' SABIHUDDIN AHMED, J.--- The facts as stated in the memo. Of Petition which have been rebutted by the respondents appear to be that the petitioners who own a Textile Mills in Tando Jam District Hyderabad imported four sets of Cone Winding Machines which arrived in two different shipments in November and December, 1985 and taken into a bonded warehouse. They were ex bounded on 15-7-1986 after assessm ent of customs duty at the rate of 20% ad valorem alongwith 5% surcharge and 5% Iqra surcharge. Though the rate of customs duty specified in the First Schedule to the Customs Act in 1985 was 40% ad valorem the same was reduced by the Legislature through an amendment in the aforesaid Schedule effected through the Finance Act, 1986 published in the Gazette of Pakistan, dated 29th May, 1986 to 20% ad valorem. The petitioners were allowed to clear the goods upon payment of duty at the aforesaid rate.
2. Nevertheless, on 19-10-1986 the petitioner received two show-cause notices from the respondent No,2 stating that due to inadvertence regulatory duty at the rate of 30% ad valorem in terms of S.R.0.658(1)/86, dated 1-7-1986 could not be levied and, called upon the petitioners to pay Rs,11,36,657 and Rs,13,46,040 in respect of two consignments calculated on the basis of the import value of the same. It was further stated that in the event of non-payment penal and coercive action will be taken. The petitioners have questioned the levy of regulatory duty through this petition.
3. Mr. Muhammad Ali Saeed learned counsel for the petitioners questioned the levy or regulatory at the aforesaid rate on a number of grounds. In the first instance he contended that by imposition of regulatory duty through the Notification in question the Federal Government in the exercise of delegated authority had attempted to undo what the legislature had expressly done through a clear manifestation of its sovereign will. He pointed out that whereas the legislature had reduced the quantum of customs, duty from 40% to 20% through an amendment in the First Schedule to the Customs Act through the Finance Act, 1986, the executive chose to enhance such duty by adding 30% regulatory duty and instead of giving effect to legislative will chose to impose further burden upon the tax payers. Indeed theoretically there could be no cavil with the proposition that howsoever, wide the spectrum of the delegated legislation be, the delegated power can not be so exercised as to defeat the express legislative intent. Nevertheless, it remains to be seen whether the levy of regulatory duty had such effect.
4. In this context it may be pertinent to mention that the provisions of section 18(2) of the Customs Act, where under regulatory duty is leviable at the relevant time and prior to its amendment through the Finance Act, 1989 read as under: "The Federal Government may, by Notification in the Official Gazette, levy, subject to such conditions, limitations or restrictions as it may deem fit to impose, a regulatory duty on all or any of the articles specified in the First Schedule at a rate not exceeding fifty per cent of the rate, if any specified therein or at a rate not exceeding hundred per cent of the value of such articles, as determined under section 25 and may, by a like Notification, levy a regulatory duty on all or any of the articles exported from
(i) in the case of article enumerated in the Second Schedule at a rate not exceeding thirty per cent of the rate specified in the Second Schedule or of the amount which would represent the value of such articles as determined under section 25, and
(ii) in the case of article not enumerated in the Second Schedule, at a rate not exceeding thirty per cent of the amount which represents the value of such articles as determined under section 25."
5. The question as to the extent to which such duty could be levied on goods mentioned in the First Schedule to the Customs Act has been authoritatively settled by the Honourable Supreme Court in Yousuf Rerolling Mills v. Collector of Customs PLD 1988 SC 232 and it was held that such duty cannot exceed the rate of 50% of the rate of duty mentioned in the aforesaid Schedule. Admittedly the rate of customs duty under the Schedule being 20% ad valorem the regulatory imposed could not exceed the rate of 10%. Accordingly, such duty at the rate of 30% ad valorem could not be claimed.
We requested Mr. Saeed whether he would be satisfied if we would direct that such duty should only be collected at the rate of 10% ad valorem. Learned counsel, however, stated that he would prefer to challenge the entire levy.
6. Elaborating his contention Mr. Saeed argued that the power to impose regulatory duty was intended to be exercised only for a limited purpose and within a limited time frame. He relied upon observations of the Honourable Supreme Court in Shaikh Abdul Rahim, Allandita v. Federation of Pakistan PLD 1988 SC 670 to the effect that such duty was in the nature of a customs charges imposed to create a balance in a fluctuating market." He, therefore, argued that before imposing such duty it was necessary for the respondents to show that independent application of mind had been effected with the object of creating such balance, whereas, the Notification in question displayed no such exercise but suggested a complete ignorance of the limitations imposed by law as well as defines of legislative mandate. Mr. Muhammad Ali Saeed further contended that the legislative power to impose taxes, when delegated to their executive must be exercised reasonably and fairly and unreasonable exercise of such power could always be struck down by this Court under its judicial review jurisdiction conferred by Article 199 of the Constitution. In support of his contention he referred to certain observations of the Honourable Supreme Court in Karachi Building Control Authority and others v. Hashwani Sales and Services Limited and others PLD 1993 SC 210 and of the Lahore High Court in Ittefaque Foundry v. Federation of Pakistan PLD 1990 Lah.
