RAJA AFRAS1AB KHAN J.--1. The petitioners, M/s. Ittefaq Foundries (Pvt) Limited, have moved these Constitutional petitions (W.P. No. 419/88 and W.P. No. 420/88) praying therein that the assessment of customs duty at the rate of 20% ad valorem instead of Rs. 418.00 per metric ton and sales tax at the rate of 12.50% instead of exempting it from sales tax on goods imported and bonded prior to the issuance of S.R.Os (Annexures P4, P5 and P6) may be declared without lawful authority and of no legal consequence and further that the respondents may be ordered to allow clearance of petitioners'
Iron and Steel Remeltable Scrap after realising duty at the rate of Rs. 418.00 per metric ton and without levying sales tax.
The questions which have arisen in both the writ petitions are identical and as such I propose to dispose of both the petitions together by my consolidated judgment.
2. Briefly stated the facts of the case are that the petitioners obtained Import Licence No. B-608510 dated 9th July, 1987 valid up to 8th July, 1988 and Import Licence No. B 608934 dated 13th August, 1987 valid up to 12th August, 1988, for the import of "Iron and Steel Scrap for Remelting and Rerolling", vide Annexure PI. On the basis of the import Licences referred to above, the petitioners were able to establish Letters of Credit on 11th July, 1987 and 20th August, 1987 vide Annexure P2. In consequence, the petitioners imported the above said Iron and Steel Scrap for remelting under Bills of Entry No. 05045 dated 20th September, 1987 and 07370 dated 20th October, 1987 vide Annexure P3. The goods mentioned above were subjected to assessment by the Customs Authorities under Pakistan Customs Tariff Heading 73.03 Duty at the rate of Rs. 418.00 per matric ton and the same were exempt from sales tax under S.R.O. 530(I)/86 dated 29th May, 1986 vide page 648 of Pakistan Customs Tariff, Fourth Edition, October 1986. The position in respect of the payment of customs duty and sales tax on shredded and bundled Iron and Steel Scrap (Remeltable), on the date when the Import Licences were obtained, Letters of Credit were established and actually goods were imported, was that the same goods were liable to customs duty at the rate of Rs. 418.00 per metric ton and were clearly exempt from the payment of sales tax as mentioned above. The Federal Government of Pakistan issued the following Notifications on the subject on 30th December, 1987, copies of which notifications have been placed on the i.e by the learned counsel as Annexures P4, P5 and P6:-
(i) S.R.O. 505(I)/86, dated 29th May, 1986 I Pakistan Customs Tariff page 543-Fourth Edition - October, 1986) was amended and Heading 73.03, Waste & Scrap Metal of Iron and Steel (Shredded and Bundled) 20% ad valorem was added exempting shredded and bundled Iron & Steel Scrap from Customs Duty in excess of 20% advalorem.
(ii) S.R.O. 547(I)/87, date It July, 1987 was amended and Regulatory Duty at the rate of 20% ad valorem was imposed on Waste & Scrap Metal of Iron and Steel (Shredded and Bundled) only.
(iii) S.R.O. 530(I)/86, dated 29th May, 1986 was amended withdrawing exemption from sales tax on Shredded and Bundled Scrap falling under P.C.T. Heading 73.03.
Ultimately, the petitioners submitted their Bills of Entry from Bond No. 10249 dated 5th December, 1987 and 8750 dated 11th November, 1987 and laid their claim for the assessment of Customs Duty at the rate of Rs. 418.00 per metric ton and exemption from Sales Tax. However, the Customs Authorities at Moghalpura, did not care to pay any heed to the prayer of the petitioners and proceeded to assess their goods to Customs Duty at the rate of 20% ad valorem and Sales Tax at the rate of 12-1/2% vide Bill of Entry Annexure P8. This is precisely the grievance of the writ petitioners.
3. The contention of the learned counsel for the petitioners is that they are liable to pay customs duty at the rate of Rs.
