1. IFTIKHAR MUHAMMAD CHAUDHRY, J. ---Petitioners have invoked Constitutional jurisdiction of this Court, by filing Constitutional Petitions Nos.409, 410, 411, 428, 429 of 1996 and 11 of 1997, to challenge the Notification SRO-560(1)/96 dated 1st July, 1996, issued by the Federal Government in exercise of powers conferred upon it by subsection (2) of section 18 of the Customs Act. 1969, whereby Regulatory duty has been levied, on goods or class of goods specified in column (2) of Table 'A' at the rate specified in Column (3).
2. As common question of law is involved in these matters, therefore, we have proposed to dispose of them, jointly.
3. Before dilating upon respective contentions of parties, it is deemed appropriate to reproduce herein-below necessary details, from each petition, for sake of convenience.
4. S. No. C. P. Number.
5. Name of Importer of ship Date of filing bill of Entry.
6. Date of filing petition.
7. 1.
8. 409/96.
9. M/S Ozone Internation (Pvt.) Limited.
10. 30-9-1996 22-12-1996 2.
11. 410/96 M/S Shaukat Hussain and Co.
12. 30-9-1996 22-12-1996.
13. 3.
14. 411/96 M/S Metco Ship- breakers Limited.
15. Bill of Entry has (Pvt.) not been filed. However, agreement between petitioner and Sellor Euroatlantic Shipping Corporation was executed on 24-10---1996.
16. 22-12-1996.
17. 4.
18. 428/96 M/S S.N. Enterprises.
19. 24-9-1996 29-12-1996.
20. 5.
21. 429/96 Messrs Mordern Metallic Services.
22. 20-11-1996 29-12-1996.
23. 6.
24. 11/97 M/S Irfan Trading Company.
25. Bill of Entry has not been filed. However, Agreement between petitioner and Sellor Al Fatah Shipping Co. Inc. Was executed on 28-9--- 1996.
26. 13-1-1997.
27. It is noteworthy that rate of Import Duty for purpose of section 30 of the Customs Act. 1969, shall be the same, when Bill of Entry is submitted to determine value and rate of duty. Therefore, on same anology, this date would be relevant to recover Regulatory duty, if it has already been levied by the Federal Government in exercise of powers under section 18(2) of the Customs Act. 1969. In this behalf, guidance can be taken from the dictum laid down by Hon'ble Supreme Court in the judgment reported in 1993 SCMR 17.
28. As it has been observed in opening para of Judgment that SRO under challenge has been issued by Federal Government on 1st July, 1996, therefore, with reference to the date of submission of Bill of Entry by each petitioner or the date of agreement executed between Sellor and Buyer in cases where Bill of Entry has not been filed, it would be seen at latter stage, as to whether petitioners, who were not subscribers of Regulatory duty on the date of issuance of Notification, can challenge it subsequently, when they have imported the ships with knowledge that all the duties which have already been levied, are required to be paid by them.
29. Importers/Buyers, in all the petitions, are aggrieved from levy of Regulatory duty on Scrap, because they have been called upon to pay duty; at the rate of 10% ad valorem, in terms of Item mentioned at Serial No.5 of the Notification, at the time of submitting Bill of Entry by them.
30. Mr. Akhtar A.I Mehmood learned Advocate; appeared in all the matters alongwith Mr. Zahid Alvi, Advocate. Mr. M.S. Rukhshani, learned Deputy Attorney General, represented the Federation of Pakistan. Raja Rab Nawaz, Advocate, addressed the Court on behalf of Central Board of Revenue and others in Constitutional Petitions 409. 410 and 411 of 1996. As for as these very respondents in Civil Petitions Nos.428 and 429 of 1.996, they were represented by Syed Ayaz Zahoor, Advocate. In Civil Petition No. 11 of 1997, learned Deputy Attorney General had also appeared for remaining respondents.
31. It is to be observed that prior to impugned Notification, Regulatory duty was levied by Federal Government vide Notification No.1050(1) of 1995 dated 29th October, 1995. This Notification came to an end on 30th January, 1996, as per force of section 18(4) of the Customs Act. Said Notification was also challenged by various Importers before this Court, by filing different Constitutional petitions through their Advocates, including learned Counsel for petitioners, in instant cases. Those petitions were dismissed by a Division Bench of this Court, headed by present Hon'ble Chief Justice vide Judgment reported in 1997 CLC 106.
