1. ' IKRAM AHMED ANSARI, J.---Through this petition the petitioners have challenged the action of the respondents Nos.2, 3 and 4 in denying the petitioner the adjudicated amount of refund on fictitious and irrelevant grounds and demanding a huge amount of Customs duties duly exempted in a past and closed transaction under Order in Original dated 26-4-1995 issued by the respondent No,3 and the action of respondent No,2 contained in its instructable, non-speaking and mechanical order rejecting the petitioners' claim to the benefits of S.R.O.962(I)/90, and SRO 456(1)/88 with the following prayers:-- "It is, therefore, respectfully prayed that this Honourable Court may be pleased to declare order of the respondents Nos.2, 3 and 4:--
(i) denying the petitioner exemption under S R 0 962(1)/90, dated 12-9-1990 from Import and Iqra Surcharges in respect of imported machinery cleared under Bill of Entry C.No,6146 dated 12-11-1990 to be illegal, without lawful authority and of no legal effect;
(ii) impugned ex parte Order-in-Original dated 26-4-1995 against the petitioner under section 32 of the Customs Act, 1969 pursuant to the show-cause notice dated 27-12-1993 to be illegal, without lawful authority and of no legal effect;
(iii) avoiding the payment of refund directed by the departmental judicial authorities of the respondent No,1 to be illegal, without lawful authority and of no legal effect and to direct the respondents Nos.3 and 4 to make payment of the amount accrued on Rs,75,93,287 alongwith mark-up to the petitioner in accordance with law pursuant to the refund order.
2. ' Pending the outcome of the petition it is respectfully prayed that this Honourable Court may be pleased to restrain any coercive action for recovery of the impugned demand raised under the impugned Order in Original dated 26-4-1995."
3. ' The brief facts of the case as stated in the memo. Of petition are that petitioner No,1 is carrying on business of manufacture and 100% export of high quality surgical absorbent wool according to British/EEC pharmaceutical code and since the respondents Nos. 1 and 2 with a view to encourage export oriented industrialization in the country had extended various fiscal and tax benefits including exemptions in Customs duties, sales tax, lqra surcharge and surcharge leviable on machinery imported for such projects for the benefits to entrepreneurs as contained in SRO 722(1)/89 dated 10-7-1989, S.R.O.962(I)/90, dated 12-9-1990 and SRO 456(1)/88 dated 26-6-1988, pertaining, inter alia, to the setting up and extension of industrial units in the textile processing industry. It is also the case of the petitioners that being attracted by the foregoing representations of exemption etc. They embarked upon the venture of setting up a new industrial unit for the manufacture and export of "surgical absorbent wool" which required high technology machinery, the raw material being hosiery clippings/waste which after through mechanical processes reducing the raw material to fiberous condition into "cakes". It is also the case of the petitioners that in Pakistan there is no other industrial unit manufacturing the product at the specifications met by the petitioners. It is also the case of the petitioners that the respondent No,1 through the Ministry of Commerce issued to the petitioner import licence bearing No,B-775577 dated 29-3-1990 for the import of requisite plant and machinery from Germany and the nature of the petitioner's industrial activity as "textile processing (bleaching) was also reiterated by the respondent No,1 in Category Pass Book dated 22-2-1990 of the petitioners. Pursuant to all that has been referred to above petitioner opened letter of credit dated 3-4-1990 for the import of machinery from Germany and finally the imported mechinary described in the letter of credit was shipped in part consignments and the first lot of such machinery arrived in Pakistan and its clearance was applied for vide bill of entry bearing C.No,6146 dated 12-11-1990 and at the back of bill of entry the petitioner claimed exemption under SRO 962(I) /90 dated 12-9-1990 in respect of which the licence for export manufacturing bond had already been applied for. As a result of all that the respondent No,3 through the assessing officer allowed the petitioners the benefit of SRO 456(1)/88 but disallowed the concession under SRO 962(1)/90, which additionally granted exemption from lqra Surcharge and Surcharge, on the ground that the export manufacturing bond licence had not yet been obtained. It is also the case of the petitioners that to avoid delay and demurrage on the imported consignment they paid under protest the disputed amount of Rs,75,93,287 comprising Iqra Surcharge and Surcharge on 12-11-1990 with the reservation of claiming the refund of the said amount upon issuance of the requisite export manufacturing bond licence. It is stated in the petition that the required export manufacturing bond licence was issued by the competent authority to the petitioners on 11-12-1990 and the petitioner after receipt of the entire imported machinery installed the same in its factory in accordance with the requirements of SRO 962(1)/90 dated 12-9-1990 and the Assistant Collector, Central Excise and Sales Tax, Chunian Division, Lahore, issued to the petitioners an installation certificate dated 15-9-1991.