418.00 per metric ton to the Government and that they are entitled to have exemption from sales tax on the consignment, referred to above, on the basis of the Notification issued earlier by the Government under section 19 of the Customs Act, 1969. learned counsel vehemently argued that in the meantime, the petitioners have accrued a vested right in paying the customs duty at the rate of Rs. 418.00 per metric ton and that they were not obliged under law to pay sales tax to the Government as the same stood exempted. It is next forcefully maintained that by issuance of the amended Notification dated 30th December, 1987, the respondents are not at all competent to withdraw the vested right of the petitioners which accounted to them on the basis of the Notification issued earlier on the subject by the Government under section 19 of the Customs Act. The respondents have filed report and written statement in the case which are available on record. It is conceded by the respondents that the petitioners imported the consignment of Iron and Steel from U.S.A of the value of USS 3181135.58 and USS 3897670.84 against the Import Licence No. B-608934 and L/C. No. 0354/LC/5562/87, dated 20th August, 1987 and Import Licence No. B-608510 and L/C No. 0354/LC/5522/87 dated 11th July, 1987. According to the reports, Bills of Entry Nos. 7370, dated 20th October, 1987 and 05045, dated 20th September, 1987 were filed with the respondents and that the petitioners claim release of the goods under Pakistan Customs Tariff 73.03 on the payment of Customs Duty at the rate of Rs. 418.0 per metric ton and exemption of Sales Tax. The precise contention of the learned Deputy Attorney General for Pakistan is that the Federal Government is the competent authority and has competently issued the Notification No. 8(9)TAR-II-84, dated 30th December, 1987 and that according to this Notification, the imported goods in question are liable to customs duty at the rate of 20% ad valorem and Sales Tax at the rate of 12-1/2%. The contention is that the bills of entry were filed before the appraising staff for the purpose of processing on 30th December, 1987 when actually the above- said Notification was promulgated and was enforced on the same date, namely, 30th December, 1987. On this basis, the learned counsel argued that in the light of the clear provisions contained in section 30 of the Customs Act, 1969, the Assessing Authority was justified in law to demand the payment of Customs Duty at the rate referred to above. Lastly, the learned Law Officer stated that the Federal Government is competent to issue Notification under sections 18/19 of the Customs Act, 1969 and section 7 of the Sales Tax Act, 1951. In other words, the contention of the learned counsel is that the value and the rate of duty applicable in cases of goods which have been placed in warehouse shall be the value and rate applicable on the date of the presentation of bill of entry and in case the duty is not paid within seven days of the date of presentation of the bill of entry, the value and rate of duty shall be such as is applicable on the date on which the duty is actually paid. In the present case, the learned counsel maintained that when the Bill of Entry for clearance was filed, the petitioners were liable under law to pay the customs duty and the sales tax as provided by the provisions of section 30 of the Customs Act. The main reliance of the learned counsel is on section 30 of the Customs Act, 1969 and Article 21 of the General Clauses Act, 1897. learned counsel for the petitioners has placed heavy reliance on the law laid down in Messrs Mardan Industries Ltd., Sakhakot, Malakand Agency and another Versus Government of Pakistan and another (PLD 1965 (W.P.) Peshawar 47), Collector of Central Excise and Land Customs and 3 others Vs. Azizuddin Industries Ltd., Chittagong (PLD 1970 Supreme Court 439), Messrs M. Afzal & Sons and 2 others Vs. Federal Government of Pakistan, Islamabad through Secretary, Finance and another (PLD 1978 Lahore 468), Federation of Pakistan and others Vs. Ch. Muhammad Aslam and others (1986 SCMR 916) and A1-Samrez Enterprise Vs. The Federation of Pakistan (PTCL 1987 CL 99) and Judgment, dated 29th February, 1988 passed in W.P. No. 4449 of 1987 titled Messrs Nishat Mills Limited Vs. Government of Pakistan through the Secretary, Ministry of Finance, Islamabad and two others (PTCL 1989 CL 81).
4. I have heard the learned counsel for the parties and have perused the record. The material question for determination in the cases is whether the petitioners are entitled to pay the customs duty at the rate of Rs. 418.00 per metric ton on imported goods and claim exemption from the payment of sales tax as per the notification mentioned earlier or they are obliged to pay the customs duty at the rate of 20% ad valorem and sales tax at the rate of 12-1/2% in accordance with the Notification issued by the Government under section 19 of the Customs Act, 1969, whereby the earlier Notification was amended and new rates were prescribed' and the exemption relief allowed to the petitioners was withdrawn. In my considered view, the Hon'ble Supreme Court of Pakistan has already dealt with this very question exhaustively and has ruled in clear and unequivocal terms that the vested rights of a litigant cannot be disturbed and withdrawn subsequently by introducing amendment in the earlier Notification. In the instant case, it is admitted by the respondents by submitting the written statement that the petitioners were liable to pay customs duty at the rate of Rs. 418/- per metric ton for the goods imported by them and that they were not to pay any sales tax at all under the earlier Notification. Thus, under the earlier Notification issued on the subject on 29th May, 1986, as noted above, the petitioners were to pay the customs duty at the rate of Rs.
418/- per metric ton and they were not at all to pay any sales tax because the same was exempted under the Notification.
