JUSTICE (R) ABDUL MAJEED TIWANA.-(l). This appeal is directed against the order, dated 31.10.2000, by which the learned Collector (Adjudication), Multan, directed the appellant to produce exemption certificate to be issued by the Income Tax Authorities within one month before the Assistant Collector, Dry port, Multan, showing the validity period thereof in respect of consignments in question, failing which the appellant will have to pay the withholding tax amounting to Rs.
70,338/-.
2. Brief facts leading up to this appeal are that the appellant A j had imported plastic moulding compound polypropylene and got (cleared vide bills of entry No. 0358 dated 24.6.1999 and No. 0365 dated 28.6.1999, under PCT heading No. 3902.1000 on which custom duty @25%, sales tax @15% and income tax @ 5% was payable. The appellant deposited the custom duty and sales tax on 20.7.1999 but the income tax, on scrutiny of the record, was not found to have been paid by them, a show cause j notice, demanding the payment of the said amount, was issued to them. In reply, the appellant claimed exemption from the payment of the aforesaid amount u/s 50(5) of the Income Tax Ordinance, 1979, and asserted that the production of exemption certificate, dated 22.7.1999, issued by the Income Tax Authorities, covered the imported consignments.
3. The learned adjudicating officer did not accept the above contention for the reason that custom duty and sales tax were deposited by the appellant on 20.7.1999 while the exemption certificate issued by the Income Tax Authorities was valid from 22.7.1999 to 21.8.1999 and it could not operate retrospectively to cover the consignments in question and the custom duty and sales tax deposited thereunder.
4. It is argued on behalf of the appellant that at the time of obtaining the release of the imported goods, they had produced before the Custom Authorities exemption certificate No. CIT-MN/g- I/79/C.E/98-99/8261/318, dated 3.6.1999, which was valid upto 30.6.1999 and in this case since the bills of entry were filed on 24.6.1999 and 28.6.1999 and after the finalisation of assessment thereon even cash No. 58, dated 29.6.1999, and No. 187 dated 30.6.1999 were allotted to them (appellant), the aforesaid exemption certificate fully covered them. According to the learned counsel, due to unavoidable circumstances, the appellant could not deposit the custom duty and sales tax till 20.7.1999 and when the Customs Authorities insisted on the production of a fresh exemption certificate, they re approached the Income Tax Authorities, who, after a good deal of haggling, issued the second exemption certificate No. CIT-MN/g-I/ 1-13/Fc) 1999-2000/501/23, dated 22.7.1999, but this too was not accepted by the Customs Authorities. He contends that under section 30 of the Custom Act, 1969, the date of filing the bills of entry for ex-bonding the goods for home consumption was the relevant date for the purpose of assessing the valuation of goods and that assessm ent included the calculation of all duties and taxes leviable thereon, including the exemptions available to the importers under any law and in the instant case the first exemption certificate, dated 3.6.1999, filed along with the bills of entry, which were filed on 24.6.1999 and 28.6.1999, fully covered them as it was valid till 30.6.1999.
5. On the contrary, it is argued on behalf of the respondent that neither the first exemption certificate issued by the Income Tax Authorities, nor the second one, was valid because the first expired before the date of deposit of the duty and taxes and the second was operative after such deposit of the duty and taxes. The official producing the record, however, concedes that the cash numbers were alloted to the appellant for the deposit of the assessed amounts within the validity period of the first exemption certificate.
6. Ordinarily when the exemption certificate is filed along with the bill of entry and other relevant documents and the assessm ent of the customs duty and taxes of the imported goods is finalized, the Customs Authorities can not insist on the production of fresh exemption certificate to be issued by the Income Tax Authorities if the amount of customs duty and taxes are deposited by the importer within a week of the finalization of such assessment and meanwhile the exemption certificate expires by afflux of time. However, if the importer does not deposit the assessed amount of duty and taxes within a week and the duration of exemption certificate issued by the Income Tax Authorities expires meanwhile, then the Customs Authorities can insist on the production of fresh exemption certificate to cover the amount of duty and taxes to be deposited after the lapse of the first week as 1 on the date of such deposit the rate of such duty might change and the importer might have to deposit the amount at the new rates as envisaged by section 30 of the Customs Act, 1969.
7. In this case, the exemption certificate was not only valid on the date the bill of entry was filed by the appellant with the Customs Authorities but also on the date the assessment of customs duty and taxes was finalized by them and even cash numbers for the deposit of the assessed amounts had been issued by them to the appellant. Had the appellant deposited the assessed amount within a week of such assessm ent, the matter would have ended there and no controversy had arisen, but they could not deposit the assessed amount within a week and happened to deposit the same on 20.7.1999 when there could be a possibility of a change in the valuation of the goods and the necessity of a fresh exemption certificate had arisen. On the insistence of the Customs Authorities, the appellant did produce the second exemption certificate but it was valid from 22.7.1999 and did not cover the date of deposit of customs duty and taxes by the appellant i.e. 20.7.1999. Technically there could be a valid objection that the second exemption certificate could not operate retrospectively so as to cover 20.07.1999 but the issuance of the second exemption certificate by the Income-tax Authorities by itself indicated that the appellant was entitled to the income-tax exemption spite a gap of few days between the expiry of the first exemption certificate and the issuance of second one because for the uncovered period of 21 days from 30.6.1999 to 22.7.1999, the Income-tax Authorities were responsible for delaying the issue of second exemption certificate.
8. In view of the above, the appeal is accepted and the impugned order is set aside.