1. KAMAL MANSUR ALAM, C.J.--- The facts relevant for purposes of this petition are that the petitioner is a registered exporter for quite long and since 1984 has been exporting textile garments to various countries including U.S.A. The export of textile goods to U.S.A. is on the basis of and within the export authonsation for Pakistan as determined under bilateral textile agreements between the two countries. Out of such export authorisation the individual exporters are allocated export quota in accordance with the rules and procedure notified from time to time. Such rules in force at the relevant time were those issued under SRO 166(1)/92, dated 7-3.4992, which provided elaborate procedure for regulating quota of the individual exporters based on proceeding years export, for the auction of residual export authorisation, for the levy of penalty for export in excess of the allocated individual quota etc. On the basis of and within the export quota of the respective exporter each is entitled to export the categories of garments covered by the quota against export visa issued by the respondent No,2 from tiny. to time to the individual exporter. It may be mentioned that without proper export visa the goods are not accepted by the authorities in the U.S.A.
2. For the year 1992, on the basis of its entitlement, the petitioner was granted quota for the export of 37030 dozens textile garments of category 340/640 (men's and boys shirts cotton and MMF) to the U.S.A. and after various adjustments it had a net available quota for the export of 34502 dozens garments as against which it actually exported 52324 dozens garments in that year thereby exceeding the available quota by 17822 dozens. In subsequent years too the petitioner made same shipments in excess of its available export quota but it was mainly the excess shipment of 17822 dozens garments during the year 1992 that resulted in dispute between the parties leading to the filing of the present petition.
3. It was contended by the petitioner that once the respondent No,2 issued export visas in respect of the said excess quantity of garments, the same stood regularized entitling the petitioner to the benefit of such export for reckoning its export authorization for the succeeding year 1993.
4. Alternatively, it was submitted that, even if the excess shipment of 17822 dozens was treated as irregular, adjustment to that extent could be made against petitioner's export authorization, but instead, the respondents, in complete disregard of the rules, twice adjusted the said quantity of excess shipment - first by deducting it from petitioner's total export of 52324 thereby ignoring this quantity for working out of 1993 export quota--- and secondly by deducting this again from petitioner's 1993 quota and in addition also imposed a penalty of Rs,4.3 million. In subsequent years too, it is alleged similar arbitrary adjustments were made ending up with the notice, dated 25-3- 1995 requiring the petitioner to surrender 10518 dozens quota of category 340/640 garments allegedly utilized by it in excess of its entitlement.
5. On behalf of the respondents, we have heard Mr. Naimur Rehman, the learned Dy.A.-G. and Mr. Mushtaq Minhas, Assistant Director in respondent No,2 Bureau. Their case is that, based on the earlier referred rules, the uniform policy of the respondents was that if in any year an exporter shipped the restricted categories of textile quota in excess of his exports authorization for that year, then such excess quantity was not considered as part of his export performance for the said year and consequently, was not taken into account for working out his export quota for the succeeding year and that the excess shipment was adjusted against his export quota for the succeeding year.
6. Additionally, the exporter was also burdened with a penalty of 20% of the F.O.B. value of the excess quantity. The contention was that yearly export authorization of every exporter was determined on the basis of his preceding years' authorized export performance and any exporter desiring to ship in excess of his export quota could do so only by purchasing export quota for the excess quantity from the open market or, if available, at the highest price in the auction held by the respondent No,2 periodically under Rule 2 of the said rules. Exports in excess of yearly authorization were dealt with in accordance with Rules 8 and 9. It was submitted that petitioner's case too was initially dealt with in accordance with the same policy but later on petitioner's representations from time to time not only the penalty was waived, except for a small amount of Rs,7,88,000 which the petitioner agreed to pay by way of interest, but it was also extended requested facilities for the adjustment of the excess shipment. It was vehemently denied that mere issuance of visa for shipments made in excess of the export authorization amounted to the regularization of the excess quantity. It was explained that had the visas been refused, American authorities would have rejected the consignments resulting in loss to the exporters and to the country. It was stated that cases of several other exporters who had exported in excess of their respective quota had been dealt with in the like manner.
