RUSTAM S. SIDHWA, This judgment will dispose of eight writ petitions, namely, writ petition W.P. No. 331 of 1988 filed by M/s. Ittefaq Foundries (Pvt) Limited, writ petitions W.P. Nos. 568 of 1988, 569 of 1988 and 570 of 1988 filed by Punjab Steel Limited, writ petitions W.P. Nos. 678 of 1988, 679 of 1988 and 680 of 1988 filed by M/s. Orient Technical Works (Pvt) Limited and writ petition W.P. No. 1726 of 1988 filed by Sunrise Engineering Industries (Pvt) Limited against the orders passed by the Deputy Collector of Customs, Lahore, charging customs duty at 20% ad valorem and sales tax at 12-1/2% ad valorem on the shredded iron and steel scrap imported by them.
2. The brief facts of the case are that all the four petitioners imported shredded iron and steel scrap from various foreign countries during the middle and later part of 1987, against the import licences obtained by them for the said purpose. After letters of credit were established by the petitioners, the shredded iron and steel scrap was shipped out by the exporters. On receipt of the goods, bills of entry for ex- bonding were filed by the petitioners. Prior to 30th December, 1987, the statutory rate of customs duty on shredded iron and steel scrap was Rs. 418/- per metric ton under PCT heading 73.3 and sales tax was exempt vide SRO No. 530(I)/86, dated 29th May, 1986. On 30th December, 1987 the Federal Government issued three notifications. By the first i.e. SRO No. 1014(I)/87, the sales tax exemption which was available on shredded iron and steel scrap under SRO 530(I)/86, dated 29th May, 1986 was withdrawn. By the second i.e. SRO 1015(I)/87, customs duty on shredded iron and steel scrap covered by PCT heading 73.03 in excess of 20% ad valorem was made exempt. By the third i.e. SRO 1016(I)/87, regulatory duty 0n shredded iron and steel scrap covered by PCT heading 73.3 was made leviable at 20% ad valorem. It appears that news of the above amendments having been disseminated by the radio and television, a host of importers of shredded iron and steel scrap, whose goods had already been imported and were lying in-bond, filed their bills of entry for ex-bonding on or after 30th December, 1987. The Appraisement Staff of the Customs Dry Port, Mughalpura, assessed all the said bills of entry and by making endorsements on the said bills of entry claimed customs duty at 20% ad valorem and sales tax at 12-1/2% ad valorem. Being aggrieved by the said orders, the petitioners preferred writ petitions, which are now before me for disposal. During the hearing of the said writ petitions, a learned Single Judge of this Court permitted the petitioners to secure the release of their goods, subject to their paying customs duty on the imported goods at Rs. 418/- per metric ton and furnishing insurance bonds to cover balance of customs duty payable at 20% valorem and sales tax dues at 12-1/2% ad valorem.
3. Before dealing with these cases it is necessary to set out the particulars showing dates on which each of the petitioners secured their import licences, the dates when they established their letters of credit, the dates when the goods were in-bonded and the dates when the bills of entry for ex- bonding were filed. These particulars are as under;- Number of Date of Date of Date of in- Number and Date writ import opening of bonding of B.E. Ex- bonding petitions. Licence L/Credit WP 331-88 28.9.87 18.10.87 6.12.87 No. 12320 dt. 30.12.87 WP 570-88 22.6.87 22.6.87 24.6.87 24.9.87 No. 12317 dt. 30.12.87 7.7.87 Number of writ petitions. Date of import Licence Date of opening of L/Credit Date of inbonding Number and Date of B.E. Ex-bonding WP 678-88 22.6.87 7.7.87 24.6.87 3.10.87 No. 12321 dt. 30.12.87 WP 679-88 22.6.87 7.7.87 24.6.87 24.9.87 No. 12322 dt. 30.12.87 WP 680-88 22.6.87 7.7.87 24.6.87 3.10.87 No. 12323 dt. 30.12.87 WP 1726-88 24.7.86 27.6.86 2.9.86 No. 19286 dt. 31.3.88 WP 568-88 22.6.87 22.6.87 7.7.87 24.6.87 28.9.87 No. 12319 dt. 30.12.87 WP 569-88 22.6.87 22.6.87 7.7.87 24.6.87 29.9.87 No. 12318 dt. 30.12.87 {{ TABLE }}
4. I have heard the arguments of the learned counsel for the petitioners and the respondents and have perused the record. It is an admitted position that before 31st December, 1987, customs duty on shredded iron and steel scrap under PCT heading 73.03 was Rs. 418/- per metric ton and sales tax on the same goods covered by the same PCT heading was exempt under SRO 530(I)/86, dated 29th May, 1986. On 30th December, 1987 three notifications were issued by the Federal Government.
By SRO 1014(I)/87, dated 30th December, 1987, the Federal Government amended SRO 530(I)/86, dated 29th May, 1987 by withdrawing the sales tax exemption which was in that notification relating to shredded iron and steel scrap covered by PCT heading 73.03. By SRO 1015(I)/87, dated 30th December, 1987, the Federal Government amended SRO 505(I)/86, dated 29th May, 1986 by adding PCT heading 73.03 to the latter notification and thus granting exemption in respect of customs duty in excess of 20% ad valorem on shredded iron and steel scrap covered by the said PCT heading. By SRO 1016(I)/87 dated 30th December, 1987, the Federal Government amended SRO 547(I)/87, date It July, 1987, by adding PCT heading 73.03 to the latter notification and imposing regulatory duty at 20% ad valorem on shredded iron and steel scrap covered by the said PCT heading.
