MIAN QAMARUDDIN AHMED, JUDICIAL MEMEER.--(1). This is an appeal against the Order-in-Review No. 04 of 1998 of th!.. Collector of Customs and Central Excise, Peshawar, passed in exercise of powers under section 195 of the Customs Act, 1969.
2. Briefly the facts of the case are that Deputy Collector of Customs and Central Excise, Gadoon Amazia reported on 5-5-1997 that during scrutiny of various refund claims sanctioned in the past it was noticed that an amount of Rs. 1,61,10,596 was sanctioned illegally to the appellants on account of his refund claim Under SRO 108(1)/95 whereby Customs Duty on one fourth quantity of the raw material imported was available under certain conditions to the Industries of Gadoon Amazia Industrial Estate NWFP. He, therefore, referred the case to the Collector to call for the record and examine the case for re-opening it under section 195 of Customs Act, 1969. As a result, the learned Collector Central Excise and Customs Peshawar referred the matter to the Board vide C. No. V- Cus(LS) Refund/94/97/4379 dated 16-6-1997 with the request to clarify the following:--
(i) Whether the period from 12-2-1995 .To 13-1-1996 i.e. Before the issuance of the final certificate under notification No. SRO 108(1)/95 dated 12.2.1995 could be considered for grant of concession under the said SRO?
(ii) Whether the period from 14-1-1996 to 30-6-1996 i.e. After the issuance of final certificate during which the goods were ex-bonded without claiming the benefit of SRO 108(1)/95 dated 12-2-1995 on ex-bond bill of entry could be considered for grant of refund of duty and taxes?
In between, a show cause notice was issued by the Superintendent, Customs and Central Excise, Gadoon Amagai on 6-4-1998 for the recovery of the refund amount to the appellants.
3. The Central Board of Revenue vide letter C. No. 1(7) S&R-2/90 dated 27-2-1998 addressed to the appellants with a copy to the learned Collector manly held, although the appellants were already recipient of Capacity Certificate issued by Central Board of Revenue under SRO 504(1)/94 dated 9- 6-1994 but not under SRO 108(1)/95 dated 12-2-1995, they are not entitled to the concession for the period prior to 14-1-1996, the date on which the required certificate was issued under SRO 108(1)/95 to them. A copy of letter of CBR's No. 1(7)S&R 2/98 dated 27-2-1998 is re-produced:-
(i) The case has been examined by the Board. While it is correct that the exemption available under SRO 108(1)/95 dated 12-2-1995 is for five years, it is required that any such unit claiming exemption under the subject SRO has to fulfil the conditions prescribed therein before becoming entitled for any such exemption. Although you were already recipient of capacity certificate issued by Central Board of Revenue under SRO 479(1)/92 dated 14.5.1992 but were not recipient of any certificate under SRO 108(1)/95 dated 12-2-1995. As explained earlier SRO 108(1)/95 provides for completion of certain conditions for availing the exemption of concession available thereon. You completed the required formalities by sending back the prescribed proforma duly filled in and accordingly you were issued a final certificate on 14-1-1996. For the materials imported prior to completion of required conditions, you are not entitled for exemption under the subject SRO.
(ii) Regarding your contention that you were not allowed benefit of SRO 108(1)/95 by the local Customs authorities. It is pointed out that exemption can be availed only upon being eligible for availing the same by fulfilling the prescribed conditions specified therein. Hence Customs authorities have rightly disallowed you the benefit of SRO 108(1)/95 as by that the you were not entitled for the benefit provided thereon.
(iii) It is further pointed out that no distinction what so ever has been made in SRO 108(1)/95 regarding fulfilment of conditions by the intending unit or those already holding capacity certificate. Hence your contention that since you were already holding capacity certificate, therefore, you were not required to undergo all the procedural formalities is not correct; and
(iv) Keeping in view the above details it is regretted to inform you that you were entitled to concessions from the date of issuance of capacity certificate dated 14-1-1996, hence not entitled to. Refund of duty paid on the materials imported prior to issuance of capacity certificate dated 14- 1-1996.