However, this concession allowed by law to the petitioners stood automatically withdrawn by promulgation of a new Notification on the subject on 30th December, 1987. According to the learned Law Officer, the petitioners cannot take benefit out of the earlier Notification. In the background of the case, it may be noted that there was a clear understanding between the petitioners and the Government that they could proceed with their business and to import goods on the basis of the Notification dated 29th May, 1986 issued on the subject by the Government. The petitioners accordingly obtained Import Licences No. B-608510, dated 9th July, 1987 and B-608934, dated 13th August, 1987 which Import Licences were valid up to 8th July, 1988 and 12th August, 1988 respectively, for importing Iron and Steel Scrap for remelting and rerolling. Letters of Credit were also opened with the Banker on 11th July, 1987 and 20th August, 1987. Accordingly, the Iron and Steel Scrap for Remelting and Rerolling, under the Bills of Entry No. 05045, dated 20th September, 1987 and No. 07370, dated 20th October, 1987, was imported from abroad vide Annexure P3. Thus, from the record it is clear that before 30th December, 1987 the petitioners fulfilled all the necessary conditions so as to enable them to reap benefits out of the earlier Notification on the subject. In my view, the petitioners cannot at all be obliged to pay over and above the Customs Duty at the rate of Rs. 418/- per metric ton and they cannot be commanded to pay the Sales Tax on the goods imported by them which Sales Tax was earlier withdrawn. Recently, this very question cropped up j before his Lordship Mr. Justice Rustam S. Sidhwa in Messrs Nishat Mills Limited Vs. Government of Pakistan through the Secretary, Ministry of Finance, Islamabad and two others (W.P. No. 4449 of 1987) (PTCL 1989 CL. 81) which was decided against the Customs Authorities placing reliance on the rule laid down in Messrs Mardan Industries Ltd., Sakhakot, Malakand Agency and another Vs. Government of Pakistan and another (PLD 1965 (W.P.) Pesh. 47), Collector of Central Excise and Land Customs and 3 others Vs. Azizuddin Industries Ltd., Chittagong (PLD 1970 S.C. 439), Messrs M. Afzal & Sons and 2 others Vs. Federal Government of Pakistan, Islamabad through Secretary, Finance and another (PLD 1978 Lahore 468), Federation of Pakistan and others Vs. Ch. Muhammad Aslam and others (1986 SCMR 916) and Al-Samrez Enterprise Vs. The Federation of Pakistan (PTCL 1987 CL. 99). Almost the same arguments were addressed before his Lordship which arguments were addressed before me in these matters. His Lordship proceeded to accept Writ Petitions No. 4449/87,4503 to 4505 of 1987, 4754/87 and 4790/87 and ruled that the respondents Customs Authorities have failed to follow the law laid down by the Hon'ble Supreme Court of Pakistan. His Lordship has taken serious notice of the failure of the Customs Authorities in not following the law laid down by the Hon'ble Supreme Court and proceeded further to burden the Customs Department with compensatory costs. It may be appreciated that Malik Muhammad Qayyum, learned Deputy Attorney General for Pakistan himself produced the judgment of his Lordship Mr. Justice Rustam S. Sidhwa on the controversy and finished his arguments by saying that he has already moved the Hon'ble Supreme Court of Pakistan against the said judgment. However, he states that matter is sub judice before the Hon'ble Supreme Court and as such no further proceedings are called for in the matter. I am afraid, I cannot agree with the learned Law Officer for the reason that the question has already been decided in number of judgments by the Hon'ble Supreme Court of Pakistan and the Hon'ble High Courts. It is almost settled that a Notification cannot be issued with a view to have retrospective effect in operation and to affect the vested rights under the prior Notification. This view was expressed in the Division Bench case reported as Messrs Mardan Industries Ltd., Sakhakot, Malakand Agency and another Vs. Government of Pakistan and another (PLD 1965
(WP) Pesh. 47). In the latter judgment Messrs M. Ajzal & Sons and 2 others Vs. Federal Government of Pakistan, through Secretary, Finance and another (PLD 1978 Lah. 468), it was observed that it is well established proposition of law that an Act of subordinate legislative authority cannot be applied retrospectively unless law confers power to do so. It was further observed that provision contained in section 21 of the General Clauses Act (X of 1897) does not empower subordinate legislative authority to take away vested rights by recalling or amending a previous Notification. In Federation of Pakistan and others Vs. Ch. Muhammad Aslam and others (1986 S.C.M.R. 916), the question before the Hon'ble Supreme Court was whether the respondents who had been acted on the Gift Scheme as in force before 20th March, 1988 and had earned a right to get Import Licence for importing Truck Chassis, could be denied that right by the Federal Government by retrospectively applying the revised definition of 'New' as contained in the press note, dated 20th March, 1983. By invoking the principle of promissory estoppel the honourable Supreme Court held that the respondents had acquired vested rights which could not be over-ridden by the Federal Government by a disposition given in the form of a declaration, without expressly legislating in the matter. In the subsequent authority Al-Samrez Enterprise Vs. The Federation of Pakistan (PTCL 1987 CL. 99) the Hon'ble Supreme Court has exhaustively dealt with the question now being raised and argued before me and the ratio laid therein, is of course complete answer to the argument of the learned counsel. It was observed by the learned Court that:-- "From the above it would be seen that the concept of exemption presupposes a liability and is a grant or immunity from the payment of duty which would otherwise be attracted in respect of the goods. It has accordingly been held that "non- liability" and "exemption" are different concepts, the first connotes that the subject was never in the tax net, while the latter connotes that it was, but has been permitted to escape. Re Sharpe, Queensland Trustees, Ltd. Vs. Commissioner of Stamp Duties, 1944 St. R. Qd. 26 at page 33.
