1. ' SAJJAD ALI SHAH, J.--This Constitutional Petition calls in question orders passed by Customs Authorities in respect of consignment imported by the petitioner.
2. ' Briefly stated the relevant facts giving rise to this petition are that the petitioner is a registered firm and obtained on 1-7-1979 an import licence for import of Iron and Steel Pipes and Tubes against Serial No, 141 of free list of Import Policy Order, 1979. After consignment arrived at Karachi, it was found that goods were misdeclared and instead of Seamless Steel Tubes with plain ends importable under heading 141 of the free list of the Import Policy Order, 1979/80, they were E.R.W.
3. (Black) Tubes, import of which was restricted'through Trading Corporation of Pakistan only under Serial No, 410 of the Free List. Notice dated 1-7-1980 was issued against the petitioner to show cause why action should not be taken against him under section 16 of the Customs Act, 1969 read with section 3 (i) of the Import and Export (Control) Act, 1950 punishable under section 156(9) of the Customs Act, 1969 read with section (3) (iii) of Import and Export (Control) Act, 1950.
4. ' Against the notice stated above, petitioner gave reply on 20th July, 1980 wherein he clainied that E.R.W. Steel Tubes (Black) were covered by I.T.C. No, 73.18 III 2, which is mentioned in the Import Licence. It was further submitted that import of such goods was neither banned nor restricted to T.C.P. Only.
5. ' At this stage, it would be pertinent to make a reference to the import licence, photocopy of which is on the record. This licence was issued on 1-7-1979 and the goods allowed for import with classification are as under:- "Iron and Steel Pipes and Tubes excluding galvanised Iron and Steel Pipes and Tubes and Black Pipes and Tubes 73-18 II, III 2, 83-08 IV."
6. ' Under section 3 of the Import Policy Order, 1979 two lists are prepared which are called free list and tied list. Free list as shown in Annexure I has 3 parts A, B and C and items mentioned therein are importable against cash from worldwide sources or under loans, credits or barters from the respective sources. Items,.Included in the Tied List are shown in Annexure II and are importable exclusively from tied sources under credits, loans, barters or US PL-480. In the schedule of free list in part A is Serial No, 141 under which import licence in question is issued. What is allowed to be imported under Serial No, 141 of the free list with description of goods and its I.T.C. Number are as under: - "Iron and Steel Pipes and Tubes excluding galvanised Iron and Steel Pipes and Tubes 73-18 II, III and Black Pipes and Tubes. 2,83-08 IV".
7. ' Section 9 of the Import Policy Order, 1979 provides that items specified in Part C-1 of Annexure I of free list shall be importable exclusively through the Trading Corporation of Pakistan Limited except when imported against US AID Loan. Part C-1 of Annexure A specifies items which are importable by Trading Corporation of Pakistan and at Serial No, 410 of the description of goods and I.T.C..Schedule number are as under:- "Iron and Steel items the following:
(a) Galvanised Iron and Steel Pipes and Tubes and Black Pipes and Tubes 73-18 III.
8. 2."
9. ' In the Customs Department first hearing took place before the Deputy Collector of Customs/Adjudicating Officer. On behalf of the petitioner, it was argued before him that goods in question were not galvanised tubes, therefore, there was no I.T.C. Contravention. It was contended that Import Licence included 73-18 111.2 of the I.T.C. Schedule as such consignment was legally covered. Deputy Collector of Customs held in his order dated 1-3-1981 that the consignment was declared to contain Seamless Steel Tubes with plain ends importable under Serial No,141 of the free list of the Import Policy Order, 1979 but on physical examination the goods were found to be Electric Resistance Welded (Black) Pipes and Tubes covered by 73-18 III 2 of the I.T.C. Schedule and such consignment could only be imported against Serial No,410 through T.C.P. Deputy Collector of Customs made one admission in his order to the effect that Black Pipes/Tubes were not covered by the description given in the licence in spite of the fact that I.T.C. Classification thereof was mentioned against the said description in the licence (73-18 111.2). In spite of this doubt, the Deputy Collector went ahead with the hearing and disposed of the matter by confiscating imported goods under section 156 (9) of the Customs Act, 1969 and imposed personal penalty of Rs,5,00,000.