32. Mr. Akhtar A.I Mehmood, learned Counsel informed that aggrieved parties have challenged the Judgment before Hon'ble Supreme Court, but so far leave to file Appeal, has not been granted to them, except chamber stay, concerning recovery of Regulatory duty.
33. We enquired from learned Counsel for petitioners, whether they are raising identical points which were put forth, previously before this Court, because incidentally they were the Counsel in those matters as well. Their answer was in affirmative. However, they contended that since matter is sub judice before Hon'ble Supreme Court, therefore, this Bench is free to take different view on the questions, which have already been decided, .On following the Judgment reported in PLD 1996 Lahore 718 (M/s Flying Board and Paper Products v. Central Board of Revenue, Government of Pakistan, Islamabad and 3 others), wherein writ petition challenging the previous Notification SRO 1050(1) of 1995 dated 29th October, 1995, relating to imposition of Regulatory duty upon goods imported into Pakistan, has been accepted. Alternatively, they suggested that a request may be sent to Hon'ble Chief Justice, for constituting a larger Bench.
34. We afraid, both the suggestions are not acceptable, because, it is a long standing practice that if a Division Bench has given a judgment on particular question of law, another Division Bench of same High Court, while hearing identical matter in exercise of jurisdiction under Article 199 of the Constitution, is bound to follow the earlier Judgment of Division Bench, unless, some new point is not agitated or more convincing arguments with support of fresh material including legal provisions etc. Are not advanced. As for as following judgment of another High Court on same question of law, is concerned, there is no prohibition, except with the condition that if the Judgment has more convincing reasons, based on such legal proposition, legal provisions, material, etc., which was not before the Bench of other High Court, who had already decided identical matter.
35. No doubt the judgment of Hon'ble Supreme Court has binding effect on all High Courts and the Courts, subordinate to it, in terms of Article 189 of the Constitution, provided the Apex Court had declared a law or had pronunciated a principle of law. But, as far as order for leave to file Appeal is concerned, with utmost respect, will not have same force, which is attached to a final Judgment of Hon'ble Supreme Court. Incidentally so far no order of leave to file Appeal, has been granted by Hon'ble Supreme Court, against the Judgment of this Court, referred to hereinabove, as it has been pointed out by Mr. Akhtar A.I Mehmood, Advocate, therefore, mere submission of a petition before Hon'ble Supreme Court, proof whereof too has also not been provided to us, it is not free from difficulty to hold that since the matter is sub-judice before the Hon'ble Supreme Court, therefore, this Division Bench can take a different view, than what has been discussed by another Division Bench of this Court. Anyway, we would entertain the contentions of petitioner's counsel, subject to the observations made hereinabove, while discussing binding effect of the Judgment of Division Bench on the other Division Bench of same High Court.
36. Learned Counsel for petitioners, first of all contended that no Regulatory duty was recoverable, during subsistence of exemption to duty vide impugned Notification, as Regulatory duty was another form of customs duty.
37. This argument has been dealt with in the Judgment of this Court (Messrs S.N. Enterprises and others v. Government of Pakistan through Ministry of Finance, Islamabad and others). Relevant observations therefrom, are reproduced hereinbelow:- "Another important reason for disagreeing with the argument of counsel for petitioners is that it could not have been the intention of the Legislature to circumvent the power of Federal Government to impose regulatory duty if a part of the customs duty has been exempted under section 19 of the Customs Act. In other words the argument that exemption covers customs duty imposed both under section 18(1) and section 18(2) is not convincing because this exemption is subject to such limitations, restrictions and conditions etc. As imposed by the Federal Government."
38. Learned Counsel next argued that in view of the law discussed in PLD 1988 SC 670 (Messrs Sheikh Abdul Rahim Allah Ditta v. Federation of Pakistan and others), Regulatory duty was a mechanism for creating a balance in local Market as a consequence of downward fluctuation in International Market. Therefore, in absence of such condition, which warrants levy of Regulatory duty, automatically and without any justification, it cannot be imposed.