4. Consequently, the case was re-opened by the learned Collector who issued a show cause notice vide C. No. V-Cus(LS) Refund/94/07/4740 dated 2-7-1998 to the appellants as to why the amount of Rs. 1,61.10,596 refunded by the then Deputy Collector of Customs and Central Excise be not recovered from the appellants besides taking penal action as may be deemed appropriate.
5. Mr. Tariq Najeeb Chaudhry, advocate, appeared before the Collector and submitted an application that an earlier show cause notice dated 6-4-1998 issued by Superintendent of Customs and Central Excise, Gadoon Amazia, reply to which was submitted by the appellants is pending adjudication before him. Therefore, the present show cause notice was not maintainable as it was beyond the scope of section 195 of the Customs Act, 1969. It was also stated that the Central Board of Revenue has similar powers under section 195, which it failed to exercise and the learned Collector should not proceed in the matter as judicial proceedings before him would be no more than farce and also against rule of law and fair-play. It was also stated that the notice was barred by time.
6. That he also urged before the learned Collector that the refund was sanctioned under SRO 108(1)/95 dated 12-2-1995 whereas all' the previous SROs in the matter contained similar conditions including the capacity certificate which the appellants held previously in terms of SRO 108(1)195 dated 12-2-1995 under previous SROs and was not required to get new capacity certificate. The SRO 108(1)/95 dated 12-2-1995 in fact desired the certificate of those units which were not functioning according to the desired capacity before the fixed date whereas the appellants' unit was operating already in accordance with the conditions laid down in SRO 108(1)/95 dated 12-2- 1995 and the appellants having been granted the desired capacity certificate previously by the same authority, no new certificate was required. However. The facts leading to the delayed issuance of capacity certificate and the enhancement of capacity on 9-12-1996 in accordance with SRO 108(1)/95 dated 12-2-1995 by the Central Board of Revenue inspite of appellant's number of requests were explained to the learned Collector and it was submitted that delay in getting capacity certificate was not on his part. But without considering these aspects of the case, he passed the impugned order illegally.
7. The learned counsel for the appellants made the following submissions before us:--
(a) That the appellants' Industry immediately after the Notification of the SRO dated 12-2-1995 wrote a letter No. FM/95/134 dated 16-2-1995 to the Assistant Collector, Customs, Central Excise and Sales Tax, Mardan that the appellants being a recognised industrial unit wanted to avail the concession of SRO 108(1)/95 dated 12-2-1995. Copy of this letter was sent to the Superintendent, Customs, Central Excise and Sales Tax, Industrial Estate Gadoon Amazia. The learned Assistant Collector vide his letter C. No. IV-CE(Survey) 11/90/11/1047 dated 19-2-1995 informed that he cannot allow the clearance on concessionary rates with reference to SRO 108(1)/95 dated 12-2-1995 unless the Board specifically issues provisional or final certificate. On the other hand, the Superintendent vide his letter C. No. 371 dated 18-2-1995 informed that a fresh Form "S" will be required for availing the exemption under SRO dated 12-2-1995. The Central Board of Revenue through its letter No. 1(7)S&R-2/90 dated 5-81997 asked the Collector, Peshawar to confirm authenticity of Assistant Collector, Mardan's letter dated 19-2-1995. The Deputy Collector, Gadoon Amazia through his letter No. IV-CE(Survey) 11/90/11/2728 dated 23-8-1997 confirmed to the Superintendent, Law Branch, Customs House, Peshawar that Assistant Collector Mardan's letter C. No. V-Cus(LS) Refund/94/6017 dated 19-21995 was issued by that office.
(b) That the appellants vide their letter dated 15.2.1995 also requested the Chief, Survey and Rebate, Central Board of Revenue to clarify the applicability of capacity certificate issued under SRO 504(1)/94 to the clearance to be made under SRO 108(1)/95. A similar request was made to Member Customs, Central Board of Revenue, through letter PAL-ISB-CBR dated 16-2-1995. The Central Board of Revenue vide letter No. 1(5)-S&R-2/90 dated 20-2-1995 sent copy of appellants' letter dated 16-2-1995 and copy of Member's remarks to the effect "we may issue clarification till 28-2-1995 at the latest" to the Collector, Peshawar, for necessary action in the light of Member's remarks. Reminders were issued by the appellants on 21-2-1995 and 07.03.1995. The Central Board of Revenue vide its letter dated 16-4-1995 issued proformas for providing certain information to determine capacity for exemption under SRO 108(1)/95. On 14-1-1996, Capacity Certificate was issued which was less than the actual capacity. On 21-1-1996, the appellants made a representation to the Central Board of Revenue to certify the capacity equal to actual capacity.
