Through this Constitutional petition, the petitioner has challenged the order, dated 11th of July, 1973 passed by respondent No,3 vide which petitioner's revision against the order, dated 10th of February, 1973 was dismissed and it was held that 26 air-conditioners imported by the petitioner were liable to custom duty and sales tax but since the goods were imported in January, 1966, those cannot be recovered on account of period of limitation having been elapsed, but the petitioners are liable to pay Rs,60,000 as penalty under section 167(8)(b) of the Sea Customs Act, 1878.
2. Facts in brief are that M.S. Sir Ganga Ram Hospital, obtained Licence No,565810' dated 16-6-1965 for the import of three air-conditioners of the value of Rs,29,000. Before the air-conditioners could be imported, on account of urgency the M.S. Sir Ganga Ram Hospital, obtained three air- conditioners from Messrs Vulcan & Company Ltd. And handed over the afore-referred licence to it so that it could import the 3 air-conditioners in lieu of the ones, the Hospital had obtained. On the basis of this import licence, Messrs Vulcan & Company imported 26 window type air-conditioners and 2 compressors in the name of the Hospital. The Custom House Appraiser, released the air- conditioners without the customs duty and the sales tax on the misconception that the air- conditioners were imported for Hospital and exempt from levy of afore-referred taxes in view of SRO.997(K), dated 4th of August, 1960. On 3rd of September, 1970 the Collector Customs issued a notice to the petitioner to the effect that on queries it had been found that petitioner had obtained licence for import of three air-conditioners of 7-1/2 tons, 5 tons and 3 tons capacities from M.S. Sir Ganga Ram Hospital whereas petitioner imported 26 air-conditioners of 1.5 H.P.
2. H.P. And 2.5 H.P. And two compressors which were not in accord with the import licence. It was further revealed that petitioner had finalized the transaction with the shipper before the issuance of licence to M.S. Sir Ganga Ram Hospital; that since the air-conditioners were not in accordance with the conditions of licence and were not imported for Ganga Ram Hospital, the importers had contravened the provisions of section 19 of Sea Customs Act, 1878 read with section 3(1) of I&E (Control) Act, 1950. They were, therefore, punishable under section 167(8)(b) of Sea Customs Act, 1878 read with section 3(3) of I&E (Control) Act, 1950. After due notice to the petitioner, the Collector Customs held that petitioner evaded sales tax leviable on these air-conditioners amounting to Rs,44,270.88 by hoodwinking the custom authorities. A fine of Rs,60,000 was imposed on the petitioner. Petitioner filed appeal against the said order which was dismissed on 10-2-1973 and his revision also met the same fate vide the impugned order dated 11-7-1973.
3. Learned counsel for the petitioner has challenged the impugned orders of the custom authorities on the following grounds:--
(i) That under section 39 of the Sea Customs Act, 1878, time limitation for recovery of any amount under the Act is three years and it is not denied that the recovery of custom duties and other taxes was time-barred. If that be the position and principal amount cannot be recovered, no penalty could have been imposed for nonpayment of the principal amount;
(ii) that 26 air-conditioners and two compressors subject-matter of this petition were imported on an import licence in the name of M.S. Sir Ganga Ram Hospital and the fine if any, has to be imposed on the Hospital and not the petitioner;
(iii) that the custom authorities having once cleared the goods without custom duties are estopped to recover the same on the principle of locus poenitentiae.
4. Learned counsel for the Customs Department, on the other hand, has opposed the petition by submitting that on the import licence in the name of Sir Ganga Ram Hospital, only three air- conditioners of the capacities specified therein were mentioned and the import of 26 air- conditioners and two compressors was untenable in law and petitioner has rightly been proceeded against. He contended that the imposition of penalty of Rs,60,000 is not linked with the custom duties and sales taxes. Section 39 of the Sea Customs Act provides a period of limitation for the recovery of the afore-referred taxes whereas petitioner has been imposed a penalty under section 67 of the Act to which no exception can be taken.
5. Heard. I have given anxious considerations to the arguments addressed at the bar and have also gone through the relevant law.
6. To better appreciate the points mooted in this petition, it is necessary to refer some of the provisions which have an important bearing on the case: Section 39 of the Sea Customs Act., reads as under:-- Section 39(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 an officer of customs which he is required by or under this Act to answer, and such document or statement is untrue in any material particular, he shall be guilty of an offence under this section.
(2) Where, by reason of any such document or statement as aforesaid collusion, the full amount of customs duty or charge payable is not paid or where any such duty or charge, after having been levied, has owing to any such reason, been erroneously refunded, the person chargeable with the duty or charge so short paid, or to whom such refund has erroneously been made, shall, on demand being made within three years from the relevant date, pay the deficiency or repay the amount paid to him in excess; and the Customs Collector may refuse to pass any goods belonging to such person until the said deficiency or excess be paid or repaid."