39. It is to be seen that argument put forth by learned counsel has no force, in view of the observations made by this Court in earlier Judgment, reported in 1997 CLC 107. Relevant para from the Judgment is reproduced hereinbelow:-- "Adverting now to the second argument that Regulatory duty being a mechanism through which a balance is sought to be created in the local prices consequent to a downward of fluctuation in the seller market, as observed by Supreme Court in PLD 1988 SC 670, the counsel argued that there should be nexus of regulatory duty with the main object as determined by the Hon'ble Supreme Court. The object according to the counsel was that Regulatory duty is imposed to share extra benefits to be earned by an importer if the prices of the goods in the international market fall down thus providing Government an opportunity to share the benefits of the importer on account of fall in the prices of the goods in the international market. The counsel vehemently urged that the petitioner is entitled to challenge an S.R.O. Imposing Regulatory Duty if it can be proved before the Court that the imposition of Regulatory duty has no nexus with the object. Reliance has been placed on PLD 1993 SC 210. We have perused the citation and observations made by Hon'ble Supreme Court. This in fact was a case under Sindh Rent Premises Ordinance and on page 228 of the judgment (supra) following observations were made:- "The Regulations have no rational nexus with the objects referred to in sections 6 and 7 and the above clauses (b) and (e) of subsection (2) of section 21-A of the Ordinance. As observed hereinabove in the present case, First Rent Appeals against the order of ejectment granted by the Rent Controller on the ground of reconstruction, are still pending for adjudication in the High Court of Sindh, and therefore, respondent No. l is seeking ejectment of the tenant through the process of the Court in terms of the provisions of the Ordinance and/or of the S. R. P.O. And not with the aid of the Authority under section 14 of the Ordinance and therefore, the ejectment of the tenants, if any, will take place through the process of the Court and not through the exercise of statutory power vested in the Authority under section 14 of the Ordinance, and hence the Regulations purporting to impose a condition upon a landlord/owner of a building which is to be demolished to produce an agreement entered into between him and a tenant for alternate accommodation or for the payment of compensation is foreign to the object and scope of the relevant provisions of the Ordinance. The conclusion arrived at by the High Court that the Regulations are ultra vires on that account, seems to be correct."
40. There is no cavil to the abovementioned proposition but the fact remains that question of calculating the fluctuations in the price in international market with domestic market are all economic and fiscal questions which cannot be conveniently determined in writ jurisdiction. "
41. It has been also argued on behalf of petitioners that the Authority competent to levy Regulatory duty had not examined, justly and judiciously, the necessity of imposing it, therefore, it should be struck down, on ground of unreasonableness. To supplement this contention, learned counsel, further argued that authority under section 18(2) of the Customs Act to impose Regulatory duty, is not absolute and it has been conferred for a particular object. Therefore, in absence of nexes with the specified object, it will not be sustainable.
42. It is important to disclose that during hearing of matters, Civil Misc. Applications were filed in all the petitions, on behalf of petitioners, seeking directions to Federal Government to produce all relevant official record, examined and taken into consideration for exercising powers under section 18(2) of the Customs Act which culminated in issuance of impugned Notification. Those applications were contested by respondents and same were rejected on 20th March, 1997, holding that while exercising writ jurisdiction, normally an exercise to probe into the matter on factual side is not undertaken, because if the official record is summoned for purpose of examination, it would tantamount to conducting of fulfledged enquiry, essentially which is not within the domain of this Court. Therefore, in view of rejection of applications, justification available to concerned Authority to impose Regulatory duty, cannot be examined. Even otherwise, both these contentions, have already been dealt with in the case of N.S. Enterprises. Relevant para for convenience is reproduced hereinbelow:-- "From plain reading of this word it becomes clear that unreasonable means immoderate, or exorbitant capricious or arbitrary. Once it is held that the Federal Government has been delegated the powers by the Legislature to impose Regulatory duty, its imposition within purview of section 18(2) of the Act cannot be held as unreasonable because no action can be said to be unreasonable if taken within four corners of law. We, therefore, have to see the scope of unreasonableness within the purview of delegated powers of imposing Regulatory duty. According to subsection (2) of section 18 of Customs Act the Government has been empowered to levy a Regulatory duty on all or any of the goods specified in 1st Schedule at a rate not exceeding 100% of the value of such goods. But in the instant case Regulatory duty to the extent of only 10% has been imposed which is neither exorbitant nor immoderate. It seems that the Government had taken into consideration the circumstances as narrated by the petitioner's counsel and, therefore, though Government could impose regulatory duty extending to 100 % of the value of such goods but taking into consideration the peculiar circumstances it was decided to impose regulatory duty at the rate of only 10% of value. The action of the Government, therefore, in our view cannot be held to be unreasonable.