10. Representative of the petitioner before the Deputy Collector had quoted a case of import by P.S.O.
11. And stated that in that case licence did not contain specific I.T.C. Heading 73-18 III 2 and the importer had also declared the pipes as "Seamless" but on adjudication the goods were released against redemption fine of Rs,20,000 but the Deputy Collector brushed aside the quoted case by observing that in that case party had admitted that the pipes were actually "Welded" and not "Seamless" and party also admitted that this was the mistake on the part of the suppliers. It would be pertinent to point out here that the Deputy Collector has also relied upon letter from the Chief Controller of Imports and Exports No,2 (11)/80 Cont., dated the 30th December, 1980 which was to the effect that. Such Pipes and Tubes were excluded for the purpose of importation in the private sector. Reliance of this letter is specifically mentioned in the order of the Deputy Collector.
12. ' Against the order of the Deputy Collector, petitioner filed an appeal before the Collector. Petitioner took up the stand that he has imported Tubes which are made of Iron and Steel and are not galvanised and I.T.C. No,73-18 III 2 relating to such Tubes made of Iron and Steel appears in the Import licence, hence the import is to be allowed. Grievance was made of the fact that Deputy Collector has relied on C.C.I. & E's letter dated 30th December, 1980 but the petitioner was neither shown copy of that letter nor was informed about its contents. It was argued that I.T.C. No,73-18 III 2 is mentioned in the Import Licence under which some pipes and tubes are allowed to be imported.
13. It was contended that Black colour of the pipes and tubes, was never considered by the Customs House as a ground for not allowing the consignment against Serial No,141 of the free List. It was stated that Mills Test Certificate could not be produced by the petitioner for the reason that the supplier refused to do the needful on the ground that the goods had already left. The Collector has held in his order dated 20-3-1982 that Iron and Steel Black Pipes and Tubes were specifically excluded from the licence and those would cover all Pipes and Tubes as having no metal coating on them. It was further held that subject goods were not importable under free list unless the pipes were seamless. About appearance of I.T.C. Heading 73-18 III. 2 in the import licence, it has been observed by the Collector that this would not make the subject gOods importable for the reason that 1.T.C. Heading mentioned above shown in the licence is for the purpose to cater for import of other welded pipes/tubes for instance stainless steel which are neither black nor galvanised. He maintained the order passed by the Deputy Collector was correct in law and facts. However, he took note of consideration of the fact that subject goods had undergone long detention and that their quality had also suffered a bit because of storage in the port in the open and he ordered release of goods against redemption fine of Rs,4,00,000 and remitted personal penalty in full.
14. Appeal was accepted to that extent.
15. ' Revision has been dismissed vide order dated 1-8-1982 by the Central Board of Revenue. Relevant part from this order is reproduced as under:- "In the I.T.C. Schedule, 1973 heading 73-18 II covered seamless tubes and pipes and 73-18 III covered 'others'. Black pipes were not importable under Serial No,141 because these were specifically excluded in the description. On the other hand seamless pipes were considered importable because I.T.C. No,73-18 II was specifically mentioned in Column II of Serial No,141. Black pipes were specifically mentioned at Serial No,410 (importable by T.C.P. Only)."
16. ' Order passed in the revision further shows that reliance was also placed additionally on the letter from C.C.I. & E in response to queries made by the Collector of Customs in his letter, to reinforce the interpretation made of the legal position stated above. It has been further observed that letter of C.C.I. & E completely upholds the practice followed by Customs House. We have examined description of goods alongwith their I.T.C. Classification in the import licence in conjunction with I.T.C. Schedule 1973 and Serial Nos.141 and 410 of free list of the Import Policy Order, 1979 in order to ascertain as to what was intended to be allowed to be imported and what was not allowed to be imported in the import licence in question. From the bare reading of description of goods given in the import licence it appears that Iron and Steel Pipes and Tubes were allowed to be imported against Serial No,141 of the free list excluding galvanised Iron and Steel Pipes and Tubes and Black Pipes and Tubes. Against this whole description of goods I.T.C. Classification is mentioned as 73-18 II, 111.2 83-08 IV. In I.T.C. Schedule of 1973 Section XV relates -to base metal and base metal articles, of which Chapter 73 covers Iron and Steel and articles thereof. Heading 73-18 in this. Chapter is reproduced as hereunder:- "Tubes and Pipes and blanks therefor, of iron (other than of cast iron) or steel, excluding high- pressure hydro-electric conducts;
1. Blanks for tubes and pipes. II. Seamless tubes and pipes. III. Others."
17. ' Since I.T.C. Classification 83-08 IV is mentioned in the import licence in continuation of the items of 73-18 therefore the same as specified in I.T.C. Schedule of 1973 is reproduced as hereunder:- "Flexible tubing and piping of base metal. I. Tubings for sanitary fittings. II. Of a kind used in automotive vehicles. III. Of a kind used in machinery. IV. Others."