The afore-referred provision of law mandates that in case the customs duty or charge payable is not paid or has been erroneously refunded, the same has to be paid by the person charged on demand being made within three years of relevant date. However, it does not relate to the imposition of fine to which the relevant section is section 167 sub-para. (8)(b) is to the following effect:- Offences Section of this Act to which offence has referencePenalties
(b) If any goods, the importation and exportation of which is for the time being prohibited or restricted under this Act, be Imported into or exported from Pakistan country to such prohibition or restriction; or Such goods shall be liable to confiscation; and any person concerned in any such offence shall he liable to a penalty not exceeding five times the value of the goods.
7. In the comments submitted by the M.S. Ganga Ram Hospital, it has been specifically denied that the petitioner-company was ever authorised to import air-conditioners on behalf of Hospital. The stand taken by the Hospital authorities in para. No,6 of the comments is an under:- "That the answering Institution purchased the three Air Conditioners of the capacities as mentioned in para. 5 above and in lieu of those air-conditioners, the Answering' Institution managed to provide for the import licence of the same value and of the same Units to M/s. Vulcan Co.Ltd. The licence was also transferred with the prior approval of Imports and Exports Authority to the petitioner-company and as such the imports effected against that licence are the imports by the petitioner-company and not by the Answering Institution. The Answering Institution had no concern with the imports against the said import licence as it was the liability of the P. Company to import the goods as specified in the Import Licence. It is further denied that the Answering Institution had ever ordered for the compressors and the air-conditioners as imported by the petitioner-company against the said import licence. Only three air-conditioners as specified in para. 5 above were agreed to be installed in the Hospital and in lieu of those air-conditioners the petitioner company was granted import licence of the same description and not otherwise." It was further reiterated in para. 16(xi) as under:-- "That the goods covered under the Bill of Entry were never delivered to the Answering Institution as the Answering Institution had already obtained the three air-conditioners of the above specification in lieu of the import licence issued to the petitioner-company in the account of Answering Institution and the authorization was for the import of air-conditioners only in respect of those air-conditioners which were supplied by the petitioner-company to the Answering Institution."
The afore-referred stand of the M.S. Sir Ganga Ram Hospital is borne out from record as well and Annexure 'A' to the comments is a letter, dated 9th of July, 1965 from M.S. Sir Ganga Ram Hospital, Lahore to. The Deputy Controller, Imports and Exports, wherein the former had sought the advice of the latter as to whether it could have the three air-conditioners (costing Rs,29,000) for which they had been granted permission to import through the petitioner-company installed from the ready stock of the company as those were available with the petitioner-company and they were prepared to do the same on the same costs as quoted. Annexure-B is the reply of the Office of the Controller of Imports and Exports, dated 13th of August, 1965 which is to the effect that: "This office has no objection if air-conditioners are obtained from Messrs Vulcan Company Ltd., Lahore." Annexure 'C' (to the comments of respondent Hospital) is a letter dated 9th of June, 1965 from Vulcan & Company Limited to the M.S. Sir Ganga Ram Hospital, Lahore wherein the import licence issued in their favour in lieu of the three air-conditioners has been acknowledged and even the price mentioned in this letter (Rs,29,000) is the same as mentioned in letter of M.S. To the petitioner-company (Annexure-A) with the comments referred to above. This letter reads as under:-- "The Medical Superintendent, Sir Ganga Ram Hospital, Queens Road, Lahore. Dear Sir, We are pleased to advise you that, we have been informed by the Chartered Bank, Lahore vide their letter dated 19-6-1965, that Import Licence No, 565810 for Rs,29,000 has been issued in our favour, in your account which is valid up to 18th December, 1965, towards the import of air- conditioners for your Hospital. We shall, therefore, request you to remit the payment of our Bill No,5,000 enclosed herewith in triplicate for Rs,38,950 and oblige, to enable us to notify the Letter of Credit in favour of our Principals. Thanking you we remain. Yours faithfully, for Vulcan Company. Limited.
(Sd.)
Akhtar 19/6 (DIRECTOR)." The afore-referred resume of facts emanating from correspondence between the petitioner- company; the respondent-hospital and between the Deputy Controller Imports and Exports clearly shows that the import licence in question was transferred in the name of the petitioner-company to import the three air-conditioners which it supplied to the respondent-Hospital valuing Rs,29,000.
The import of 23 air-conditioners and two compressors which were in excess of the authorization stipulated in the licence was unauthorised and petitioners were liable to be proceeded against under section 167, subsection (8)(b) of the Sea Customs Act, 1878.
8. A notice was given by the Collector Customs to the petitioner to which he replied in writing and the contentions raised in reply were duly considered by the Collector where after he was imposed a penalty of Rs,60,000. The effect of section 39 of the Sea Customs Act, referred to above was duly taken note of and that precisely is the reason that petitioner was not charged with the custom duty amounted to Rs,44,270.88. So far as the penalty amount which is impugned herein is concerned, no exception can be taken to it as the facts alleged are not disputed by the petitioner in so far as the import of 26 air-conditioners and 2 compressors on the basis of Import Licence No,565810 issued originally in favour of respondent-Hospital is concerned. That this licence was meant for import of only three air conditioners for Hospital as manifest from petitioner-company's own letter addressed to M.S. Sir Ganga Ram Hospital wherein it was held: "We are pleased to advise you that we have been informed by the Chartered Bank, Lahore vide their letter dated 19-6-1965 that Import Licence No,565810 for Rs,29,000 has been issued in our favour, in your account, which is valid up to 18th December, 1965 towards the import of air- conditioners for your Hospital."
