MALIK MUHAMMAD QAYYUM, J.~Khurshid Spinning Mills Limited, the petitioner herein, was at the relevant time, engaged in setting up a cotton spinning mills at Jaranwala. It imported certain machinery by opening an irrevocable letter of credit. On arrival of the goods, a request was made by the petitioner to the Customs Authorities that the goods be allowed to be placed in a Bonded Warehouse and an in-Bond Bill of Entry was filed on 25-5-1988.
2. On 28-5-1990 the petitioner approached the respondents for the clearnace of the goods from the warehouse for Home Consumption, by filing a Bill of Entry in which exemption was claimed from payment of Customs duties, sales tax, surcharge and iqra surcharge. The respondents allowed 50% rebate in the custom duties under Notification No. SRO 500 (l)/84 dated 14th June, 1984, but held the petitioner liable to pay 20% regulatory duty, surcharge and iqra surcharge. In this manner, the total duties payable by the petitioner was assessed at Rs: 98,59,135/-.
3. It appears that the petitioner challanged the levy of surcharge, iqra surcharge and regularity duty by filing a constitutional petition in this Court (W.P.No. 2854/88) in which an interm order was passed directing release of machinery subject to the petitioner furnishing bank guarntee to the extent of the disputed amount of regularity duty. The prayer for stay relating to iqra surcharge was refused. The petitioner thereupon filed a civil petition for special leave to appeal (C.P.S.L.A 262- R/88) in the Supreme Court which was please to stay recovery of surcharge and iqra surcharge subject to the petitioner furnishing bank guarantee. However, as the petitioner failed to furnish bank guarantees in terms of order dated 18th June, 1988 passed by this Court and order dated 25th June, 1988 by the Supreme Court, the stay orders never became effective. It may be mentioned that writ petition was subsequently dismissed.
4. Out of Rs: 98, 59, 135/- which as stated earlier, were assessed as duties payable, the petitioner deposited a sum of Rs: 49, 29, 568/- on 22nd June, 1988. The remaining amount was to be paid in the form of debentures. However, before debentures could be furnished or the machinery cleared, a notification on bearing NO. 458 (l)/88 was issued by the Federal Government in the exercise of the powers conferred upon it by Section 19 of the Customs Act, 1969 and the Sales Tax Act, 1951 whereby the machinery imported for the purpose of setting up textile industry was exempted from whole of the customs duty and sales tax leviable thereon.
5. On the issuance of the above notification, the petitioner claimed exemption from the payment of custom duty but the respondents refused to allow the benefit of the notification in question on the ground that goods were imported, the duty assessed and part of it paid before the notification was issued.
6. This refusal of the respondents to allow clearance of goods without i>ayment of customs duty hasbeer challenged by the petitioner by filing this petition.
7. It may be mentioned that the goods in question were cleared from the bonded warehouse under an order passed by this Court on 2nd August, 1988 subject to petitioner furnishing debentures.
8. Leamed counsel for the petitioner has relied upon Section 30 of the Customs Act, 1969 to contend that as the petitioner had not paid customs duty within 7 days from the date of filing of Bill of Entry for home consumption, the rate of duty applicable would be the rate prevailing on the date the duty was actually paid which was this case was in August, 1988. The leamed Standing Counsel has, however, argued that as the goods in question had been imported by the pelitioncr prior to 26th June, 1988 when the notification was issued and as a part of duty had also been paid on 22nd June, 1988, the notification has no applicability to the goods imported by the petitioner.
9. From the respective contentions of the parties, the real question in controversy which falls for decision is as to whether the petitioner is entitled to avail of the benefit conferred upon by the notification dated 26th June, 1988 under which total exemption from customs duty has been granted. The answer to this question depends upon true interpretation of Section 30 of the Customs, 1969.
10. Before adverting to that aspect of the matter, it may be noted that there is no factual dispute between the parties and the dates which are relevant to the controversy are as follows:-
1. Arrival of goods in Pakistan ' ' May, 1988.
2, In-Bond Bill of Entry filed. 25-5-1988.
3. Ex-bond bill for clearance of goods from warehouse filed. 16-6-1988.
4. Custom duty assessed at Rs: 98,59,135/- 28-5-1988.
5. An aniount of Rs: 49,29,568/- 22-6-1988.
6. Debentures for the remaining 50% amount was furnished. 7-7-1988.
11. In this factual background, the legal contention raised by the parties may now be examined.
Both the learned counsel have relied upon Section 30 of the Customs Act, 1969 which reads as under:- "Date for determination of value and rate of import duty.
The value of, and the rate of duty applicable to, any imported goods shall be the value and the rate of duty in force:-
(a) in the case of goods cleared'for home consumption under section 79, on the date on which a bill of entry is presented under the section; and
(b) in the case of goods cleared from a warehouse under section 104, on the date on which a bill of entry for clearance of such goods is - presented under that section; "Provided that a bill of entry has been filled in advance of the arrival of the conveyance by which the goods have been imported, the relevant date for the purposes of this sectibn shall be the date on which the manifest of the conveyance is delivered; Provided further that in respect of goods for the clearnace of which a bill of entry for clearance has been presented under section 104, whether before or after the commencement of the Finance Ordinance, 1979, and the dilty is not paid within seven days of the bill of entry being presented the value and rate of duty applicable on the date on which the duty is actually paid".