18. ' Now if reference is made to Serial No, 141 of free list of Import Policy Order, 1979, it will appear that what was intended to be allowed to be imported was Iron and Steel Pipes and Tubes excluding galvanised Iron and Steel Pipes and Tubes and Black Pipes and Tubes. Against this I.T.C.
19. Classification covers 73-18 II (Seamless tubes and pipes) III. 2 (other tubes and pipes excepting of a kind used in machinery) and 83-08 IV (Flexible tubing and piping of base material other than tubings for sanitary fittings, of a kind used in automotive vehicles and of a kind used in machinery.
20. This shows that there is a large scope for import of many other items of Iron and Steel Pipes and Tubes excluding galvanised Iron and Steel Pipes and Tubes and Black Pipes and Tubes. Now we go back to Serial No, 410 of the free list to find out what has been allowed to Trading Corporation of Pakistan for exclusive import. This shows that only import allowed to Trading Corporation of Pakistan is galvanised Iron and Steel Pipes and Tubes and Black Pipes and Tubes covered by I.T.C.
21. Classification 73-18 III.
2. When Serial No, 410 of the free list is read with ITC classification 73-18 III. 2, it will appear that T.C.P.
22. Is allowed to import galvanised Iron and Steel Pipes and Tubes and Black Pipes and Tubes which are other than blacks tubes and pipes, seamless tubes and pipes and also other than of a kind used in machinery. This may be so but III. 2 is also allowed against Serial No, 141 of the free list. This created confusion whether all Black Pipes and Tubes were to be imported exclusively by T.C.P.
23. Regardless of the fact that they were seamless tubes and pipes. Secondly that welded-pipes have not been mentioned specifically in the description of goods under Serial No, 410 of the free list.
24. ' When the petitioner took this objection before the Adjudicating Officer of Customs that his import licence does mention I.T.C. No, 73-18 III. 2 and that is the correct classification of goods imported, the Adjudicating Officer held that Black Pipes and Tubes were not covered by the description in the licence in spite of the fact that I .T.0 . Classification thereof was mentioned against the said description. Adjudicating Officer without assigning any reason for his own conclusion relied upon letter of C.C.I. & E No, 2(11)/80 Cont. Dated the 30th December, 1980 and since it was said therein that such Pipes and Tubes were specifically excluded for the purpose of importation in the private sector, goods were confiscated and personal penalty was imposed. It also appears from the order of Adjudicating Officer that no factual enquiry* was made and copy of this letter of C.C.I. & E was not supplied to the petitioner. The copy of this letter is not produced in the Court. In appeal this point was taken up but the Collector came to the conclusion that Iron and Steel Black Pipes and Tubes were specifically excluded from the licence covering all pipes and tubes as having no metal coating on them. Such pipes and tubes were allowed to be imported by the petitioner only when they were seamless. Collector also held that I.T.C. Heading 73-18 111-2 appeared in the licence to cater for impOrt of other welded-pipes/tubes for instance stainless steel which were neither black nor galvanised. In the order passed by the Collector dated 20-3-1982 he has not mentioned that in coming .To that finding he has relied upon any other letter received from C.C.I. & E. In revision reference is made to the letter of C.C.I. & E and it is further stated that in this context reference was made to C.C.I. & E by the Collector (Appeals) and the C.C.I. & E upheld the practice followed by Customs House. Petitioner has produced the copy of the letter of C.C.I. & E dated 23-1-1982 and stated in paragraph 19 of the memorandum of petition that he got the copy of this memorandum subsequently on 5-3-1983 in connection with another case. It appears from this letter of C.C.I. & E that Collector of Customs had sent a letter No, AC 411/81-A dated 14-12-1981 on the subject of Iron and Steel Black Pipes and Tubes and the reply given was that the subject covered all pipes and tubes as have no metal coating over them. Coating of non-metal, e.g. Bitumen, paint or plastic material does not exclude such pipes and tubes from the description in question. Regarding query No,2 the reply was that Serial No, 141 of free list in the Import Policy Order, 1979-80 did not cover import of any Black Pipes/Tubes unless the same were seamless. Regarding query No,3 reply was that I.T.C. 73-18 111.2 has been shown to cater for import of other welded-pipes/tubes for instance stainless steel which are neither black nor galvanised and those coated with metals other than the metal coated on galvanised pipes/tubes which too are neither black nor galvanised.