4. ' It is the case of the petitioner that prior to the filing of this petition the petitioners had two rounds of litigations: First upon arrival of the entire plant and machinery into bond at the site of the petitioner's industrial unit when the petitioner on 5-1-1991 made an application to respondent No,4 for refund of its disputed amount of Rs,75,93,287 but the respondents did not take any action in refunding the amount and finally respondent No,4 on 15-9-1991 passed an ex parte order holding that the petitioner was not entitled to the claimed refund on the ground of absence of export manufacturing bond licence at the time of clearance of the consignment. Such order of respondent No,4 was agitated by the petitioners by filing appeal before the Collector of Customs (Appeals) Karachi who vide order dated 5-12-1991 rejected the appeal on the same grounds which had led to the passing of the order dated 15-9-1991. In such a situation a revision petition was filed before the Member (Judicial), Central Board of Revenue whereby the contention of the petitioners was upheld and refund of the disputed amount of Rs,75,93,287 was ordered to be refunded vide order dated 22-7-1992. This revisional order was neither challenged by the respondents nor its review was sought and as such, according to the petitioners, it attained finality and its enforcement was sought by claiming from respondents Nos.3 and 4 the refund of the said amount but without any success. The second round of litigation started when respondent No,4 through notice dated 5-9-1992 purported to be under section 26 of the Customs Act required the petitioners to furnish documents establishing the purpose for which they had imported the machinery whereafter an Order-in-Original dated 10-10-1992 was passed without notice to the petitioners and without considering the refund order passed by the learned Member (Judicial), C.B.R. And behind the back of the petitioner a conclusion was reached that petitioner's project was not a Textile Unit but a Cotton Process Unit. It is also the case of the petitioners that certificates dated 31-8-1992 and 16-9-1992 were obtained by the petitioner respectively from CCI and E, Ministry of Commerce and the Director Textiles, Ministry of Industries which were in favour of the petitioners' claim. However, the petitioners challenged the second Order-in-Original dated 10-10- 1992 by filing an appeal before the Collector of Customs (Appeals), Karachi who vide order dated 15-5-1993 did not accept the authenticity of the aforesaid two certificates issued by the responsible functionaries of respondent No,1 . It is also the case of the petitioner that the order dated 15-5-1993 has been passed without associating the petitioner in the matter and the respondent No,3 issued a show-cause notice dated 27-12-1993 to the petitioner under subsection
(2) of section 32 of the Customs Act claiming that the benefits already availed by the petitioner under SRO 456(1)/88 were secured by misdeclaration and charged the petitioner with a demand and of recovery of Rs,10,124,382 as a counterblast against petitioners' right to claim the adjudicated amount. It is also the case of petitioners that the said action of respondents was barred by time.
5. The petitioners have also submitted that the respondents made the said demand when the above petition was pending decision during the pendency of the Original Petition before this Court already having been admitted to regular hearing on 25-3-1995, hence, the petitioners filed an amended memo. Of petition in the matter.
6. ' The petitioner has contended that in relation to their purport to effect recovery, the respondents Nos.3 and 4 have no jurisdiction under any pretence or interpretation of section 32 of the Customs Act to claim any dues in respect of the imported machinery cleared vide cash Bill of Entry bearing C.No,6146 dated 12-11-1990, after a lapse of three years from the date of filing of "the said Bill of, Entry. It is also the case of the petitioners that in the matter of scope and nature of industrial activity the respondents Nos.2 to 4 are subject to the opinion of other Ministries of Government of Pakistan. It is also the case of the petitioner that the disputed amount of Rs,75,93,287 was paid under protest in order to avoid delay and demurrage on the clearance of first consignment of the machinery, however, on the clearance of four other consignments of the machinery/equipment imported by the petitioners' exemption under SRO 962(1)/90 dated 12-9-1990 was claimed, which consignments were cleared on 30-12-1990, 1-1-1991 and 10-1-1991 without charging any Iqra and Surcharge.