7. It is not disputed that the export of textile garments to the U.S.A. is subject to the bilateral agreements between the two countries and within the limits prescribed by such agreements the individual export quota of the various exporters is regulated by the rules and procedure as notified by S.R.O. 166(1)/92, dated 7-3-1992 and that petitioner's case was covered by these rules. It would, therefore, be convenient to reproduce here the relevant rules 8 and 9 of the said rules, which read as follows:-- "8.(a) Any exports made in contravention of the provision of the rules shall not count towards the performance of the exporter and shall be treated as irregular and void.
(b) Cases of shipments in contravention of these rules and other malpractices including circumvention, shipment over the allocated quantity, misdeclaration of quantity, weight and category, shall be liable to cancellation of export authorization and punishable under the Imports and Exports (Control) Act, 1950 (XXXIX of 1950), and the rules and orders made thereunder.
(c) In case of circumvention, in addition to the penalty specified in clause (b), the business group to which the defaulting unit belongs shall also be liable to cancellation of export authorization, if issued under these rules.
9. Where an exporter makes shipment in excess of his export authorization such excess shipment shall be adjusted against his export authorization of next year on such terms and conditions as may be determined by the Federal Government."
8. It is apparent that under clause (A) of Rule 8, export in excess of the authorized export quota is not to be taken into account for determining the quota for the succeeding year and under Rule 9 such excess shipment has to be adjusted against the next years export quota of the exporter. The principle underlying these provisions seems to be that no exporter is authorized to export in excess of his initial yearly quota and any such excess shipment unless covered by quota purchased from the open market or obtained at the auction held by the first respondent, is to be treated as advance utilization of succeeding year's quota and adjusted there against accordingly. Excess quantity of 17822 dozens exported by the petitioner in 1992 was admittedly neither covered by any quota purchased from the open market nor obtained in the auction held by the respondents, as such, as an unauthorized export no credit could be given to it for determining petitioner's export quota for the succeeding year and at the same time it became liable to be adjusted against petitioner's quota for 1993.
9. ' In its correspondence with the respondents, the petitioner on several occasions accepted the excess shipment of 17822 dozens garments in 1992 and its liability either to have the same adjusted in subsequent years or to pay for these on the basis of the highest bid in the auction of similar articles held by the first respondent in 1992. The petitioner also agreed to pay a penalty of 10% in respect of the excess quantity which penalty, however, as stated earlier, was later waived, except for the interest amount of Rs,7,88,230. However, admittedly, the quantity of excess shipment in 1992 was neither fully adjusted in subsequent years nor paid for by the petitioner in the above manner. It appears from the documents on record that some adjustments of the 1992 excess shipments were made, but evidently in subsequent years too the petitioner resorted to excess export beyond its authorized quota. It seems that by reason of repeated excess shipments and consequential adjustments in petitioner's yearly quota such quota continued to decrease year after year with the result that as in 1995, after adjustment of all the earlier excess shipments, the petitioner was left with no export performance to its credit which could entitle it to any further yearly quota and instead was found to have exported 6427 dozens of garments in excess of its quota which excess quantity had to be surrendered by it in accordance with the rules. It may be mentioned here that, in the letter/notice, dated 25-3-1995, which is impugned in this petition, the quantity of excess shipment was mentioned as 10518 dozens, but, it was stated on behalf of the respondents that, later on re-checking, the correct quantity was worked out as 6427 and as such by letter/notice, dated 12-7-1995 from the second respondent the petitioner was required to surrender 6427 dozens garments instead of 10518 dozens as required under the earlier letter. The former letter/notice was accordingly replaced by the latter. In the circumstances of the case, no exception can be taken to the said letter/notice, dated 12-7-1995 requiring the petitioner to surrender the excess quantity unauthorized exported by it and consequently the various actions of the respondents complained of in the petition do not call for interference by this Court.
10. However, in so far as the respondent's demand for payment of Rs,7,88,000 by way of interest is concerned, we find no justification therefor. The amount of penalty having been waived by the respondents, there could be no question of claiming interest. We, accordingly, hold that the petitioner is not liable to pay the aforesaid interest amount and to that extent respondents' demand is set aside. During the course of arguments, we were informed that the petitioner had paid a sum of Rs,7,00,000 which has been adjusted towards the said interest, but now in view of our finding on the point, the petitioner will be entitled to its refund, provided that the respondents may adjust the same wholly or partly against petitioner's liabilities, if any, including that arising from the excess shipment referred to in respondents' said letter, dated 12-7-1995.
11. The petition is disposed of accordingly with no order as to costs.
12. All the four pending applications have become infructuous and are dismissed.