25. One thing is very clear from what is stated above that description of goods allowed to be imported in the import licence of the petitioner was not free from ambiguity and doubt as such first remark to that effect was made by Deputy Collector/Adjudicating Officer in his order and then letter of queries on the subject was addressed by the Collector of Customs to C.C.I. & E. About the description of goods findings of the three forums in the Customs Department are not the same. In the show-cause notice it is alleged that the goods on physical examination were found to be E.R.W.
26. (Black) tubes. Deputy Collector of Custom expressed his doubt in the order particularly in view of I .T.C. Classification mentioned against the description of goods. On the basis of letter of C.C.I. & E dated 30th December, 1980 he just held that importation of such goods was excluded in private sector. Collector of Customs held in appeal that Iron and Steel. Black Pipes and Tubes were specifically excluded from the licence and those covered all pipes and tubes having no metal coating on them. Only those pipes and tubes were importable under free list which were seamless.
27. He further held that 73-18 111.2 allowed in the import licenge for import of other welded-pipes/tubes for instance stainless steel which are neither black nor galvanised. O.B.R. Has held in the order of revision that black seamless pipes are allowed to be imported by Commercial importers. This shows that there was serious dispute with regard to the description of the goods firstly and also with regard to what was allowed to b imported in the import licence of the petitioner. This necessitated factual enquiry which should have been carried on with participation of the petitioner.
28. It is very clear that decisions have been made by Customs Authorities on the basis of letters received from C.C.1. & E which was done behind the back of the petitioner. In all fairness Customs Authorities should have supplied copies of the letters received from C.C.I. & E on the subject to the petitioner and then should have heard him in that 'context. After all the petitioner is one of the two parties to the licence of import. Licence has been issued by the C.C.I. & E and has been received by the petitioner. Petitioner has acted upon that licence and has imported the consignment investing his capita therein. If any adverse interpretation is to be put on the contents of the import licence, it would not be fair to keep him out of the whole exercise which is carried on between Customs Authorities and the C.C.I. Is E. Petitioner cannot be condemned on the basis of enquiry mad bearing his back and without his knowledge particularly when orders adverse against him have been passed on the basis of letters or clarification obtained from C.C.I. & E without giving any opportunity to the petitioner to look into them or to rebut them. In such circumstances orders stand vitiated on the principle of violation of natural justice. In support of the proposition stated above, reliance is placed on the case of Messrs Farooq International v. The Chief Controller of Imports and Exports 1985 CLC 1781. Petitioner has produced another letter, dated 24th March, 1983 from the Office of the Chief Controller of Import's and Exports on the subject of Iron and steel pipes and tubes and scope of Serial No, 424 of Free List of Import Policy Order, 1982. This letter is sent to all recognised Trade Organisations in Pakistan and has. Been included in news bulletin. Clarification is given in this letter that Black Pipes and Tubes would include welded-pipes and tubes made of iron or steel, whether or not having a coating of paint or of any other non-metal material of any colour. Further it is clarified that stainless steel pipes and tubes with or without coating will be importable. Similarly seamless pipes and tubes of Iron and Steel whether having a coating or not will also be permissible for import.
29. ' Petitioner has stated in the memorandum of petition in paragraphs 21, 22 and 23 that he had imported another consignment of pipes and tubes and the same objection was raised by Customs Department so he had made a representation to the C.C.I. & E and conveyed to him his contention that it would be impossible for trade to function on the basis of instructions which were not known to the trade but were acted upon by the Customs Department and in consequence his contention was accepted and C.C.I. & E was pleased to issue Circular to all recognised trade organisations in Pakistan which was duly published in the bulletin of Chamber of Commerce and Industry. This is the same letter mentioned above. Mr. Nizam Ashraf Subzwari, Assistant Collector of Customs has filed counter-affidavit in connection with the proceedings before this Court in which in paragraph 20 he has admitted with reference to paragraphs 22 and 23 of the petition that two consignments of the petitioner were released on the specific release instructions from the Chief Controller of Import and Export.
30. In the circumstances and for the facts and reasons stated above, we set aside order passed in revision and further direct that the revision application be kept pending to enable the petitioner to make a representation to the Chief Controller of Imports and Exports so that his grievances in respect of consignment in question be taken note of and the revision application be disposed of on the basis of whatever fresh orders are passed by .The C.C.I. & E and hearing the petitioner. Subject to the obtaining orders from the C.C.I. & E, it would be satisfactory if revision application is disposed of within three months. Petition is allowed in terms of what is stated above.