5. Under section 30 of the Customs Act, 1969, the value and rate of duty applicable to any imported goods is the value and the rate of duty in force on the date that the bill of entry for home consumption or for ex-bonding is presented, provided that where duty is not paid within seven days of the presentation of the bill of entry for ex-bonding, the value and rate of duty payable would be that applicable on the date on which the duty is actually paid. From the table given in para 3 above it is apparent that all the four petitioners filed their bills of entry for ex-bonding on or after 30th December, 1987. In these circumstances, the value and the rate of duty applicable on the imported goods was the value and the rate of duty as modified by the three Federal Government's notifications dated 30th December, 1987. In these circumstances, the petitioners were liable to pay-
(a) customs duty at 20% ad valorem, provided it did not exceed the amount calculated at the statutory rate;
(b) regulatory duty at 20% ad valorem; and
(c) sales tax at 12-1/2% ad valorem on duty paid value, unless exempted under the principle laid down by the Supreme Court in Al-Samrez Enterprise v. The Federation of Pakistan (PTCL 1987 CL 99).
6. What the Appraisement Department of the Customs Dry Port, Mughalpura, Lahore, did, was indeed startling. They assessed the goods to customs duty at 20% ad valorem, on the basis that customs duty in excess of 20% ad valorem was exempt under SRO 1015(I)/87 dated 30th December, 1987. They did not impose any regulatory duty at 20% ad valorem on the goods, on the basis that since regulatory duty was additional customs duty, what was to be charged was only 20% ad valorem as customs duty and, therefore, no regulatory duty was chargeable. They charged sales tax at 12-1/2% ad valorem on duty added value on the basis that SRO 1014(I)/87, dated 30th December, 1987 was applicable.
7. I am called upon in these petitions to declare that the assessment orders are without lawful authority to the extent to which the Customs have claimed sales tax at 12'1/2% ad valorem on duty added value and customs duty over and above Rs. 418/- per metric ton. So far as where customs duty is concerned, the petitioners' claims are valid. SRO 1015(I)/87, dated 30th December, 1987 is applicable and customs duty in excess of 20% ad valorem on shredded iron and steel scrap covered by PCT heading 73.03 is exempt. However, under the said notification, the Customs cannot claim customs duty in excess of that which would be payable, if the statutory rate were applied i.e. Rs. 418/- per metric ton. The object of an exemption notification is to remit or reduce the statutory customs duty payable, but not so as to claim anything over and above it. If excess duty is to be claimed, it must be by legislation. To the extent to which the notification dated 31st December, 1987 enhances the burden of the petitioners over the statutory rate, the same is not permissible and customs duty jat Rs. 418/- per metric ton would be chargeable. As regards line sales tax, the petitioners are entitled to the exemption, in view of the principle laid down by the Supreme Court in Al- Samrez Enterprise's case (Supra). Section 31-A of the Customs Act, 1969, does not apply here, as sales tax is not covered by this section or sections 30 and 31 of the Customs Act.
8. I am surprised that the Appraisement Staff did not charge regulatory duty on the goods by some dubious form of reasoning, which they have not taken in any other case, but the present and some others dealing with shredded iron and steel scrap. Though the learned Standing Counsel is silent, Mr. Nasir-ud-Din, the Appraiser of Customs, submits that as regulatory duty is nothing more than additional customs duty, they were not obliged to charge anything over and above 20% ad valorem as customs duty. In support thereof, Sh. Abdul Rahim Allah Ditta v. Federation of Pakistan (PLD 1976 Lah. 886), Yousaf Re-rolling Mills v. Collector of Customs, Karachi (PLD 1977 Kar. 497) have been referred. I am surprised that these rulings are being referred, because they only state that since regulatory duty is in the nature of a duty of Customs, its levy under the Customs Act is not ultra vires the Constitution. However, nothing is stated in these rulings that regulatory duty shall be equated with the customs duty, when the same is to be levied. The mings clearly state that the provisions of subsection (2) of section 18 of the Customs Act deal with certain special situations and the levy of customs duty under subsection (1) of section 18 of the Customs Act does not debar the additional customs duty described as "regulatory duty" to be levied under sub-section (2). In short the levy of customs duty under sub-section (1) of section 18 does not exhaust the power to levy regulatory duty under sub-section (2) of the same section of the Customs Act. Whether the Customs will reassess these eight cases in order to realise regulatory duty, is not for me to advise, for, if it does do so, it will have to issue notices to the petitioners under section 32 of the Customs Act, 1969.
9. For the foregoing reasons, all these writ petitions are accepted and the impugned orders of the Appraisement Staff, Customs Dry Port, Mughalpura, Lahore, to the extent that they have applied SRO 1015(I)/87, dated 30th December, 1987 and have claimed customs duty in excess of what would be payable were the statutory rate of Rs. 418/- per metric ton applied, the same are declared to have been passed without lawful authority and likewise the said impugned orders to the extent that they have claimed sales tax at 12-1/2% ad valorem on the duty added value of the goods covered by PCT heading 73.03 are also declared to have been passed without lawful authority and are set aside.
10. There shall be no order as to costs.