7. ' In reply to the petition the Assistant Collector of Customs Appraisement (Law) on 20-4-1995 filed parawise comments in the matter stating therein:-- ' The perusal of import documents as well as the documents annexed with the refund claim revealed that the importers were not in possession of the valid "Open Bonded Warehouse Licence" required under the relevant SRO 962 (1)/90 dated 12-9-1990 read with SRO 722(1)/89 dated 10-7- 1989. The import was made on 3-11-1990 (the date of filing of B/E), while assessment was finalized by group on 8-11-1990 and taxes were paid on 12-11-1990. On the other hand, the "Manufacturing Bond Warehouse Licence" was granted by the Collector of Customs, Lahore on 11-12-1990 i,e, after almost one month of import clearance. Besides, the declaration in terms of paras. (1) and (11) of SRO 962(1)/90, dated 12-9-1990 are referred to, be made at the time of importation. No such declarations were made in the instant case. It is also submitted that the importer's industry is not a textile processing industry but is in fact engaged in washing, bleaching, processing, drawing and bailing of cotton only This aspect was confirmed by the Collectorate of Customs, Lahore in whose jurisdiction the unit is located. However,, the matter was taken up with the Central Board of Revenue for redress of grievances of the importer if any and for ruling whether an industry engaged in the aforesaid process/function can be termed as "Textile Processing Industry" for the purpose of allowing exemption from customs duty under the denied SRO 456(1)/88 dated 26-6- 1988. The Board vide its letter C. No,1(53) Mach/90 dated 20-10-1993 confirmed that the said Industry cannot be categorized as a "Textile Industry" and hence, not covered under SRO 456(1)/88 dated 26-6-1988 at all, so, the importer made an attempt to evade duty/taxes and claimed the benefit of SRO 456(1)/88 dated 26-6-1988 by declaring that the consignment of "Bleaching Machine and Complete Dyeing Line" was meant for use in the textile processing industry. The application of the petitioner for refund on the basis of above-stated facts was rejected as unsubstantiated."
8. ' He also stated that Member (Judicial) passed orders in revision as under:-- "The Federal Government, after taking into consideration all aspects of the case that applicant be given the benefit of SRO 962(1)/90 dated 12-9-1990 and allowed refund of the import and Iqra surcharges paid on the impugned goods, if otherwise in order."
9. ' In the parawise comments it has also been stated that in view of the above-referred revisional order the case was scrutinized in detail on the basis of expression "if otherwise in order, therefore, it has been decided that the petitioner is not entitled for the refund claimed. It has also been stated in the parawise comments that the Customs Department is empowered to collect information and requisite documents under section 26 of the Customs Act from the importer or any other person, and, therefore, the action taken by the respondents is within the purview of law. It has also been stated that in response to the enquiry the C.B.R. Vide Letter C.No,I(53) Mach referring dated 20-10- 1993 confirmed that the said industries cannot be categoried as textile industry and hence, not covered by SRO 456(1)/88 and, as such, was competent to raise the demand impugned against as the petitioner is liable to pay short-levied amount mentioned in the show-cause notice. It has also been contended in the parawise comments that the petitioner's industry is not "Textile processing industry" but is in fact engaged, in washing, bleaching, pressing, drawing and bailing of cotton only, therefore, the benefit claimed by the petitioners cannot be allowed. It has also been stated in the parawise comments that the importer also violated the provisions of subsection (2) of section 32 of the Customs Act, 1969 which made them punishable under clauses 9 and 10-A of section 156(1) of the Customs Act, 1969 hence, a prayer was made for the dismissal of the petition.
