1. This is a suit for declaration permanent injunction and damages whereby it is prayed, inter alia, that it be declared that the plaintiff is entitled to all the concessions and exemptions granted vide S.R.O. No,508(1)/95, dated 14-6-1995. The brief facts of the matter are that as per averments contained in the plaint the defendant No,1 issued SRO 508(1)/95 dated 14-6-1995 (hereinafter SRO 508) whereby the Federal Government was pleased to exempt from customs duty such raw materials and components which were not manufactured locally as specified in the table attached to said SRO where these were imported by a manufacturer of goods provided the conditionalities of the SRO were met. One such condition was that the manufacturer (in this case plaintiff) was to obtain a certificate from the Chief, Survey and Rebate, .Anfral Board of Revenue as to the list of goods being manufactured by it as well as annual capacity of the Factory and total requirements of various types of raw materials alongwith the quantity required for the manufacture of each specified item. 'Accordingly in pursuance of such condition (which appears to be the basic criteria for qualifying for exemption under SRO 508) the plaintiff applied to the said officer who after carrying our the required survey issued his final certificate dated 11-1-1996, a copy of which has been filed as Annexure C/3 to the plaint. Thereafter the plaintiff established letters of credit in April, 1996 with its suppliers for the import of poly-proplylene which fell under Item 25 of the Table attached to SRO 508, copies of which have been filed as Annexures C/7 to C/9 to the plaint in pursuance of which three consignments of the imported material arrived at Karachi Port vide Bill of Entries filed as Annexures C/10 to C/12 to the plaint. So also in terms of SRO 508 the plaintiffs gave Indemnity Bonds alongwith three post-dated cheques in the total amount. Of Rs,7,66,703 to the Customs Authorities being customs duty which was exempted under the said S.R.O. Thereafter the plaintiff consumed the imported goods viz. Polyproplylene for the manufacture of vacuum flasks within one year from the date of filing of the bill of entry as per details given in para.7 of the plaint since this was one of the requirements of SRO 508 in order that the plaintiff be enabled to get the benefit thereof. Thereafter the plaintiff approached the defendant No,3 for the issuance of the consumption certificate of the goods in question so that the indemnity bonds given by the plaintiff could be discharged and post-dated cheques returned as per the procedure provided in SRO 508. However, said defendant without even hearing the plaintiff and without applying his mind to the legal implications of SRO 508 through a letter dated 28-1-1997, a copy of which has been filed as Annexure "F" to the plaint, rejected the plaintiff's requests on the reasoning that the goods in question had not been consumed prior to 13-6-1996, the date on which SRO 508 stood rescinded by virtue of SRO 444(1)/96 dated 13-6-1996. Earlier the defendant No,4 had also verbally refused to take any action in the matter. In such circumstances, the plaintiff filed an appeal on 4-3-1997 before the Collector Appeals, Central Excise Customs House Karachi, copy of which has been attached as Annexure "G" to the Plaint, however to date no orders have been passed on the same.
2. In the meanwhile, the defendant No,1, Central Board of Revenue, also rejected the plaintiff's requests for the requisite certification vide letter dated 26-11-1996 on the basis that the concession to the plaintiff was not available after 13-6-1996 when SRO 508 stood superseded by SRO 444(1)/96 dated 13-6-1996. A copy of the rejection letter dated 26-11-1996 has been filed as Annexure H/1 to the plaint and hence the suit. In the written statement filed on behalf of the defendants Nos.3 and 4 their main contention is that SRO 508(1)/95 dated 14-6-1995 was superseded vide SRO 444(1)/96 dated 13-6-1996, therefore, the plaintiff could not claim the exemption granted by the earlier SRO as the latter SRO did not give any such exemption to the goods imported by the plaintiff. It is further stated in the written statement that since the goods were not consumed prior to 13-6-1996 when the concession given under the old SRO were superseded, consumption certificate could not be given and the exemption under the old SRO to alai extent cannot be claimed by the plaintiff. On the basis of the parties' pleadings the following issues were framed on 2-121998:-
(1) Whether the jurisdiction of this Court is ousted in terms of the bar contained in section 162 of the Customs Act?
(2) Whether the plaintiffs are entitled to the concession available under SRO 508(1)/95 dated 14-6- 1995 ?
