1. ' SAIDUZZAMAN SIDDIQUI, J.---The above petition is directed against the interim order dated 23-1- 1996 passed by the High Court of Balochistan at Quetta, in Civil Petition No,13 of 1996 which reads as follows:-- "C.M. No,74 of 1996.--Petitioner is allowed to break the vessel and to take away the scrap from Gadani Customs area, subject to making payment of customs duty/other taxes in cash in pursuance of Notification dated 14-6-1995 SRO 490(1/95) in addition to furnishing bank guarantee in favour of respondent No,4 equal to 10% ad valorem regulatory duty vide Notification dated 29-10- 1995, pending adjudication of petition."
2. ' When this petition came up for hearing in chamber before a learned Judge of this Court, the interim order reproduced above was modified as follows:-- "ORDER: ' Present: Mr. Khalid Anwar, Advocate Supreme Court for Petitioners. Mr. Ejaz Muhammad Khan, Advocate-on-Record.
3. ' Heard.
4. ' Learned counsel for the petitioner/applicant states that the learned High Court while disposing of Civil Petition No,13 of 1996 allowed the petitioner to break vessel and take over the scrap from Gadani Custom Area subject to the making payment of custom duty/other taxes in cash in pursuance of Notification dated 14-6-1995 SRO 490 (1/95) in addition to furnishing bank guarantee in favour of respondent No,4 equal to 10 per cent. Ad valorem regulatory duty vide Notification dated 29-10-1995 pending adjudication of application. It was argued that the amount for furnishing bank guarantee referred above by the learned counsel comes to about 27.2 million which facility in these days is not provided by the Banks for obvious reasons. The order of the learned High Court be modified to the extent that the petitioner be allowed to break the vessel and to take away the scrap from Gadani Custom Area subject to making the payment of custom duty/other taxes in cash in pursuance of Notification dated 14-6-1995 SRO-490 (1/95) but instead of furnishing bank guarantee in favour of respondent No,4 equal to 10 per cent. Regulatory duty vide Notification dated 29-10-1995 the petitioner be restrained from removing 3000 tonnes of scrap, which is approximately equal to the regulatory duty in question, till the decision of the petitioner.
5. ' The argument appears plausible as on failure to furnishing the Bank guarantee the petitioner will suffer a lot as the charges will go up while in later case the interest of the Government is fully safeguarded. Accordingly, the order of the learned High Court is tentatively modified to the extent that instead of furnishing bank guarantee equal to 10 per cent. Regulatory duty the petitioner is restrained to take away 3000 tonnes of scrap till the decision of the petition. The petition be fixed for hearing within 2 months."
6. ' When the above petition came up for hearing before this Court, following further interim order was passed in this case pending hearing of the leave petition, on 13-3-1996:-- "Learned counsel for the petitioner states that in spite of depositing a sum of approximately Rs,12 crore towards Customs duty no part of scrap has been released to the petitioner. Deputy Collector states that under rules, unless full duty is paid the consignment could not be released. Since, 66% of the total customs duty payable on the consignment is already deposited, we are inclined to make an order that to the extent of proportionate half of the scrap of consignment covered by the duty already deposited by the petitioner may be released. However, this will not apply to 3000 tons of scrap which has been directed to be retained by way of security for the 10% Regulatory duty on the consignment under orders of this Court dated 4-2-1996. Adjourned to 17-3-1996.
7. ' In reply to contempt application, Deputy Collector Abdul Sami Babar has filed his affidavit. For further orders adjourned to a date in office."
8. ' Today the petition has come up for hearing and after hearing the learned counsel for the petitioner and learned Deputy Attorney-General, we have converted this petition into appeal and it is disposed of as follows.
9. ' The appellant imported vessel 'TT Mona' for the purposes of scraping. According to the appellant the above ship arrived at Gadani Customs Post on 26-10-1995 and on .The same day a bill of entry for clearance of the imported ship was filed with the Customs authorities. The Customs authorities, on the Other hand, contend that the bill of entry was actually filed by the appellant on 29-10-1995 but in collusion with the staff of Customs the appellant managed to get the date of filing of bill of entry recorded in the office record as 26-10-1995. The controversy with regard to the date of filing of bill of entry has assumed importance on account of issuance of a notification by the Government on 29-10-1995 whereby 10% regulatory duty has been imposed on ships imported for scraping.