43. Thus in our opinion, learned Counsel has failed to convince us, that contentions raised by him, require further consideration on basis of any other new material or legal proposition, which either was not considered while disposing of the case of N.S. Enterprises and others, or the circumstances have changed on basis of new discovery of any provision of law etc. Therefore, we are inclined to hold that arguments put forth by learned counsel for petitioners, deserve rejection, in view of earlier Judgment of this Court, relevant paras. Wherefrom have been reproduced hereinabove, and further no new situation exist, which may warrant for requesting the Hon'ble Chief Justice to constitute a larger Bench, therefore, this request as well, is turned down.
44. Learned Counsel finally contended that impugned Notification, being a device to roll over Regulatory duty, chargeable by SRO 1050(1) of 1995 dated 29th October, 1995, even after expiry of financial year, 1995-96, is manifested to defeat and circumvent provisions of section 18(4) of the Customs Act, 1969, therefore, tantamount to committing fraud on the Statute. Thus the Notification deserves to be struck down. Reliance in this behalf was placed on PLD 1988 SC 670 (Messrs Abdul Rahim Allah Ditta v. Federation of Pakistan and others) and PLD 1994 SC 363 (The Collector of Customs Karachi and others v. New Electronics (Pvt.) Limited and 59 others).
45. Raja Rab Nawaz, learned Counsel, argued that Federal Government is empowered to levy Regulatory duty and when petitioners obtained Import Licences for import of ships for scrapping, they did not obtain any undertaking from concerned Authority to the effect that if in the meanwhile Regulatory duty is imposed they would not be paying it nor before filing Bills of Entry, they submitted any Representation to Customs Department, for not levying Regulatory duty. Inasmuch as, they filed Bills of Entry, after more than a period of two months from the issuance of impugned Notification, having full knowledge that all duties, taxes etc. They shall be liable to pay, therefore, petitioners are debarred from challenging the impugned Notification on imputation that fraud has been committed on Statute. He placed reliance on PLD 1991 SC 884 (Messrs Qaisar Brothers (Pvt.)
46. Limited v. Government of Pakistan and others).
47. Messrs M.S. Rukhshani, learned Deputy Attorney-General and Syed Ayaz Zahoor, Advocate, contended that under section 18(4) of the Customs Act. 1969, the Federal Government has not been debarred from issuing fresh Notification of levying Regulatory duty, if it had not earlier rescinded or stand rescinded on the expiry of Financial year, in which, it has been issued. According to them, Law givers have conferred this authority on the Federal Government, which is competent to exercise it, keeping in view the prevailing circumstances, because such duty is imposed to maintain a proper balance in a Fluctuating market, as a result of sharp fall of international prices, as it has been held by Hon'ble Supreme Court in the case of Messrs Abdul Rahim Allah Ditta.
48. We have examined respective contentions of parties' counsel.
49. Under the scheme of section 18(2) of the Customs Act. Legislation has delegated its power to Federal Government to levy Regulatory duty, subject-to such conditions, limitation or restrictions, as it may deem fit to impose on all or any of the goods, specified in the first schedule. The object of delegation of powers has been explored in depth by Hon'ble Supreme Court in the case of Messrs Abdul Rahim Allah' Ditta. In this Judgment, SRO No.990(1) of 1975 whereby Federal Government had levied Regulatory duty on all items of Iron and steel scrap for re-rolling under the respective heads of Chapter 73 of the First Schedule, was questioned. Relevant para from the Judgment with benefit is reproduced hereinbelow:-- "The levy was described as "regulatory duty" as it was imposed to maintain a proper balance in a fluctuating market as a result of sharp fall in the international prices of iron and steel scrap and certain other iron and steel items with the result that the importers imported these materials at a much lower cost but regardless of it the prices did not fall to any substantial extent in the domestic market, and it were the importers only who were the beneficiaries and were earning windfall profits.