(3) What should the decree be? Previously the parties had agreed not to lead any evidence and had admitted each other's documents filed alongwith their respective pleadings as per their statements recorded vide order dated 30-11-1996. Accordingly, such documents were marked as exhibits and both counsel proceeded to argue the matter. As regards the Issues Nos.1 and 2 learned counsel for to plaintiff has submitted that as per the case of Abbasia Cooperative Bank and another v. Hafiz Muhammad Ghous and 5 others (PLD 1997 SC 3), the jurisdiction of Civil Courts is not ousted where the impugned order/action of the Executive Authority is: (a) passed without jurisdiction or (b) violative of any law or (c) is mala fide or
(d) the principles of natural justice have been violated while passing such an order. In the present case learned counsel says that the Customs Authorities have erred in law by not giving the benefit of the exemption contained in SRO 508(1)/95 dated 14-6-1995 and to that extent, therefore, this refusal amounts to mala fides in law as well. Learned counsel in this regard has relied upon the principle of vested rights and promissory estoppel on the reasoning that once the goods have been consumed within the period of one year from filing of the bill of entry and the other conditionalities of SRO 508 fulfilled, as in the present case, the impugned refusal of the Customs Authorities to give the exemption under said SRO on the basis that the imported goods were consumed after 13-6-1996 viz. After SRO 508 had been superseded by SRO 444(1)/96 dated 13-6-1996, is totally extraneous to the conditionalities mentioned in SRO 508(1)/95 and hence to that extent not justified and a violation of the terms of the said S.R.O. In this regard learned counsel has relied upon the following case law:--
(i) Al-Samrez Enterprise v. The Federation of Pakistan (1986 SCM R 1917),
(ii) Associated Trading Co. Ltd. v. The Central Board of Revenue (PLD 1987 Kar.63),
(iii) Pakistan through Secretary, Ministry of Finance v. Salahuddin (PLD 1991 SC 546),
(iv) M/s. Tharparkar Sugar Mills Ltd. v. Federation of Pakistan (1996 M LD 1221) and
(v) Chairman, Selection Committee/Principal, King Edward Medical College, Lahore v. Wasif Zamir (1997 SCM R 15). Further learned counsel has argued that no notice was given to the plaintiff before passage of the impugned order which is violative of fundamental principles of natural justice and in this event too, the said orders deserve to be set aside. In rebuttal Mr. Sattar Silat for defendants Nos. 2 and 3 has fully supported the refusal of the Customs Authorities to grant the plaintiff the benefit of SRO 508 as according to him such benefit was only available uptil 13-6-1996 and not thereafter viz. When SRO 508 was superseded by SRO 444(1)/96 as far as the exemption to the goods in question was concerned. In this regard, he has relied upon Molasses Trading & Export (Pvt.) Ltd v. Federation of Pakistan (1993 SCM R 1905) and Army Welfare Sugar Mills v. Federation of Pakistan (1992 SCM R 1652). I have considered the arguments of both learned counsel and gone through the record of the case and my conclusions are as under: As both Issues Nos.1 and 2 are inter-connected I propose to dispose them of together. It would seem that vide the impugned order dated 28-1-1997 passed by defendant No,3 the only reason whereby the requisite consumption certificate was refused- is that the imported goods belonging to the plaintiff were not consumed prior to 13-6-1996 and since thereafter SRO 508 which gave the exemption from customs duties etc. Was superseded by the new SRO hence this request could not he acceded to. Such reasoning, however, is not mentioned in the second impugned order dated November 26, 1996 whereby the Central Board of Revenue also refused to accept the plaintiff's request for a consumption certificate. In fact, the reason given by the Central Board of Revenue is that as the new SRO No,444 dated 13-6-1996 has superseded the previous SRO 508 dated 14-6-1995, therefore, the concession under the latter could not he allowed after 13-6-1996. It appears, however, that the intent of this impugned order as well, seems to be that all the actions proposed to be taken under the previous SRO viz. 508 should have been completed before the issuance of the new SRO whereby the exemption was rescinded. In this regard, it would be relevant to note that the previous SRO 508 does not give any time limit within which the imported goods are to be consumed by the plaintiff so as to enable the plaintiff to avail the exemptions given under said SRO. The only limitation in this respect is that the SRO would be valid till 30-6-19%. In these circumstances. It would have to be considered whether SRO 444 would affect the goods of the plaintiff in question. Thereby preventing it from the exemption granted under SRO 508. In this connection the legal position has been very well established by the Hon'ble Supreme Court in a series of judgments considering the effect of section 31-A of the Customs Act.