The Central Board of Revenue through its letter dated 9-12-1996, enhanced the capacity.
(c) That a perusal of the capacity certificate clearly indicates that:--
(i) capacity of unit is not dependent upon SRO.
(ii) the Central Board of Revenue has failed to realise that it has to certify the capacity and it has no power to arbitrarily grant quota.
The capacity certificate dated 14-1-1996 was issued on the basis of Survey Report submitted by the Peshawar Collectorate on 16-12-1993 before the issuance of SRO 108(1)/95 dated 12-2-1995. The Central Board of Revenue arbitrarily reduced the capacity as surveyed by the Peshawar Collectorate without assigning any reason. However, this was enhanced on 9-12-1996. The matter of certifying actual capacity was delayed by the department. By this way the department cannot be allowed to defeat the purpose of exemption notification.
(d) That it was also argued that the facts of the case and the capacity certificate issued with reference to SRO 108(1)/95 clearly reveal that as a matter of fact the capacity certificate of the unit is not dependent on the SRO whether it is under SRO 504(1)/94 or SRO 108(1)/95 or under any other SRO. The refusal of the department to give benefit of SRO 108(1)/95 on the basis of capacity certificate which was valid for SRO 504(1)/94 was illegal. The delay was caused by the Department in issuing the certificate of actual capacity. As a result, the appellants were deprived of the facility to clear the goods without payment of duties etc. Under Bank Guarantee.
(e) That the appellants applied for refund of customs duties etc. Exempted under SRO 108(1)/95 vide refund applications No. FM/96 dated 3-6-1996, No. FM/96 dated 3-6-1996; No. FM/96 dated 3.6.1996; and No. FM/96/584 dated 9-10-1996 and submitted consumption certificates bearing C.
No. 841 dated 12-3-1997: C. No. 842 dated 12.3.1997: C. No. 4955 dated 15-12-1997: C. No. V-Cus (Consumption)/97/456 dated 15-12-1997: C. No. V-Cus (Consumption)/98/710 dated 19.3.1998: C.
No. V-Cus (Consumption)/98/1576 dated 11-6-1998: and C. No. V-Cus (Consumption)/98/2067 dated 1-8-1998 granted by the Assistant Collector, Gadoon Amazia. The learned Deputy Collector vide Refund Order Nos. 21/96, 22/96 and 23/96 dated 21-10-1996 refunded amounts of Rs. 10,08,70/-, Rs. 25,19,517 and Rs. 60,15,000 and vide Refund Order No. 1/97 dated 13-1-1997 refunded an amount of Rs. 59,07,312.
(f) That in para 8 (vi) of the impugned order, the contention of the appellants has been recorded that the appellants through their letter dated 16-2-1995 requested. The Assistant Collector, Customs, Mardan to release the raw materials and components under SRO 108(1)/95 on the already issued capacity certificate. A reference was also made to the request made through letter dated 15-2-1995 to the Chief (Survey & Rebate), Central Board of Revenue to confirm that the already issued certificate will be sufficient and no other certificate under SRO 108(1)/95 was necessary.
(g) That the capacity certificate is purely related to the suitable in house facilities; it is immaterial whether it was issued under one Notification or the other. The Assistant Collector, Mardan illegally refused to clear the goods for exemption under SRO 108(1)/95 on the basis of the capacity certificate issued under SRO 504(1)/94 and failed to consider the real purpose of the procedure laid down in the aforesaid to notifications. Under these circumstances, the appellants were forced to clear the raw materials and components after payment of duty and tax. The learned Deputy Collector considered the purpose of the procedure laid down in the aforesaid to notifications and passed orders for refund of duty after the goods had been manufactured using the raw materials and components imported and thus all the conditions laid down for exemption under SRO 108(1)/95 were virtually fulfilled.
