' This is a Constitutional petition filed by Mrs. Hajera Rashid Gardee, petitioner, against the Customs Duty praying that the levy of Customs duty in excess of 25 per cent. And the port storage charges by the Railways, Lahore, be declared to be without lawful authority and as having no legal effect.
2. The brief facts of the case are that Mst. Hajera Rashid Gardee, petitioner, who is a South African national of Pakistan origin, imported reconditioned textile machinery after securing special permission from the Government of Pakistan, Ministry of Industries, out of her own foreign exchange resources in Africa. The machinery was shipped to Pakistan from U.K. Per s.s. "Scapehill" on 21-9- 1977. The said ship reached Karachi on 7-11-1977. The petitioner filed documents with the Lahore Railways for the transhipment of the machinery from Karachi to Lahore. On 18-1-1978, the petitioner filed a bill of entry for home consumption at the Customs Dry Port, Lahore. The Customs claimed Customs duty on the consignment at 40 per cent ad valorem under SRO 22(1)/78, dated 1-1-1978.
The petitioner approached the Customs with the request that Customs duties be charged at 25 per cent ad valorem under SRO 695 (1)/77, dated 4-8-1977 and not at 40 per cent. Under the Government's notification dated 1-1-1978, but the request was rejected. The Customs also claimed port storage charges of Rs,97,677 for delay in the completion of wharfage assessment at Karachi, which the petitioner refused. Being aggrieved by the action of the Customs, the petitioner filed a writ petition in the High Court, which is now before me for disposal.
3. Mr. Zaheer Ahmad Khan, Advocate for the petitioner, submits that as regards port storage charges, he is not pressing the petition, as the petitioner will seek her remedy from the competent authority in that respect. He is only pressing the present writ petition as regards the Customs duty.
4. On behalf of the petitioner it is submitted that by virtue of the Government's Notification SRO 695(1)/77, dated 4-8-1977, a vested right accrued in favour of the petitioner to have her goods charged to duty at 25 per cent ad valorem and that this vested right not only accrued to her on the date when she made the contract for the purchase of the goods from the foreign manufacturer, but also on the date when the goods reached Karachi port on 7-11-1977. It is submitted that the newly added section 31-A of the Customs Act only affects vested rights which have accrued on the date the contract is executed or the date the letter of credit is opened, but does not touch a case where vested right has accrued on the date the goods are imported and since the petitioner's goods reached Karachi port on 7-11-1977, the vested right which accrued to the petitioner lady that day under the exemption notification of 4-8-1977, was not affected.
' On behalf of the Customs Authorities it is submitted that by virtue of the newly added section 31-A of the Customs Act, 1969, the exemption notification of 1-1-1978 applies and that as the bill of entry for home consumption was filed by the petitioner on 18-1-1978, Customs duty is chargeable at 40 per cent ad valorem.
' I have given my anxious consideration to this case. The affect of an exemption notification in respect of import of goods was considered by the Supreme Court of Pakistan in Ai-Samraiz's case (1986 SCM R 1917). In that case the Federal Government by exemption notification dated 8-6-1972 exempted certain types of machinery from so much of the Customs duty leviable thereon as was in excess of 20 per cent ad valorem. By an earlier Federal Government notification already in force; sales tax on such machinery stood already exempt. The petitioner company contracted to import machinery from the foreign supplier on 7-6-1977 and opened letter of credit on 15-6-1977.
Meanwhile, on 11-6-1977 the Government issued another notification amending the earlier one, raising the ceiling of Customs duty to 25 per cent and also imposed a condition that the exemption would only be available to goods imported against an industrial licence. By yet another notification, it withdrew exemption from sales tax also. The goods arrived at Karachi Port on 13-9- 1977, when the Customs authorities refused to clear the same, except on the basis of enhanced duties, which the petitioners refused to pay on the basis that they had acquired a vested right in terms of the earlier notifications. The Supreme Court held that the grant of an exemption under section 19 did not have the effect of modifying or altering the levy of duty under section 18 of the Customs Act, which continued to remain in force, but the only legal effect was that the liability for the payment of duty that accrued under section 18 on the importation of dutiable goods was wiped off to the extent exempted. The Supreme Court observed that the two sections operated independently and the exercise of power under section 19 was distinct in character and scope and did not have the effect of nullifying the provisions .Of section 18, whereby the charge was created.
