MUHAMMAD ASLAM, TECHNICAL MEMBER.- (1). This appeal has been filed by M/s. Gulshan Weaving Mills Limited, Lahore, against orders-in-original Nos. 54 to 57 of 1997 dated 29.09.1997 passed by Collector of Customs, Lahore.
2. Facts leading to this appeal are as under:-
(i) The appellants imported humidification plant vide Bill of Entry No. 18926 dated 13.12.1990 at the Lahore Dry Port and claimed exemption under notification No. SRO 1284(I)/90 dated 13.12.1990, which was available to such plants and machinery as were not manufactured locally.
(ii) As humidification plants were being manufactured indigenously, the Customs refused to extend the benefit of exemption. The appellants, therefore, moved the Lahore High Court vide Writ Petition No. 325/1991 which was pleased to dispose it of with the direction that whether or not the machinery imported by the petitioner was locally manufactured should be determined after holding fresh enquiry into the matter. The goods, meanwhile, were ordered to be released against "Bank Guarantee" by the High Court.
(iii) Pursuant to the orders of the Honourable High Court, Lahore M/s. Gulshan Weaving Mills Limited vide letter No. 975 dated 28.06.1995 were called upon to explain as to why the aforesaid plant and machinery may not be treated as locally manufactured and why the benefit of exemption of customs duties and taxes under SRO 1284(I)/90 dated 13.12.1990 be not refused to them.
(iv) While pleading the case of the appellants before the learned Collector of Customs, Lahore, Mr. Zamir Siddiqui contended that the show cause notice issued to them was not tenable as they had imported the humidification plant after seeking clarification from the Ministry of Industries that the same was not being locally manufactured at the given point of time. He further contended that the proceedings initiated against them had virtually been rendered null and void in view of the categorical clarification given in this behalf that the said plants were not manufactured locally. To substantiate this stand, the learned representative furnished photocopies of the letters of the Ministry of Industries dated 12.2.1991 which was also forwarded to APTMA on 24th March, 1991 and of the Central Board of Revenue dated 17.12.1995 both of which are available on appeal file No. CE&ST- AT/LHR/612/97.
(v) The learned Collector summoned local manufacturers, namely M/s. Manstock Engineering (Pvt)
Ltd. Lahore Cantt. And M/s. S.T. And Associates, Lahore, confronted the appellants and three others whose case was of identical nature and after detailed enquiry determined liabilities of duty and taxes against the appellants.
(vi) As it transpired during the course of adjudication proceedings that the Central Board of Revenue was not correctly apprised in the matter, the issue was once again taken-up with the said "Authority" which, realising the earlier mistake, withdrew its letter C. No. l/88/Mach/84-PT-3 dated 17.12.1995 vide its fresh correspondence of even number dated 15.1.1996.
(vii) The appellants challenged the aforesaid orders of the learned Collector before the Tribunal which admitted the appeal and issued direction to the Collectorate of Customs, Lahore, on 15.2.1997, for report and parawise comments thereon. On the next date of hearing i.e. 9.2.1998, the appellants sought adjournment while for the next two dates the Department put in the same request. The case was, however, heard-at Lahore on 28.07.1998 and the judgment reserved.
Subsequently, it transpired that certain vital links were missing as the file of the Tribunal contained only the memo of appeal and the letters of the Ministry of Industries and the Central Board of Revenue dated 12.2.1991 and 17.12.1995 respectively, clarifying/intimating that humidification plants were not being manufactured in Pakistan. As the Department had not come up with evidence to the contrary except the withdrawal letter of the Central Bored of Revenue dated 15.1.1996 through report and parawise comments as per the Tribunal's directions of 15.2.1997 nor presented any document which could rebut the claim of the appellants forcefully, it was deemed necessary to afford another opportunity to them to substantiate their stand in the matter.
(viii) The case was heard at Karachi again on 23rd September, 1998 and the appeal was allowed.