(h) That in the following cases, the Capacity Certificates issued under different SROs were accepted for the purpose of notification No. SRO 487(1)/94 dated 9-6-1994 and SRO 108(1)/95 dated 12-2-1995:--
(i) The Central Board of Revenue, vide C. No. 1(19)S&R-2/92, dated 4-12-1995 directed that the final certificate of even number dated 22-5-1995, issued in favour of M/s. Cherat Paper sack Limited, Gadoon Amazia under SRO 487(1)/94 dated 9-6-1994 for the manufacture of Sacks of Kraft Paper will be applicable to SRO 108(1)/95 dated 12-2-1995 in addition to SRO 487(1)/94 dated 9-6-1994.
(ii) That Central Board of Revenue, vide C. No. 1(19)S&R-2/92 dated 6-11-1995; directed that Cherat Paper sack Limited, 26-Gadoon Amazia will be allowed adjustment of imports/ex-bonding during 3-7-1994 (the date of issue of SRO) and 22-5-1995 (the date of issue of final certificate).
(iii) That Central Board of Revenue, vide C. No. 1(18)S&R-2/90 dated 17-7-1995, directed that certificate of even number dated 7-5-1995 issued in favour of M/s. Khyber Papers (Pvt.) Limited, Gadoon Amazia under SRO 487(1)/94 dated 9.6.1994 will automatically be applicable to the new SRO 487(1)/95 dated 14-6-1995. It further allowed adjustment of imports/ex-bonding made by the unit during 1-7-1994 (the date of issue of SRO and 7-5-1995 (the date of issue of final certificate).
(iv) The Central Board of Revenue through its C. No. 1(2)S&R-2/90 dated 29-10-1998 directed that since the unit of M/s. M.Y. Electronics Industries (Pvt.) Limited, .Gadoon Amazia was already enjoying concessionary import before the issuance of SRO 108(1)/95 and they were not issued any capacity certificate afresh, they are entitled to concession under SRO 108(1)/95 as they were holding Capacity Certificate under SRO 504(1)/94 dated 9-6-1994.
(i) That in the subject matter, the clearances were being made under SRO 504(1)/94 and refund application was made after issuance of final certificate under SRO 108(1)/95. Keeping in view the directions given by the Central Board of Revenue to the Collector Peshawar in the cases of M/s. Cherat Paper sack Limited, M/s. Khyber Papers (Pvt.) Limited and M/s. M.Y. Electronics Industries (Pvt.) Limited, Godoon Amazia, the learned Collector, Peshawar should not have initiated any proceedings against the appellants.
(j) That the the under section 32(3) is six months. The refunds were made on 21-10-1996 and 13-1- 1997 whereas the show cause notice by the Collector was issued on 6-4-1998 and it was hopelessly the-barred. To circumvent the law, he exercised powers under section 195 of the Customs Act, 1969, finding his action the-barred.
(k) That in para "9" and "10" of the comments filed by the Department before this Tribunal, it has been contended that the Superintendent issued demand-cum-show cause notice under section 32(3) of the Customs Act, 1969 and the amount involved was beyond the scope of adjudication powers, therefore, the case was referred to Collector. The relevant SRO 56(1)/93 dated 19-1-1993 gives powers to the Superintendent under section 32(3) without any limit. The case was barred by the, therefore, despite the objection raised in reply before the Superintendent, the learned Collector did not refer to the dates of refunds.
(I) That the impugned order was signed on 10-12-1998 whereas part of the refund was allowed on 21-10-1996, which to was beyond the stipulated period of to years under section 195(2) of the Customs Act, 1969.
