This order covers two writ petitions, namely, W.P. No. 6101 of 1988 and W.P. No. 6103 of 1989 filed by Al-Badar Corporation, petitioner, and three writ petitions, namely, W: P. No. 6102 of 1988, W.P. No. 6104 of 1988 and W.P. No. 6105 of 1988 filed by Mian Akhtar and Company, petitioner challenging various orders passed by the Collector of Customs, Lahore, the Member (Judicial), Central Board of Revenue, and the Government of Pakistan in the Ministry of Finance.
2. The brief facts of the case are that both the petitioners exported between April and July, 1985 a number of consignments of printed cotton, polyester blended, Yasir Arafat Roomals to Saudi Arabia. At the time of presentation of the shipping bills, samples of Yasir Arafat Roomals were taken, as the petitioners had riled documents to indicate that they would be claiming export rebate. The Valuation Committee appointed to assess the goods, in arriving at the normal and fair price of the consignments found that the normal export value of each of Yasir Arafat Roomals was Rs. 32.00 per piece FOB, whereas the value declared by the petitioners ranged between Rs. 45.02 and Rs. 49.02 per piece C&F. The petitioners were accordingly issued notices to show cause why proceedings should not be taken against them under sections 32 and 156(1) 14 of the Customs Act, 1969. The petitioners submitted their replies, wherein they took up the stand that the export prices stated by them were the correct C&F value of their Yasir Arafat Roomals, according to the value invoiced by them and in respect of which payments had been received by them which had been certified by the State Bank of Pakistan, on the basis of which they had filed their claims for export rebate. However, the learned Collector of Customs, Lahore, by his adjudication orders in respect of all the five cases, held that the normal and fair export price of the Yasir Arafat Roomals was Rs.
32.00 per piece FOB and that the petitioners were, therefore, entitled to export rebate as follows:--
(i) 14% of the FOB value in respect of customs duty and 1% of the said value in respect of sales tax under SRO No. 1013(1)/83, dated 30th October, 1983; and
(ii) 1.5% of the FOB value in respect of central excise duty under SRO No. 766(1)/79, dated 29th August, 1979.
He also held the petitioners guilty under section 156(I) 14 of the Customs Act, 1969, for having violated section 32 of the Customs Act, 1969, and imposed heavy penalties in each of the rive cases. The petitioners being aggrieved by the said orders, filed appeals before the Central Board of Revenue, where the legal contravention was maintained, but the penalties were reduced by 50%.
The revision petitions taken against the said orders, however, did not meet with any success and were dismissed. Being aggrieved by the said orders of the various Customs Officers, the petitioners preferred five writ petitions in the High Court, which are now before me in motion.
3. On behalf of the petitioners it is submitted that the valuation could only have been done by the Customs Officers and not by Valuation Committees, whereas the Customs Officers had blindly accepted the valuations made by the Valuation Committees, which was not legal and proper. It is also submitted that reports of the Valuation Committees were not made available to the petitioners beforehand, notwithstanding their requests, with the result that they could not cross- examine the members of the said Committees who had arrived at the valuation. In this connection, it is submitted that the reports were also not tendered in evidence in these cases. It is lastly submitted that since no untrue statements were made by the petitioners with regard to C&F value of the goods, no penalty could be imposed on the petitioners, unless it was found that any statements made by them in the shipping documents were false to their knowledge, or were made by the petitioners knowing or having reasons to believe that they were false in any material particular.
4. With regard to export rebate, what sections 21(c) of the Customs Act, 1969 and 27(2-A) of the Sales Tax Act, 1951 and Rule 12-A of the Central Excise Rules, 1944 permit, is the repayment in whole or in part of the customs duty, sales tax and excise duty paid on the importation of goods or raw materials, as the Government may prescribe, which have been used in the production or manufacture in Pakistan of goods as may be prescribed, which are ultimately exported. Initially, notifications under the aforesaid provisions actually permitted the repayment of the actual customs duties, sales taxes and excise duties which were paid on that much part of the raw materials that were used in the finished products, that were exported. This involved a lot of calculations which were found to be tedious. In order to do away with this difficulty, it was later found feasible to prescribe the repayment in the form of a percentage of the FOB value of the goods exported, such value to be worked out on the basis of normal price as stated in section 25.
This system was resorted to in order to allow the exporter certain concessions, which the earlier system did not permit, in order to make his product more competitive in the International Market.
The Valuation Committees worked out the normal price as follows:-- Grey Cloth @ 16 per yard (1.375 yards total)Rs.
22.00 Printing @ 3.50 per yard Rs. 4.81 Wastage Rs. 1.34 Stitching Rs. 1.85 Packing, profit, misc. Rs. 2.00 Total :Rs.
32.00 <p.m> </p.m> In the instant cases, the only raw material on which customs duties and sales tax would have been paid were the dyes which may have been imported and the only goods on which the excise duty would have been paid was the grey cloth manufactured in Pakistan. If this is worked out in respect of each Yasir Arafat Roomal, the export rebate would not work out to more than a rupee per piece.
However, on the basis of the assessed value worked out by the Customs on the basis of FOB value, the petitioners are receiving handsome amounts. Under the law, the petitioners are not entitled to receive anything more than what the law allows. However, since the Customs are permitting something more, I would not like to interfere. However, one thing is certain, that the petitioners have in their writ petitions given the breakdown of the Yasir Arafat Roomals in order to show that the central excise duty paid by them on each roomal and customs duty and sales tax paid by them on the foreign dyes used in each roomal, both put together, was larger than the total export rebate granted by the Customs. In these circumstances, so far as the claim of the petitioners to further export rebate is concerned, the same is not legally permissible and to that extent their claims are dismissed in limine. [See Messrs Crecent Pak. Soap & Oil Mills Ltd. v. Commissioner of Income Tax
(East) (PTCL 1985 CL 73)].
5. This now brings me to the submissions of the learned counsel for the petitioner to the effect that the reports of the Valuation Committees were not made available to the petitioner beforehand, notwithstanding their request, that they were also not tendered in evidence, with the result that they could not cross-- examine the authors of the reports and that the Customs Officers had blindly accepted the assessm ent made by the Valuation Committees. It is obvious from the original adjudication orders of the Collector Customs, Lahore, dated 6th February, 1986, that the breakdown of the goods, as given by the Valuation Committees, was disclosed to the petitioner, for in their reply to the show cause notices they clearly took up the position that reimbursement for wastage had been allowed at a much lower rate. Even the petitioner's grounds of appeal clearly show that it was aware of the breakdown of the goods submitted by the Valuation Committees before the appellate Court, for it took up the question regarding low values applied in printing, wastage and stitching, but it did not take up the pleas that the breakdown of the goods made by Valuation Committees was not made available to the petitioners beforehand, or that the reports were not shown to them or that the Officers of Customs blindly accepted the reports and did not apply their own independent minds to the matter. The objections raised in this connection are, therefore, rejected.
6. This now leaves me with the question of the heavy penalties imposed by the Customs under section 156(1)14 of the Customs Act, 1969, in respect of violation of section 32. The two notifications granting reimbursement in respect of export rebate, do so on the basis of a percentage of the FOB value of the goods. The notifications do not state on what basis FOB values have to be worked out.
It is not the case of the Customs that the normal the goods had been exported by the petitioner were in excess of those exported by other exporters during the same period, for which they had in their possession documentary material. In these circumstances, the question whether the petitioners were guilty of false declarations, requires examination.
7. These writ petitions are, therefore, admitted only to examine the limited question stated in para. 6 above.
AA./A-950/L Petitions admitted.