petitioner: -
(a) PLD 1978 Lah.
468.
(b) PLD 1970 SC 439.
(c) PLD 1965 Pesh.
47.
(d) Judgment dated 18-3-1982 in Constitutional Petition No. D-1401/80 of a Division Bench of this Court.
' The judgment in PLD 1984 Kar. 94 relied upon by the learned Deputy Attoreny-General is not applicable in the instant case. In that judgment the question that was under consideration was the interpretation of section 30 and the question of exemption having been granted under section 19 through a notification and its subsequent withdrawal by another notification was not under consideration.
4. In the instant case when, the contract was made by the petitioners with the foreign suppliers and the irrevocable letter-of-credit had been opened by the petitioners in favour of the foreign suppliers, the type of machinery imported by the petitioners was entitled to exemption and this created a vested right in the petitioners that when the machinery arrives, custom duty will not be payable by the petitioners in respect of the said machinery. Issuance of the Customs General Order No. 11, dated 4-9-1980 cannot be given effect retrospectively so as to take away such vested right of the petitioners.
5. Constitutional Petition No. D-109 of 1983 is allowed and we grant a declaration that the demand of the Customs Authorities for the payment of custom duty in respect of the machinery in question imported by the petitioners has been made without lawful authority and the same is of no legal effect. A further direction is given to the respondent No.2 to cancel the bank guarantee furnished by Dubai Bank Ltd. and return the cancelled bank guarantee to the petitioner. The petitioner shall also be entitled to costs.
Writ .