121.
8. Unfortunately, we did not receive much assistance from the learned counsel for the respondent who consistently attempted to defend the levy in question arguing that the Notification was issued under lawful powers notwithstanding limitations imposed by section 18(2) of the Customs Act and the law authoritatively declared by the Honourable Supreme Court in Yousuf Re-rolling Mills case.
9. Nevertheless, we have anxiously considered the question raised at the bar by learned counsel for the petitioners and regret our inability to subscribe his view in totality. Indeed the question that the executive has attempted to undo the manifest expression of legislative will no longer arise once it is recognised that the quantum of regulatory duty at the relevant time could not exceed 50% of the rate of duty specified in the First Schedule. There can also be no cavil with the proportion that such regulatory duty can only be levied for certain limited purposes. Nevertheless, in the recent judgment in Collector of Customs v. Ravi Spinning Mills 1999 SCM R 412. The Honourable Supreme Court has observed as under:-- "Firstly, the reasons stated by this Court for imposition of regulatory duty in Abdur Rahim's case (supra) are not exhaustive. There may be variety of other reasons depending on the facts and circumstances of each case which may persuade the Government to exercise its discretion to levy regulatory duty within the framework of section 18(2)(3) and (4) of the Act. Mr. K.M.A. Samdani rightly pointed out that apart from the reasons mentioned by this Court in Abdur Rehman's case, there could be several other reasons to justify the imposition of regulatory duty by the Government."
10. In the same judgment their Lordships have expressly held that it is not necessary that the reasons for imposition of regulatory duty must be stated in the Notification itself and non- mentioning of such reasons would invalidate the levy. In the instant case once it is acknowledged that quantum of regulatory duty cannot be exceeded 10% of the import value of the goods in any case, it is difficult to assume that such levy was ultra vires legislative mandate. Indeed legislature decided in its wisdom that the rate of normal customs duty under section 18(1) on the goods in question be reduced from 40% to 20% ad valorem. Nevertheless, it seems to be within the power of the Federal Government and within the objects of section 18(2) to allow importers to avail of the benefit of such reduction gradually so as to prevent a disbalance in the market. Mr. Saeed contended that benefit of doubts or presumption should be given to tax payers and not the Government in accordance with well-established principles of interpretation of fiscal statutes. In our humble opinion, however, this principle would not be attracted inasmuch as it is not a question of interpretation of a fiscal law, but one of declaration of a statutory instrument invalid. The principle that would apply here in our view would be that a Court must explore all avenues for upholding the validity of the instrument before striking it down as ultra vires.
11. Mr. Saeed appears to be correct in so far as the general proposition of law to the effect that apart from the limitations expressly imposed by statutes conferring powers upon executive all public power must be exercised reasonably, fairly and in the public interest, is concerned.
Nevertheless it is almost impossible to lay down a universal rule to determine what is "reasonable" and what may be reasonable in one set of circumstances may be altogether unreasonable in another. The question of reasonableness, therefore, has to be considered always in the relevant context and the Court does not substitute its opinion for that of competent Authority. It is well- settled that in fiscal matters the Courts have always conceded a greater altitude to the Legislature and its delegatees in choosing the subjects of taxation and the measures of levies imposed. There are hardly any judicially manageable standards to review the propriety or the rate of a particular levy unless of course it is found to be manifestly confiscatory or discriminatory. We, therefore, invited the learned counsel to refer to any reported precedent where a particular levy has been struck down on the ground of being unreasonable. Mr. Saeed was only able to refer to the Lahore High Court Judgment in Ittefaque Foundry v. Federation of Pakistan PLD 1990 Lah.
121. Having carefully gone through this illuminating judgment of Khalil-urRehman, J. (as his Lordship then was in High Court). We are of the view that it is distinguishable and not of much help to the petitioners. In this case it was held that the power to grant exemption from taxes cannot be arbitrarily exercised and there must be some rational basis for treating two similar products differently. Accordingly, when it was shown that steel ingots and billets were being treated as the same product for purposes of excise duty and sale tax, an exemption from duty granted to ingots was found to be violative of Article 25 of the Constitution. In the instant case no question of exemption is involved and admittedly the same measure or regulatory duty has been imposed on goods similar to those imported by the petitioners.
12. Finally, Mr. Saeed argued that imposing duty at a rate transgressing the limitations imposed by law itself showed that no serious application of mind was ever made by the concerned functionaries of the Government and this itself vitiated the Notification in question. We must indeed lament the manner in which the responsible State functionaries some times act in delicate matters involving public revenues and rights of citizens or which cause the impression that public power was not exercised responsibly. At the same time, however, the answer to Mr. Saeed's contention is found in the judgment of the Honourable Supreme Court in Yousuf Re-rolling case PLD 1990 SC 232 where their Lordships only declared that the levy of regulatory duty in access of 50% of the rate of duty mentioned in the First Schedule was invalid. Accordingly we would allow this petition only to the extent that the petitioners are liable to pay regulatory duty at the rate of 10% of the import of the goods, i,e, Rs,3,78,885 and Rs,4,48,680 on the two consignments. Above are our reasons for the short order announced on 20-12-1999.