Accordingly it would appear that the mere grant of exemption under section 19 does not have the effect of modifying or altering the levy of duty under section 18 which continues to be in force. But the only legal effect is that the liability for the payment of duty that accrues under section 18 on the importation of dutiable goods is wiped OF to the extent exempted.
The two sections, therefore, clearly operate independently and the exercise of power under section 19, is distinct in character and scope, so that it cannot have the effect of nullifying the statutory provisions contained in section 18 whereby the charge is created by the statute itself. In this context it is not difficult to understand that section 30 has no material bearing on the controversy before us and its provisions would not be violated either way on the determination of question whether the exemption from the payment of duty earlier granted was applicable to the case of the appellants or not. This brings us to the main question whether in the circumstances of this case the appellants had acquired vested right to the exemption in terms of the earlier notification and whether they were legally liable to be deprived of the same by virtue of the subsequent revised notification. The question whether the grant of exemption from tax creates a right which once having been vested in the subject, cannot be destroyed by a fresh exercise of the same power by way of modification, was first considered by this Court in Civil Appeal No. 3-P of 1965, Government of Pakistan and another Vs. Messrs Mtirdan Industries Limited and another (unreported). It was held that the power to take advantage of notification can be terms as right. In Collector of Central Excise and Land Customs Vs. Azizuddin Industries Ltd. PLD 1970 SC 439, which was a case of withdrawal of exemption from the payment of excise duty under the Central Excises and Salt Act, 1944, the following dictum was laid down:-- "It is a settled rule that an executive authority cannot in exercise of the rule-making power or the power to amend, vary or rescind an earlier order, take away the rights vested in the citizens by law.""
The learned Court further observed that:-- It will be inequitable and unjust to deprive a person who acts upon such assurance of the right to exemption and expose him to unforeseen loss in the business transaction by suddenly withdrawing the exemption after he has made legal commitments. It is in this perspective that a right is created in his favour and a subsequent withdrawal of exemption cannot be given retrospective operation by an executive act to destroy this right. The High Court in its review order did not doubt the genuineness of the assertion made by the appellants that the i.e for opening the Letter of Credit was deposited by them on 10th June, 1977 but gave no importance to this fact on the assumption that an Import Licence was necessary. The item in question being on the free list it was not necessary to obtain an import licence and it was only sufficient to deposit fees for opening the Letter of Credit. Therefore, the fact that the letters of credit were opened on 15th June, 1977 is of no significance but in any case the explanation for delay is contained in the letter of the Habib Bank on record. The main ground that prevailed with the High Court to hold that the revised notification which was in force on the date when the Bill of Entry was presented was that under section 30 of the Customs Act the rate of duty applicable with reference to the date of the Bill of Entry was chargeable. However, as discussed above, the particular ^te of duty was in force is not relevant to the controversy but whether exemption from this rate could be availed by the appellants. Clearly in respect of an item on the free list an importer could make binding and irrevocable commitments with the foreign supplier without obtaining an import licence. We, therefore, do not agree with the view taken by the learned Judges of the High Court that no vested right was created or that the transaction is open to doubt as fraudulent as an attempt to evade the payment of duty. As already observed retrospective operation cannot be given to executive orders so as to destroy contractual rights and obligation already accrued. In the result this appeal succeeds and the constitutional petition of the appellants is accepted. The appeal is allowed with no order as to costs."
In view of the above position of law, there is no alternative left but to interfere in the matter. Unless, the law as laid down by the Hon'ble Supreme Court is revised by itself, it is the duty of the every citizen including the Government Functionaries to follow the law so laid by the ultimate court of the country in letter and spirit. At this stage, the argument of the learned Law Officer cannot be entertained that the controversy is pending before the Supreme Court and as such the matter should be kept pending indefinitely till such time same is finally decided, on the ground that the law as laid down today which holds the field, is in Al-Samrez Enterprise Ks. The Federation of Pakistan (PTCL1987 CL. 99). Respectfully following the rule laid down in 1986 SCMR 1917 PTCL 1987 CL. 99. I accept both the writ petitions. In consequence, the petitioners are liable to pay the Customs Duty at the rate of Rs. 418/- per metric ton and they are entitled to claim exemption from Sales Tax on the basis of the earlier Notification dated 29th May, 1986. Both the petitions succeed and are allowed leaving the parties to bear their own costs.