10. ' It is evident from the record and the foregoing that part of the consignment was got cleared by the petitioners on 6-12-1990, claiming the benefit of SRO 962(I)/90 dated 12-9-1990 by paying under protest the sum of Rs,75,93,287 for subsequent refund to be claimed after obtaining manufacturing licence which had already been applied for, which fact was mentioned in the Bill of Entry. It is also evident from the record that under the SRO 962(1)/90 dated 12-9-1990 the petitioner on different dates i,e, 30-12-1990, 1-1-1991 and 10-1-1991 cleared their other consignments claiming exemption from payment of Iqra Surcharge etc. In terms of SRO 962(1)/90 dated 12-9-1990. Thus, it is evident that the four consignments of the petitioners were cleared as late as 10-1-1991, it is also clear from the record of the case that the requisite manufacturing Private Bonded Warehouse Licence No, 189/LMR/90 was issued to the petitioner by the Collector of Customs, Lahore on 11-2- 1990, in pursuance whereof the imported machinery was installed to commence the project of the petitioner and, as such, according to the petitioners. It became a past, closed and complete transaction.
11. ' The petitioners have placed on record following certificates to the effect that the industry of the petitioners falls in the Specialist Textile Industry and the same is covered under the category of Textile as per Serial No,1 of the Table of SRO 962(1)/90, dated 12-9-1990:-
(i) Certificate dated 16-9-1992 issued on behalf of Textile Commissioner. Ministry of Industry, Government of Pakistan.
(ii) Certificate dated 3-2-1992 issued by Deputy Secretary, Ministry of Industry Government of Pakistan, certifying that the Ministry is of the view that the end produce mainly Absorbent Cotton Bleach does not attract the exclusion provided by Item (i) of the Table appended to SRO 962(1)/90 dated 12-9-1990.
(iii) Certificate dated 20-5-1993 issued by Assistant Collector, Lahore Dry Port to the effect that the petitioner is the manufacturer of Surgical Absorbent Cotton Wool which is classifiable under Section (X) Textile and Textile Article in the Pakistan Custom Tariff.
(iv) Certificate dated 23-6-1994 issued by Director-General (Impl.) Board of Investment, Prime Minister's Secretariat to the effect that the manufacturing of Bleach Surgical Absorbent Cotton Wool falls under the heading of Textile in Sr.No,1 of the Table of Lists of Industries mentioned in the SRO 962(1)/90 dated 12-9-1990.
(v) Certificate dated 23-10-1995, issued to the petitioners by the Secretary (Machinery), Central Board of Revenue, Government of Pakistan, is to the effect that Bleached Absorbent Cotton Industry is covered under SRO 962(1)/90 dated 12-9-1990. Subject, however, to the fulfilment of the conditions laid down therein.
12. ' We have heard the arguments of learned Advocates as well as of the learned standing counsel in support of their respective pleas in the matter and find that since none of the respondents had challenged the order dated 22-7-1992 passed by the Additional Secretary, Government of Pakistan (Central Board of Revenue), holding that since the petitioners prior to clearance of the impugned goods had applied for the grant of Open Bond Manufacturing Licence and its issuance was delayed because of various formalities and that the petitioners had also obtained the installation certificate from the Assistant Collector, Lahore to the effect that the impugned machinery had been installed in the licensed open bond manufacturing warehouse and that the impugned machinery constituted part of the full bleaching and processing plant, the rest of which was given benefit of the SRO 962(1)/90, dated 12-9-1990, therefore, the Federal Government after taking into consideration all the aspects of the case, is pleased to order that the applicants (petitioners) be given the benefit of SRO 962(1)/90, dated September 12. 1990 and allowed the refund of Import and Iqra Surcharges paid on the impugned machinery and accordingly the Revision Application was disposed of. It is also on record that various departments of Government of Pakistan including Secretary of Central Board of Revenue on different dates, as aforesaid, issued to the petitioners certificates that Surgical Absorbent Cotton Wool is "Textile", therefore, the petitioners are entitled to claim benefit of SRO 962(1)/90, dated 12-9-1990. It is worth noting that after the Revisional Order dated 22-7-1992 the petitioners made repeated demands for the refund of disputed amount of Rs,75,93,287; but the respondent No,4 on 15-11-1993 issued to the petitioners show-cause notice purporting to be a notice under section 32(3) of the Customs Act, 1969, whereafter the respondent No,3 in suppression of the said show-cause notice dated 15-11-1993 issued to the petitioners another show-cause notice dated 27-12-1993 to the effect that the petitioners have violated the provisions of subsection (2) of section 32 of the Customs Act, 1969 which is punishable under clauses 9 and 10-A of section 156(1) of the Customs Act, 1969. In the said show-cause notice the petitioners were also required to explain as to why an amount of Rs,10,124,382 should not be recovered from them for the violation of law.