10. However, in the present appeal we are only concerned with the validity and reasonableness of the interim order passed by the learned Division Bench of the High Court of Balochistan whereby the appellant has been directed to furnish a bank guarantee in favour of Customs authorities equal to 10% ad valorem regulatory duty which has been imposed by the Government vide notification dated 29-10-1995. At the hearing of this appeal, we enquired from the learned Deputy Attorney- General whether the quantity of 3000 tons of scrap of ship directed to be retained by way of security under order dated 4-2-1996, is sufficient to cover 10% regulatory duty in the case. The learned Deputy Attorney-General after consulting the Deputy Collector Customs, who is present in Court, stated that no doubt 3000 tons of scrap ordered to be retained as security, would be quite sufficient to cover the claim of 10% regulatory duty in the case but keeping in view the convenience of recovery of the amount under a bank' guarantee, he is instructed to oppose modification of the impugned order.
11. ' The learned counsel for the appellant, in support of the appeal, contended that the order of the learned High Court directing the appellant to furnish bank guarantee equal to 10% ad valorem regulatory duty amounted to a direction to deposit the amount in cash as in the prevailing circumstances a bank guarantee cannot be obtained except by depositing 100 per cent. Margin with the bank. It is also contended by the learned counsel that under the rules, the appellant was allowed benefit of payment of customs duty in 3 monthly instalments and on deposit of Ist instalment he could start not only the scraping of the vessel but he could also start removing the scrap partly. It is contended that in spite of deposit of two instalments of customs duty amounting to about Rs, 12 crores, the appellant was mala fidely not allowed to remove any part of the scrap by the Deputy Collector Customs, thus creating serious liquidity problem for the appellant. The learned counsel further stated that the third instalment of customs duty which approximately works out to about 6 crores is to be deposited by the end of this month and as such it is not possible for the appellant in these circumstances to furnish the bank guarantee for the amount of 10 per cent. Regulatory duty.
12. ' We may mention here that on 13-3-1996 when we passed the interim order directing the Customs authorities at Gadani, to allow removal of half the quantity of scrap for which customs duty was already deposited by the appellant, the learned Deput Attorney-General had contneded that removal of scrap could not be allowed unless customs duty in full was deposited. Today, the learned Deputy Attorney-General has produced before us a letter addressed by the C.B.R. To Collector Customs, Quetta, on 12-3-1996, which reads as follows:-- "Government of Pakistan Central Board of Revenue ' C.No,1(16)Tar.II/92: Islamabad, the 12th March, 1996.
13. ' From: Mr. Muhammad Nasir Azhar, Secretary (CT-II)
14. ' To: The Collector, Customs and Central Excise, QUETTA.
15. ' SUBJECT: Deferment of Duty Under SRO 245 (1)/93 and 27/95 and Facility of Delivery.
16. ' I am directed to refer to your Letter No,V-7(14) Cus/87-96 dated the 10th March, 1996 on the above subject and to say that Board is pleased to allow the facility of delivery to those ship-breakers who have paid 34% of their first instalment, as is required in the schedule of deferment vide SRO 245(1)/93 dated 31-3-1993 and who have not defaulted in the payment of Government dues in any manner.
17. (Sd.)
18. (MUHAMMAD NASIR AZHAR), Secretary (CT-II.)"
19. ' In view of the above instructions of C.B.R., the order dated 13-3-1996 is recalled. Coming now to the impugned order in the case , we may observe that the object of directing the appellant to furnish a bank guarantee was, to secure the claim of 10% regulatory duty in the case against them. It cannot be disputed that the customs authorities will not be able to encash the bank guarantee in the case until decision of the pending petition of appellant by the High Court. The statement of Deputy Attorney-General before us in Court today clearly shows that 3000 tons of scrap ordered to be retained as security in the case by order dated 4-2-1996 is more than sufficient in value to cover the claim of Government for 10% regulatory duty in the case. Therefore, keeping in view the circumstances of the case, we are inclined to modify the interim order of the High Court dated 23- 1-1996 to the extent that for a period of two months from today the appellant may not furnish the bank guarantee and the Customs authorities may retain 3000 tons of scrap as directed by order dated 4-2-1996 During this period of 2 months, the learned Judges of the Division Bench of the High Court will dispose of the pending Constitution Petition No,13/96 instituted by the appellant. Since we have fixed time limit for the disposal of the petition by the High Court we further direct that any written reply or counter-affidavit on behalf of the Government will be submitted by the Government within a period of two weeks from today and immediately thereafter, hearing of the case will be fixed in Court. In case the above petition is not disposed of by the High Court within the period specified above the appellant/petitioner will furnish bank guarantee on expiry of that period equivalent to 10 per cent. Regulatory duty payable by appellant. The appeal stands disposed of, accordingly, with no order as to costs