The Court further held that section 30 had no material bearing on the controversy, as its provisions did not stand violated either way on the determination of the question whether the exemption from the payment of duty earlier granted was applicable to the case of the importer or not. The Supreme Court then went on to decide what it considered to be the main question, i.e,, whether in the circumstances of the case, the importer had acquired a vested right to the earlier exemption notification and whether it could be deprived of the same by virtue of the subsequent revised notification. In this connection it held that if a binding contract stood concluded between the importer and the foreign exporter or steps were taken by the importer creating a vested right to the first exemption notification, the same could not be taken away and destroyed by another notification in modification of the earlier one. Since the facts on record showed that the importer had concluded his contract with the importer on 7-6-1977, pursuant to which the irrevocable of credit was established on 15-7-1977, it was held that these facts clearly established that the importer had acquired a vested right to the earlier exemption notification, which could not be defeated by another notification by giving retrospective operation to an executive act to destroy that right.
6. Unfortunately, Al-Samraies case (supra) cannot be applied to the present case before me in view of section 31-A of the Customs Act, which has been newly added by the Finance Ordinance, 1988. Section 5(2) of the Finance Ordinance, 1988 which inserts section 31-A into the Act after section 31, clearly states that "the new section shall be inserted and shall be deemed always to have been inserted". The new section, which has been given retrospective effect, reads as follows:- "31-A. Effective rate of duty-- (1) Notwithstanding anything contained in any other law for the time being in force, any decision of any Court, for the purposes of sections 30 and 31, the rate of duty applicable to any goods shall include any amount of duty imposed under section 18, section 2 of the Finance Ordinance, 1982 (XII of 1982) and section 5 of the Finance Act, 1985 (I of 1985), and the anti-dumping or countervailing duty imposed under the Import of Goods (Anti-dumping and Counter-vailing Duties) Ordinance, 1983 (III of 1983), and the amount of duty that may have become payable in consequence of the withdrawal of the whole or any part of the exemption of concession from duty whether before or after the conclusion of a contract or agreement for the sale of such goods or opening of a letter of credit in respect thereof.
(2) For the purpose of determining the value of any imported or exported goods, the rate of exchange of which any foreign exchange is to be converted into Pakistan currency shall be rate of exchange in force:-
(a) In the case of goods referred to in clause (a) of section 30, on the date referred to in that clause;
(b) in the case of goods referred to in clause (b) of the aforesaid section, on the date referred to in that clause; and
(c) in the case of goods referred to in section 31, on the dates referred to in that section."
7. The provisions of the above section now apply "notwithstanding any decision of any Court" and the rate of duty applicable in respect of imported goods now not only includes the amount of duty imposed under section 18 of the Customs Act, but inter alia also the amount of duty that may have become payable in "consequence of the withdrawal of the whole or any part of the exemption or concession from duty whether before or after the conclusion of a contract or the agreement for sale of such goods or opening of a letter of .Credit in respect thereof".
8. The ratio laid down by the Supreme Court of Pakistan in Al-Samraiz's case was that the grant of exemption under section 19 of the Customs Act did not affect, modify or alter the chargeability of the goods to duty, which was provided under section 18, that by the issue of the notification under section 19, the liability for payment of duty that accrued under section 18 stood altered or wiped off, as the case may be, and that the provision of section 30 did not stand, violated, irrespective of the fact whether the exemption earlier granted was applicable to the case of the importer or not. The newly added section 31-A of the Customs Act which clarifies and expands inter alia the scope of section 30, clearly includes within the rates of duty applicable on imported goods, the amount of duty that may have become payable in consequence of the withdrawal of the whole or any part of the exemption or concession from duty whether before or after the conclusion of the contract or agreement for the sale of such goods or opening of letter of credit in respect thereof. In the light of this provision, which is also retrospective, it cannot be said that section 30 would now have no material bearing on the controversy, assuming the ratio stated by the Supreme Court in Al- Samraiz's case was to be applied. Sections 30 and 31-A read together now clearly affect the principle behind section 19 and it cannot, therefore, be said that the liability for payment of the duty would still stand on the basis of the earlier exemption notification, which has been withdrawn.