13. ' The contention of the learned standing counsel is that the SRO 482(1)/88 envisages exemption to textile and not to Yarn Weaving Industries, therefore, he submitted that the petitioners are not entitled to claim the benefit of SRO 962(1)/90, dated 12-9-1990. He also submitted that under section 223 of the Customs Act, 1969 a Customs Officer is bound to follow the orders of the Central Board of Revenue. In support of his submissions the learned standing counsel has relied upon the cases of Messrs Flying Board and Paper Products v. Central Board of Revenue and others reported as PLD 1996 Lah. 718, Messrs Saima Enterprises v. Deputy Collector of Customs and others reported as 1996 MLD 1522 and Wealth Tax Officer and another v. Shaukat Afzal and others reported as 1993 SCMR 1810.
14. ' The first case pertains to withdrawal of exemption in payment of sales tax, second case is of disputed questions of fact and the third case is of invocation or otherwise of Constitutional Jurisdiction while statutory remedy is available to a party. In our view and in the circumstances of the case the cited cases are not applicable to the instant case.
15. ' In order to appreciate the implications or effect of the provisions of sections 26 and 32 of the Customs Act, 1969 it would be appropriate to peruse the same and for the sake of convenience they are reproduced hereunder:- "26. Power to require information to be furnished.--An appropriate officer may by a requisition in writing, require any person concerned with the importation, exportation, purchase, sale, transport, storage or handling of any goods which are being or have been imported or exported to furnish such information relating to the goods as may be necessary for determining the legality or illegality of the importation or exportation of such goods, the value of such goods, the nature, amount and source of the funds or assets with which the goods were acquired and the customs duly chargeable thereon, or for deciding anything incidental thereto and to produce, and allow the officer to inspect and take extracts from or make copies of any invoice, bill of lading, book of account or other book or document of whatever nature relating to the goods.
32. Untrue statement, error, etc.--(1) If any person, in connection with any matter of customs,--
(a) makes or signs or causes to be made or signed, or delivers or causes to be delivered to an officer of customs any declaration, notice, certificate or other document whatsoever, or
(b) makes any statement in answer to any question put to him by an officer of customs which he is required by or under this Act to answer, (knowing or having reason to believe that such document or statement is false) in any material particular, he shall be guilty of an offence under this section.
(2) Where, by reason of any such document as aforesaid or by reason of some collusion, any duty or charge has not been levied or has been short-levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within three years of the relevant date, requiring him to show ,cause why he should not pay the amount specified in the notice.
(3) Where, by reason of any inadvertence, error or misconstruction, any duty or charge has not been levied or has been short-levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within (six months) or the relevant date requiring him to show cause why he should not pay the amount specified in the notice."