8. On the other hand, the Assistant Collector and Mr. S.K. Masood Kiani, Deputy Superintendent, appearing on behalf of the respondent Collector repelled the arguments of learned counsel for the appellants and namely relied on the impugned judgment of the learned Collector and submitted that he rightly exercised powers under section 195 of the Customs Act, 1969 in the circumstances of the case. On confronting, they admitted the facts leading to delay in granting the capacity certificate under SRO 108(1)/95 dated 12-2-1995 by the Customs authorities and also the four cases (mentioned in para 6 above) in which the capacity certificate granted previously under different SROs was considered as correct for the purpose of SRO 108(1)/95 dated 12-2-1995. However, they vehemently argued that it was duty of the appellants to satisfy in the including the requirements of the capacity certificate as in SRO 108(1)/95 dated 12-2-1995 which they failed to complete and so were not entitled to concession and refund in any manner which was illegally sanctioned by the Deputy Collector and correctly set aside in the impugned order.
9. As Central Board of Revenue did not re-open the case on its own level under section 195 of the Customs Act 1969 but otherwise was associated with it although, we also summoned the concerned Secretary of the Central Board of Revenue but as is evident from his letter No. 1(7)S&R- 2/90 dated 28-1-1990, the matter was solely left for the Collector to defend. All this shows that the Central Board of Revenue did not like to say anything in defence.
10. While asking for the clearance of the goods, the appellants did not mention the SRO 108(1)/95 dated 12-2-1995 on the relevant Bills of Entry.
11. We have considered the arguments of both the parties and examined the record and hold that the appellants were lawfully entitled to exemption under SRO 108(1)/95 dated 12-2-1995 on the basis of the Capacity Certificate already granted to them under SRO 504(1)/94 dated 9-6-1994 as approved capacity of the same certificate was maintained subsequently while issuing Capacity Certificate firstly on 14-1-1996 and then on 9-12-1996 when the capacity was enhanced by the same authorities of Customs under SRO 108(1)/95 dated 12-2-1995. Therefore, the appellants having fulfilled all the conditions including the consumption certificate, in no way, can be deprived of exemption under the SRO 108(1)/95 for the period prior to the date of the issuance of the certificate irrespective of the fact that they fulfilled other requirements of the SRO afterwards in the given circumstances. We find that the delay in the issuance of the Capacity Certificate was on the part of the Customs. The appellants were vigilant as they applied immediately for clarification after the SRO was notified and inspite of the remarks/directions of ("we may issue clarification till 28-2- 1995 at the latest") the then Member Customs of the Central Board of Revenue as in para 7(b) above, the issuance of Capacity Certificate was delayed for which the appellants cannot be penalized.
12. It is a well-settled law as propounded in a number of judgments of the superior courts that mere technicalities cannot prevent the affording of relief which, otherwise, someone is found entitled to receive. The Honourable Supreme Court has recently held in a case, C.A. No. 223 of 1994 decided on 16-121998 (duly approved for reporting but no yet published):-- "That the technicalities cannot prevent this court from exercising its constitutional jurisdiction and affording relief which otherwise petitioner is entitled to receive."
The same view was also taken in cases reported as 82 SCMR 494, 82 SCMR 673 and, PLD 1990 Lahore 121.
13. We have also noticed that in similar circumstances such relief was granted previously in cases mentioned in 7(h) above Which fact has not categorically been refuted by the learned Collector in the impugned order.
14. It would have sounded judicious and lawful if regular appeal was filed under section 194-A of the Customs Act, 1969 before Collector Appeals on the receipt of letter dated 27-2-1998 from the Central Board of Revenue also seeking condonation of delay thereto. Re-opening of the case on the basis of the Central Board of Revenue's letter referred to above and subsequent decision as per the impugned order amounted to condemning the appellants un-heard which is un-lawful in the eye of law.
15. It is true that on the relevant Bills of Entry for clearance, I SRO 108(1)/95 was not mentioned but as the Central Board of Revenue itself ignored this aspect for the period subsequent to the date of the issuance of the Capacity Certificate, it is not now - open to the Department to raise this objection. Even otherwise, as already observed above, such technicalities have no bearing in such like cases.
16. In view of the above, we find no legal infirmity in the refund already granted to the appellants vide Order No. 21, 22, 23/96 and No. 4/97 dated 13/1/1997 by the Deputy Collector. We confirm this order, set-aside the one passed by the learned Collector and accept the appeal.
17. Order announced. Copies of the same may be sent to all concerned immediately through registered post.