While writing the judgment with the help of some record which was obtained from the Lahore Dryport, it was revealed that the relevant documents were intentionally or otherwise withheld. The Tribunal, therefore, took stock of the situation and passed the following order on 1.10.1998; "We had announced judgment in this case at Karachi on 23.09.1998 when arguments were heard. It was an oral announcement but while writing the judgment we noticed that there was suppression of fact in a way on the part of both of the parties. The appellants alleged that they were not allowed an opportunity to cross examine the so-called local manufacturers of the humidification plant but when my brother Mr. Muhammad Aslam, Member (Technical) set down for writing the judgment, he discovered from the original record that not only the appellants but about 2 dozen other appellants in similar cases were allowed ample opportunity of cross-examining the witnesses produced to prove existence of local manufacture. This was how we were not properly helped in the course of arguments and in fact we were misdirected to believe that such an opportunity was really denied to the appellants. The appellants have also taken up such a ground in the memo of appeal but the same appears to be incorrect. Even the learned Collector Customs in the order sheet of his file had written that an opportunity of cross-examining witnesses was afforded to the appellants. The Departmental Representative appearing before us missed to note this from the appellate record and did not contest the assertion of the appellants made on that behalf. The main files though shown to have been summoned by this Tribunal were not annexed by our own office tor reasons yet to be ascertained.
Because of the above reasons, we would like to hear this case again at Lahore on 14.10.1998. Issue notices accordingly.
On the aforesaid date of hearing, the concerned Additional Collector of Customs, Lahore Dryport and Mr. Arshad Ali, Supdtt: too should be summoned to apprise us about the legal and factual issues involved in this case.
Meanwhile the Assistant Registrar and Mr. Zaidi must, ensure that the connected files are traced out on Top Priority."
(ix) The case was heard afresh on 14.10.1998, on which date the appellants were represented by Mr. Zamir Siddiqui and the Department by M/s.. Shafqat Mehmood and Imran Tariq, both Additional Collectors and Mr. Arshad Ali, the Superintendent of Customs (Headquarters), Custom House, Lahore.
(x) While pleading the case of the Department, the learned representative pointed out that the order passed by the learned Collector of Customs, Lahore, did not suffer from any legal or factual infirmity nor he had disallowed exemption and determined liability of duty and taxes against the appellants in an arbitrary and whimsical manner. To substantiate the stand of the Department, the following evidence was placed before the Tribunal:--
(a) File No. 95-BG/1/91/92 containing exhaustive cross examination of local manufacturers namely Manstock Engineering Co. (Pvt) Limited and STL Associates at Note Sheet pages 1-14. It was pointed out that at all the hearings conducted in this behalf in respect of about 25 importers of identical plants, M/s. Zamir Siddiqui was always present on behalf of M/s. Gulistan Textile Mills, which, too, reportedly belong to the same group that owns Gulshan Textile Mills.
(b) The withdrawal letter of the Central Board of Revenue dated 15.1.1996 which established that the earlier confirmation given by the said authority was primarily the result of wrong information supplied to it by the appellants.
(xi) When Mr. Zamir Siddiqui was confronted with the aforesaid evidence, he did not deny his presence before the learned Collector of Customs, Lahore but stated that the cross examination in the matter was done by others and not him. In this connection, he drew attention of the Tribunal to para 22 of note-sheet page 14 of the Department's file No. 95-BG/91/92, wherein it is mentioned that he had specifically pointed out that he did reserve his right to cross examine the local manufacturers at the next date of hearing which never took place. As to the letter of the Central Board of Revenue of even number dated 17.12.1995 and 15.10.1996, Mr. Siddiqui argued that the relevant one was wherein it was specifically clarified that humidification plants were not being manufactured locally. To say that the appellants mis-guided the Central Board of Revenue is rather humiliating or ridiculing the said Authority. Interesting to note that the same Central Board of Revenue had granted special exemption vide its letter dated 8.6.1992 under the provisions of section 20 of the Customs Act, 1969 to M/s. Dannemann Fabric Limited, Karachi who too had imported humidification/air-conditioning plant with accessories and the chilling plant in the years 1991 and 1992. He also referred to the judgment endorsed vide C. No. 1415 dated 4.7.1998 of the Lahore Bench of the Tribunal and contended that in the instant case as well, the appellants deserved equal protection of law. His stand was that any deviation thereto would not only be in conflict with the aforesaid findings of the Tribunal itself but also violate the express verdict of the Supreme Court of Pakistan contained in its judgment reported as PTCL 1991 CL 388 titled M/s. Sohail Jute Mills Limited and others.
3. We-have examined the records of the case very minutely, heard both sides in detail and addressed ourselves to the relevant provisions of law and rules. The moot point involved in this appeal is whether at .The given point of time humidification plants were being manufactured in Pakistan or not. We shall first like to discuss the stand taken by the appellants in correct perspective.