This has not been controverted by the petitioner by filing any rejoinder. The attempt by the petitioner to seek protection of section 39 of the Sea Customs Act is not tenable firstly because the said section is confined to the custom duty and other charges and not to the imposition of fine under C section 167 of the said Act. Secondly, the expression used in the section "relevant date" would mean the date when it comes to the notice of the authorities that the petitioner had evaded the duties and taxes through misrepresentation. Thirdly, petitioner is in the equitable jurisdiction of the Court and he must demonstrate equity before he seeks any relief. The Constitutional jurisdiction of this Court cannot be used to perpetuate an ill- gotten gain to which petitioner was not even entitled at the relevant time. This is in line with the law laid down by the Hon'ble Supreme Court in Nawab Syed Raunaq Ali etc. v. Chief Settlement Commissioner and others PLD 1973 Supreme Court 2361 wherein at pages 258 and 259, it was held as under:-- "An order in the nature of a writ of certiorari or mandamus is a discretionary order. Its object is to foster justice and right a wrong. Therefore, before a person can be permitted to invoke this discretionary power of a Court, it must be shown that the order ought to be set aside had occasioned some injustice to the parties. If it does not wrong any injustice to any party, rather it cures a manifest illegality, then the extraordinary jurisdiction ought not to be allowed to be invoked. Acting on this principle, a writ of certiorari has been refused by the Courts in the following cases because to grant it would have had the effect of allowing the technicality of the law to cause unjust enrichment which it was the policy of the law to avoid or would have resulted in the confirmation of a certificate obtained wrongly by suppressing material facts or would have sustained an order of allotment which the petitioner had obtained by suppression of material facts within his knowledge or' would have resulted in perpetuating an injustice which had been done to the respondents by an incorrect order passed against them or would result in perpetuating a manifestly illegal order or would debar the taxing authorities from initiating proceedings because the requisite time for such initiation had expired." This principle was reiterated in Muhammad Baran and others v. Member (Settlement and Rehabilitation), Board of Revenue, Punjab and others (PLD 1991 Supreme Court 691) wherein at page 697, it was observed as under:-- 'Where, therefore, the High Court, in its extraordinary jurisdiction under Article 98 of the Constitution, 1962, had come to the conclusion, that the orders of the Deputy Claims Commissioners verifying the claims of certain persons were illegal and without jurisdiction, it was held that, 'it could legitimately refuse to set aside the order of the Officer on Special Duty (Central Record Office), even though the letter was clearly without jurisdiction'. Putting this observation in juxtaposition to the present case; if the allotments relied upon by the appellants made by the settlement functionaries were illegal and without jurisdiction and indeed if they were also based on fraud and forgery, in that eventuality even if the Board of Revenue which exposed fraud and forgery and. Set aside illegal transfer of properties worth millions by its own order, the High Court would not in exercise of its discretionary (writ) jurisdiction annul the order of the Board of Revenue, even though, to borrow the language used in the case of Raunaq Ali the latter, was clearly without jurisdiction."
8. Coming to the point that petitioner NA as not importer and that the import licence being in the name of M.S. Sir Ganga Ram Hospital, the fine if any should be recovered from Hospital, I am afraid, the petitioner is estopped to raise this argument as admittedly, it was the petitioner who imported 26 air-conditioners and two compressors. Mere use of the import licence issued in favour of M.S. Sir Ganga Ram Hospital which was meant only for three air-conditioners cannot be taken as a defence by the petitioner in the face of his own admission and the facts emanating from record.
The principle of locus poenitentiae is a well-recognized principle of Constitutional law and it has been held by this Court as well as by the Hon'ble Supreme Court that an order once passed, cannot be recalled if certain rights have been created in favour of a person. This principle cannot be stretched to protect orders and actions in derogation to law which have caused injustice on the face of record. In the instant case; in view of the value of the air-conditioners imported by the petitioner, it was liable to pay custom duty to the tune of Rs,44,270.88. However, since by inadvertence, it was neither charged nor the afore-referred amount was paid, they could be burdened with fine not exceeding five times of the value of the goods as mandated under section 167, sub-para. (8)(b) of the Sea Customs Act, 1878. The imposition of fine, is therefore, well within the ambit of law. In The Engineer-in-Chief Branch through Ministry of Defence. Rawalpindi and another v. Jalaluddin (PLD 1992 Supreme Court 207), the Hon'ble Supreme Court at page 210 observed as under:- "Locus poenitentiae is the power of receding till a decisive step is taken. But it is not a principle of law that order once passed becomes irrevocable and it is past and closed transaction. If the order is illegal then perpetual rights cannot be gained on the basis of an illegal order."
9. For what has been discussed above, there is no merit in this petition which is dismissed.