12. Section 30 as originally enacted was in different form and was amended by Ordinance 30 of 1979. The main difference between two provisions is that under proviso to section 30 as originally enacted the rate and amount of duty chargeable in respect of the goods which have been ware- housed was to be the rate and amount chargeable at the time of actual removal of such goods fr6m the ware-house for home consumption, however, under the amended provision, in case of goods cleared from the warehouse, rate of duty applicable was to be that which was prevailing on the day when the Bill of Entry for clearance from warehouse was presented and in the event of non-payment of duty within 7 days from the Bill of Entry being presented, the rate of duty applicable was to be that which was prevailing on the date of actual payment of duty.
13. Thus, under the amended provision, the importer was allowed 7 days' time to pay duty and if such payment was made, the rate of duty applicable would be the rate prevailing at the time when the Bill of Entry was presented for clearance from warehouse. If, however, duty is not paid within 7 days, rate applicable would be the rate applicable at the time when the duty was actually paid.
14. The case of the petitioner rests upon proviso to section 30 as according to the learned counsel for the petitioner, "expression duty actually paid means the payment of the entire duty. It was emphasized that the payment of duty contemplated by the proviso was such which would entitled the importer to clear the goods from the customs.
15. Learned Standing Counsel for Pakistan has however maintained that proviso to section 30 would not be applicable to a case where a part of duty had been paid and in such event, the rate applicable would be the rate envisaged by Section 30 (b) i.e. The rate prevailing at the time of filing of Bill of Entry. I regret my inability to agree with the learned Standing Counsel. If his argument is accepted, it would entitle to the importer to freeze the rate of duty by paying even a small part thereof, which certainly cannot be the intention of legislative.
16. The contention of the learned counsel for the petitioner, if examined in the context of various provisions of Customs Act, 1969 that the expression "duty actually paid" has reference to such payment as would entitled to importer to clear the goods from the customs has merit.
17. Under section 79 of the Customs Act, 1969, the owner of the imported goods has to file a Bill of Entry either for home consumption or for ware-housing. Section 80 provides for assessment of duties and further ordains that the owner of such goods may proceed to clear the same for home consumption or warehouse subject to the provisions contained in the Act. Section 83 deals with clearance of goods for home consumption. The procedure for warehousing is provided by Chapter XI. Section 104 whereof states that any owner of ware-housed goods may at any time within the period of ware-housing mentioned in Section 98 clear the goods for home consumption by paying duty assessed on such goods. Section 30 (b) of the Customs Act, 1969 makes a reference to section 104 of the Act which stipulates that the goods can only be cleared for home consumption by paying duty assessed on the goods under the provisions of the Act alongwith rent, Penalties, surcharge and other charges in respect of such goods. It is thus clcar'that "expression duty" in second proviso to section 30 has reference to entire duty assessed on the goods in accordance with the provisions of the Act.
18. In the present case, admittedly when the notification dated 28th June, 1990 was issued only half of the duty had been paid while the remaining was still outstanding and was as a matter of fact paid in the form of debentures after the petition was filed. Consequently, as the entire duty had not been paid so as to enable the petitioner to take the delivery of goods, the case of the petitioner falls under second proviso to section 30.
19. It was next argued by the learned standing Counsel that as the petitioner was required to pay only half the duty in cash while other half in debentures, he should be taken to have paid the duty on 22-6-1988. -
20. Furnishing of debentures instead of cash payment is provided bythe "Deferment of Import Duty"
Rules 198 framed by the Central Board of Revenue in exercise of powers conferred upon it under section 219 Customs Act, 1969. Under rule 7, the Assistant Controller is authorised to allow a request for deferment of duty made by a importer subject to conditions stated therein. This rule, inter alia, provides that after request for deferment of duty has been accepted by the Assistant Collector, the importer shall furnish to the Assistant Collector the documents mentioned in sub-rule 5. Under rule 8, the Assistant Collector is authorised to accept the request after the documents are found to be in order. Even if furnishing of debentures is figuratively equated with payment in cash, the date of actual payment within the meaning of proviso to section 30 would be the date on which debentures are actually furnished alongwith the documents mentioned in sub-rule 5 of rule 7 and same are accepted under rule 8. There is no dispute in the present case that debentures were admittedly furnished much after notification dated 28th June, 1990 was issued. Consequently, this argument of the learned Standing counsel is of no avail.
21. 1h Ibrahim Textiles Mills Ltd. Vs: Federation of Pakistan (PLD 1989 Lahore 47) the dispute was regarding rate of duty in respect of goods cleared from warehouse for home consumption. While considering the provisions of Section 30 of Customs Act, it was observed by this Court at page 54 of the report that:- "I have given my anxious consideratioi to these cases. It is obvious that in all the fifteen cases the bills of entry for ex-bonding were filed on 2-6-1987 or 3.6.87. It is admitted by the Customs Department that the petitioners did not pay the customs duty due on these bills of entry* for ex- bonding within seven days of their presentation. Under Section 30 of the Customs Act, 1969, the rate of duty applicable on imported goods, in the case of goods cleared inder a bill of entry for home consumption, or under a bill of entry for ex-bonding, is the rate of duty in force on the date on which such a bill of entry is presented. However, under the second proviso to the said section, where customs duty is not paid within seven days from the date on which such a bill of entry is presented, the rate of customs duty become that which is applicable on the date on which the duty is actually paid. The petitioners, therefore, were entitled to pay the duty at the rate applicable on the dates they made the payment".
The decision of this Court was upheld by the Supreme Court of Pakistan on 10th May, 1992 when it dismissed the appeal filed against the judgment of this Court. (Civil Appeal No. 114/90. Federation of Pakistan Vs: M/s Ibrahim Textile Mills Ltd.).
In view of what has been stated above, this petition is allowed with no order as to cost.