16. ' The contention of the learned Advocate for the petitioner is that the first consignment of the petitioner was released on 6-12-1990 against payment of Iqra and Surcharge, which was under protest for subsequent refund to be claimed under SRO 962(1)/90, dated 12-9-1990 after obtaining/issuance of the manufacturing licence which was already applied for and the remaining consignments of the petitioners' machinery and equipment were cleared on 30-12-1990, 1-1-1991 and 10-1-1991 without payment of any Iqra or Surcharge, therefore, the show-cause notice dated 15-11-1993 and/or dated 27-12-1993 on the basis of subsections (2) and (3) of section 32 of Customs Act, 1969 are barred by time, without jurisdiction and invalid inasmuch as that the threatened action could be taken against the petitioners only within a period of six months from the date of import of the consignments .The other contention of the learned advocate for the petitioners is that the final order in revision having been passed by the Additional Secretary as far back as 22-7-1992 having attained finality the matter became a past and closed transaction and the respondents Nos.2 to 4 ceased to have any jurisdiction in the matter and their subsequent actions in avoiding to refund the disputed amount of Rs,75,93,287 and/or threatening the petitioners with action in terms of clauses 9 and 10-A of section 156(1) of the Customs Act, 1969 are mala fide and illegal. It has also been submitted by the learned advocate for the petitioners that the petitioners manufacture "Surgical Absorbent Cotton Wool" which is not meant for home consumption as the entire product is exported from Pakistan for which the requisite export certificates have been issued by the competent authority. It has also been contended that the show-cause notices dated 15-11-1993 and 27-12-1993 charging the petitioners for violating the provisions of section 32(2) and (3) of the Customs Act are time-barred as has been held in the case of Federation of Pakistan through Secretary Finance and 2 others v. Messrs Ashiana Cotton Product Ltd., 1992 SCMR 1898, wherein it has been held that in case of short-levied duties on account of inadvertence, error or misconstruction recovery notice can be served within a period of six months and after lapse of such prescribed time recovery is not enforcible through Courts. It has also been contended by the learned advocate for the petitioners that after the passing of the revisional order dated 22-7-1992 the re-opening of the case by the respondents is hit by the principle of res judicata on the premises that the principles of res judicata would be applicable to the cases where provisions of C.P.C. Have not specifically been made applicable in this behalf the reliance has been placed on the case of Muhammad Anwar v. Messrs Associate Trading Company Ltd., reported as PLD 1995 Karachi 214. It is pleaded by the learned advocate for the petitioners that the Government functionaries including the Secretary, Central Board of Revenue, having issued certificates to the petitioners that they are entitled to the benefits of SRO 962(1)/90, dated 12-9- 1990 amounts to an estoppel against the respondents and as they can neither deny to refund the amount of Rs,75,93,287 nor can require the petitioners to pay the alleged sum of Rs,10,124,382.
17. We are of the view that in the back-ground and facts of this petition neither the provisions of sections 26 and 32 of the Customs Act, 1969 can be pressed into service nor the respondents 3 and 4 could issue the impugned show-cause notices dated 15-11-1993 and 27-12-1993 or pass any order in derogation to the revisional order dated 22-7-1992. As has been discussed hereinabove the petitioners did hold valid Import Licence and got the requisite export manufacturing bond licence and placed before them various certificates issued by the competent Government functionaries/ministeries to the effect that since the industry of the petitioners was a textile industry and their product "Surgical Absorbent Wool" was classifiable as textile and that the petitioners are entitled to the benefit of SRO 962(1)/90, dated 12-9-1990. Thus, any notice, in the given circumstances, under the provisions of section 26 of Customs Act, 1969 was unwarranted. Even notices under subsections (2) and (3) of section 32 of Customs Act, 1969 issued on 27-12-1993 is barred by time as the consignments in question had arrived at Karachi Port and cleared between the dates, from 6-12-1990 and 10-1-1991. It is on record that as to the documents of import and refund claim etc. Placed before the respondents by the petitioners have been verified and/or scrutinized by the concerned and competent authority and there is no allegation that the petitioners knowingly made any false or untrue statement.
18. ' On the basis of the record and the foregoing discussion we had arrived at the conclusion that the petitioners have made out a case for the reliefs claimed in the petition that the respondents cannot deny them the exemption under SRO 962(1)/90, dated 12-94990 from Import and Iqra Surcharge in respect of the consignment in question of the petitioners and that the impugned ex parte Order-in-Original dated 26-4-1995 is illegal and without lawful authority and as such the respondents are not only bound to refund the disputed amount of Rs,75,93,287 to the petitioners; but also cannot claim from them the alleged amount of Rs,1,01,24,382, therefore, vide short order dated Z5-9-1998 we had allowed this petition and the above are the reasons for the same. ' but with no order as to costs.