50. Therefore, the discretion to levy "Regulatory duty" was a device to enhance the rate of duty at any time during the course of the year so as to achieve a balance. The Legislature, in the circumstances could not know as to the details of the fluctuating international prices from time to time during the course of the year and for that matter could not also be in a position to enhance the levy to obtain a balance of the prices in the domestic market nor was it in a position to speculate the details of the conditions, limitations or restrictions which were necessary to be imposed for the levy of "regulatory duty". It was in these circumstances that it provided the framework for the levy of "regulatory duty" to be imposed and gave the discretion to the Federal Government to make a levy so as to achieve a balance in the price in the local market.
51. The above guideline persuade us to hold that it is the discretion of Federal Government to issue any Notification, for purpose of levying the tax being delegatees of the Law givers.
52. It has been argued by Mr. Akhtar A.I Mehmood, Advocate, that on 30th June, 1996, Finance Act, 1996, was passed by the Parliament and if there were circumstances, on basis of which, it was deemed to impose Regulatory duty at the rate of 10% ad valorem then instead of issuing impugned Notification on following day, this duty could have been included in customs duty, in terms of section 18(1) of the Customs Act. Thus instead of charging 10% ad valorem as a custom duty, with mala fide intentions a confiscatory duty has been imposed on following day i.e. 1st July, 1996, after passing of Finance Act, to unjustifiably burden the Importers.
53. We are not inclined to agree with the learned counsel for, simple reason that had 10% ad valorem been included in Customs duty under section 18(1) of the Customs Act. While passing the Finance Act., it would have imposed permanently for all times to come, unless it has not been withdrawn by the Parliament itself and in that case the Importers instead of being the beneficiaries, may have been on the looser side, because the authority has been delegated to the Federal Government to create a balance in local market, as a consequence of downward fluctuation in International market, as it has been held by Hon'ble Supreme Court in the case of Sheikh Abdul Rahim Allah Ditta and no sooner downward trend of fluctuation in International market-would come to an end, the Federal Government, instead of burdening the Importers, can rescind the Notification at any time and if it had not done so far any reason, on the end of financial year, it would automatically stand rescinded. Therefore, no restriction can be placed upon the delegated powers of Government for issuing such Notification, immediately after passing of Finance Act. At this stage, reference to the case of Messrs Qaisar Brothers (Pvt.) Limited, would also be relevant, wherein the Hon'ble Supreme Court has held that 'levy of Regulatory duty tot only regulates the price structure of the items concerned, but it also generates additional funds for the public purposes. To put constraint upon the exercise of power contained in subsection (2) of section 18 of the act of nature sought to be pressed into service by petitioner will not be in the interest of the public.' As we have not noticed any fraud on the Statute by the Federal Government in issuing impugned SRO dated 1st July, 1996, therefore, we are not inclined to agree with the contention of learned counsel for petitioners. As for as judgment cited by them, reported in PLD 1994 SC 363, is concerned, with utmost respect it is not applicable on the facts of instant case.
54. Before parting with the judgment, we would like to note that while concluding arguments, Mr. Akhtar A.I Mehmood, Advocate, requested that if his all contentions fails and petitions are dismissed, then in that case, some time may be given to petitioners, so they may approach the Hon'ble Supreme Court and in the meanwhile respondents be restrained from taking coercive steps against them for the recovery of Regulatory duty.
55. We have been informed that while admitting petitions, interim relief was obtained by petitioners, concerning non-payment of duty, subject to furnishing indemnity bonds, bank guarantees etc. But in most of the cases, despite of stay orders, petitioners did not file bank guarantees. In such view of the matter, we are of the opinion that it would not be proper and in the interest of justice to suspend the operation of instant Judgment, as such, the request, so made in this behalf, is declined.
56. For the above discussion, we see no force in all the petitions, which are dismissed with costs.