9. The words "any decision of any Court" in section 31-A obviously are intended to defeat the rule laid down by the Supreme Court in Al-Samraiz's case and by the other High Courts in a number of cases.
10. The words "and the amount of duty that may have become payable in consequence of the withdrawal of the whole or any part of the exemption or concession from duty" in section 31-A are intended to retrospectively apply to cases wherein earlier notifications granting exemptions or concessions already stand modified or cancelled by later notifications, as a result of which higher duties have already become payable. The words "duty that may have become payable" refers to the extended duties. The words "in consequence of the withdrawal of the whole or any part as the exemption or concession from duty" refer to the two or more notifications that have issued earlier in point of time to the final assessment or finalisation of pending proceedings. These words, therefore, do affect the ratio laid down by the Supreme Court in Al-Samraiz's case. A notification, which reduces or withdraws a concession or exemption granted by an earlier notification, would now affect the rate of duty by virtue of section 31-A.
11. The words "whether before or after the conclusion of a contract or agreement for sale of such goods or opending of a letter of credit in respect thereof" are intended to refer to those points of time, when vested rights are normally stated to arise in favour of an importer on the basis of the earlier notification. The word "whether" here covers both the alternatives i.e, in either case. In short, the effect of these words is that the extended liability will prevail, even though it may have accrued before or after the two circumstances which are judicially recognised as conferring a vested right on an importer to the benefit of the earlier exemption notification. These words, therefore, also seek to effect or destroy the vested right. The new section 31-A creates the extended liability, which arises by virtue of the amending notification, and protects it by stating that it will prevail, even though it may have accrued before or after the two dates when vested rights may have arisen in favour of the importer on the basis of the earlier notification.
12. I will now take up the submission of the learned counsel for the petitioner. It is submitted that the new section 31-A has only destroyed the vested right that accrued in favour of the petitioner on the date when she entered into a contract for the purchase of the machinery, but as a vested right also accrued to her on the date when the goods stood imported into Pakistan, which was on 7-11- 1977, the said section is silent about that right and that right still stands and the petitioner is entitled to the benefit of the earlier notification dated 4-8-1977. It cannot be denied that the contract of, sale of the machinery took place sometime before 21-9-1977, the date when the goods were shipped. The first exemption notification, the benefit of which is claimed by the petitioner, was issued on 4-8-1977. The vested right therefore accrued to the petitioner on the date she entered into the contract of sale, if it was after 4-8-1977, or on 4-8-1977, if it was earlier to the issue of the notification. But whatever be the position, as I have stated earlier, second notification of 1-1-1978 which created the extended liability, by virtue of the new section 31-A of the Customs Act establishes that right retrospectively and treats it as if it has always been in existence, any earlier or later vested rights notwithstanding. The arguments of the learned counsel for the petitioner, therefore, has no force and must be rejected.
13. The petitioner's case is still sub judice. Due to the writ petition, the Customs Authorities could not finally recover the full customs duty. Since the lis is open, section 31-A of the Act fully applies. I mention this, as there may be past and closed case, to which section 31-A may not be applicable, but since I am not dealing with such a case, I would leave that matter open, to be decided at the appropriate occasion.
14. For the foregoing reasons, there is no merit in this petition, which is dismissed. Since this writ petition fails due to an amendment brought in the Act with retrospective effect, I would not like to burden the petitioner with costs. There shall be no order as to costs.