4. Their main plea is that as the Ministry of Industries and the Central Board of Revenue had confirmed vide their letters dated 12.2.1991 and 17.12.1995 respectively that no one in Pakistan was manufacturing humidification plants, the action taken by the lower authorities of the Collectorate of Customs, Lahore, automatically became null and void in the eye of law. We see that the learned representative of the appellants has unnecessarily attempted to side track the main aspects of the issue involved. The exemption in the matter was contingent upon the non-manufacture of humidification plants in Pakistan. If it is proved that some one was manufacturing the same, the clarification given by any authority including the Ministry of Industries and the Central Board of Revenue would become redundant. It is more pertinent in the instant case because the Central Board of Revenue withdrew its earlier clarification of 17. 12,1995 vide its letter dated 15.1.1996 which obviously means that the said authority was not provided correct information. Even the clarification given by the Ministry of Industries in February 1991 is nothing but a clarification and not a statutory provision which shall have binding force. Its validity/ authenticity too is not un- questionable and even otherwise, the mandate of the Department in this behalf always remains open.
5. The second point made by the appellants is that they deserve exemption by way of equal treatment in terms of the Tribunal's Judgment dated 16.6.1998, which was given in the case of M/s. Aruj Garments, Accessories Limited, Lahore, referred to above. First of all, the facts and circumstances of the case of the appellants have no nexus with the one quoted by them. Secondly, in the said case, the show cause notice was vacated being time-barred in terms of section 32(3) of the Customs Act, 1969. Thirdly in the said case, the Central Board of Revenue had initially passed an order under the provisions of Section 20 of the Customs Act, 1969 which was subsequently withdrawn, while in the present case only a clarification was issued to the appellants on the basis of information supplied by them and the one available in the Central Board of Revenue both of which proved incorrect subsequently. In view of all this, we hold that our own decision of 16.6.1998 does not, in any way, favour the appellants and that their reference to Central Board of Revenue's order 79/92 dated 8 6.1992 pertaining to the case .Of M/s. Dannemann Fabrics Limited Karachi issued under section 20 of the Customs Act 1969 too is not relevant.
6. The last point made by the appellants is that as they were not given the opportunity to cross- examine the local manufacturers, it was not fair on the part of the learned Collector to conclude that the same too was being locally fabricated. Although Mr. Siddiqui was present at almost all hearings which were conducted by the then learned Collector of Customs Lahore in respect of about two dozen importers of humidification plants, yet we find that his stand in this connection is correct as is evident from para 22 of note-sheet 14 of file No. 95-BG/1/91/92. Even if further cross examination had taken place, the same is not recorded on the file in a categorical manner. We, therefore, feel that, to meet both the ends of justice and to secure the interest of "State Exchequer", it would be more appropriate if this aspect is thrashed out thread-bare at the original stage by associating all concerned. The case is, therefore, remanded back to the learned Collector of Customs,. Lahore, for de-novo consideration on merit with the direction that: ~
(i) He shall formulate a committee comprising of three officers of the rank of Assistant Collector who are to visit the premises of local manufacturers in association with the representative of the appellants to see for themselves the actual inception of local manufacture of such plants in Pakistan, their capacity and capability etc. At the given point of time and then submit a report in writing.
(ii) He shall summon the local manufacturers and all others connected with the matter, allow reasonable opportunity of cross-examination enable the appellants to inspect the relevant record, if they so desire.
(iii) He shall, if the need be, also take up the matter with the Central Board of Revenue and the Ministry of Industries for any clarification as required therefor.
(iv) He shall decide this issue positively within 3 months of the receipt of the order of the Tribunal and ensure that the case does not linger on beyond the stipulated period.
7. As two dozen cases of identical nature entailing government revenue of about Rs. 200.00 million are pending adjudication at the Lahore Dry Port, it would be in the interest of the State if all these are clubbed together and then a decision recorded in a fair, objective, impartial and equitable manner. Here we shall like to advise the Collector that he should deal with the matter personally and not leave it to the officials who, reportedly, throw the files in cold storage when the cases are remanded back by the Superior Courts/Tribunals.
8. As the stake of both parties i.e. The appellants and the Government is very high in the matter, we are. Also endorsing a copy of this remand order to the Chairman, Central Board of Revenue so that all such pending cases are now decided without a second's delay.
9. The appeal is disposed of as above.
10. The Tribunal shall like to place on record its appreciation for the commendable assistance rendered by Mr. Arshad Ali, Superintendent of Customs, Lahore, who personally traced out the old files and apprised us of the correct situation of the case.