3. 1969. In Mian Nazeer Sons Industries Limited v. Government of Pakistan (1992 SCM R 883) it was held by the Hon'ble Supreme Court that in terms of section 3I -A of the Customs Act any amount of duty which becomes payable in consequence of withdrawal of concessions of duty even though such withdrawal takes place after the conclusion of a contract for the sate of goods or opening of a letter of credit, would now be payable in terms of section 30 with reference to the date of filing of the bill of entry. Similarly, in Federation of Pakistan v. Amjad Hussain Dilawary (1992 SCM R 1270) it was held that the import of section 31-A of the Customs Act is that it has modified the rule laid down in Al-Samrez Enterprise v. Federation of Pakistan (1986 SCM R 1917) and now it was not only necessary to show that between the date an exemption was granted and the date it was withdrawn the importer had been granted the import licence and taken effective steps to conclude his contract. To purchase the goods and open a letter of credit in terms thereof. But also that the bill of entry was filed by the importer with the customs authorities before the date the exemption was withdrawn. Similarly, the Honourable Supreme Court in Molasses Trading and Export (Pvt) Ltd. v. The Federation of Pakistan (1993 SCM R 1905) has held that the import of section 31-A of the Customs Act is that notwithstanding anything' contained in other law for the time being in force or any decision of any Court, for the purposes of sections 30 and 31, the rate of duty applicable on any -goods shall include the amount that may have become payable in consequence of withdrawal of exemption from duty whether the withdrawal is before or after the conclusion of a contract or agreement for the sale of such goods or opening of a letter of credit thereof. However, this does not mean that straightway it should be held that since section 31-A of the Customs Act has been given retrospective effect this would wipe-out past and closed transactions or all the vested rights that have accrued. Consequently, the Honourable Supret(e Court came to the conclusion that where the hill of entry was presented before the concession/exemption was withdrawn, in such a case, the petitioner would he entitled to said concession. Explaining further the Honourable Supreme Court laid down that as per the Al-Samrez case the liability to tax was created under.Section 18 of the Customs Act with reference to this date because it is the rate of duty by application of which the tax liability can be quantified or assessed. Simultaneously any benefit of exemption also takes effect on the same date because in the very nature of things the liability is wiped off by virtue of exemption at the same time, therefore, this is the crucial point of time at which by operation of law the liability is discharged. In other words the rights and liabilities of the importers attain fixation on the said crucial date. Inevitably, therefore. a vested right has been created and the transaction is closed by the quantification of the tax, if any, or by the passage of liability on that date. The mere fact that any proceedings remain pending for assessment of the tax by statutory functionaries for the purpose of recovery of the dues will not prevent the law from operating and producing the result of closing the transactions. So alsoin the case of Federation of Pakistan v. Punjab Steel Limited (1993 SCM R 2267) the Honourable Supreme Court referred to with the approval the case of Molasses Trading & Export (Pvt.) Limited, (supra). Finally in M.Y. Electronics Industries (Pvt.) Ltd. v.
4. Government of Pakistan (1998 SCM R 1404) again the Honourable Supreme Court has 'reiterated the principles laid down in the cases of Mian Nazeer Sons Industries Ltd. v. Government of Pakistan, Molasses Trading v. Federation of Pakistan and Federation of Pakistan v, Punjab Steel Limited (supra).
5. It would, thus, be seen that it has been the consistent view of the Honourable Supreme Court that the exemption claimed by any importer has no nexus with the establishment of a letter of credit or finalization of a contract of sale of the goods in question but to the date of the bill of entry i,e, that the goods for which the exemption is sought should have arrived in Pakistan before the date on which such exemption was withdrawn because it is on this date that the obligation to pay customs duties is crystallized in terms of section 18 of the Customs Act. In the present case, it is not disputed that the bills of entry were presented by the plaintiff before SRO 444(1)/96 dated 13-6-1996 came into effect on 13-6-1996, which is apparent from a perusal of the same. Consequently, in my view the exemptions claimed by the plaintiff in terms of SRO(I)/95 dated 14-6-1995 were available to it provided the other conditionalities of the said SRO could be satisfied. In this connection too it has not been disputed by the defendants that any condition of SRO 508 remains to be discharged by the plaintiff, their only objection being that the imported goods were not consumed before the issuance of SRO 444(1)/96. In my opinion, as discussed above, the customs dues to be paid by the plaintiff were crystallized on the date of the bill of entry alongwith exemption which in the present case is admittedly before 13-6-1996 when the exemption was withdrawn by the said SRO. It may be that the plaintiff has not consumed the imported goods for the manufacture of the vacuum flasks before the exemption was withdrawn. However, as discussed above this has no nexus with the crystallization of the duty to be paid by the plaintiff as the same concerns the date of the bill of entry. I am also of the view that once this rate of duty has crystallized on the date of bill of entry the remaining action on the part of the plaintiff which includes consumption of the imported products and the ministerial actions of the Customs Authorities for grant of the consumption certificate are quite irrelevant as held by the Honourable Supreme Court in case of Molasses Trading & Export (Pvt.) Ltd. (supra). Consequently, in my view the plaintiff is entitled to all the exemptions as contained in SRO 508(1)/95 dated 14-6-1995 and the Customs Authorities erred in not giving the plaintiff the said exemption. As I have come to the conclusion that the Customs Authorities have violated the law in not giving such exemption, the bar contained in section 162 of the Customs Act would not operate in view of the criteria laid down by the Honourable Supreme Court in Abbasia Cooperative Bank Limited v. Hafiz Muhammad Ghous and 5 others (PLD 1997 SC 3). Consequently Issue Nos.1 and 2 are both answered in the positive and the suit is decreed in terms of prayer Nos.(i) to (iv) as contained in the prayer clause of the plaint. There shall be no order as to costs.