MALIK MUHAMMAD QAYYUM, J.--(1). The factual background leading to the filing of this petition is that the petitioner was running a cement plant in Pakistan. Keeping in view the exemption granted by the Government vide Notification No. S.R.O. 484(I)/92, dated 14-5-1992 from the payment of customs duty of sales tax on the import of plant and machinery which was not locally manufactured the petitioner intended to undertake expansion of its plant.
2. The petitioner entered into a contract in May, 1994 for import of machinery and letter of credit was opened on 28-12-1994. Before the goods could reach Pakistan the Notification, dated 14-5-1992 ceased to be operative. Thereafter, a fresh Notification bearing No. 978, dated 4-10-1995 was issued. This notification modified the terms of previous notification. A dispute arose as to whether the goods imported by the petitioner was entitled to the exemption under Notification, dated 14-5- 1992 or the Notification, dated 4-10-1995. The petitioner filed a Constitutional petition in this Court praying that it be declared that the petitioner was entitled to the benefit of Notification, dated 14-5- 1992 as the letter of credit for the import of goods had been opened before the expiry of the period mentioned in Notification, dated 14-5-1992. Under an interim order passed by this Court the goods were released by the respondents. During the pendency of aforesaid petition the respondents served a notice under section 32(2), dated 4-12-1999 calling upon the petitioner to show-cause as to why the petitioner be not held liable to pay the entire duty and charges as the goods imported by the petitioner were being locally manufactured.
3. In support of this petition the learned counsel for the petitioner has contended that the respondents were estopped from claiming to claim that the machinery imported by the petitioner was locally manufactured in view of various representations which the respondents had been making. In this respect learned counsel has heavily relied upon letter, dated 25-10-1993 addressed by the petitioner to the Secretary, Ministry of Industries and Production, the reply of the aforesaid Ministry, dated 21-4-1994 and the letter, dated 15-5-1994 of the Ministry of Commerce.
4. The learned counsel for the respondents has objected to the maintainability of this petition on the ground that only a show-cause notice has been issued to the petitioner and no order adverse to their interest has been passed. He has further stated that the letters relied upon by the petitioners were issued before the enforcement of Customs General Order No. 17 of 1994, dated 30- 10-1994. This C.G.O. Was issued as a result of negotiations between the Central Board of Revenue, the private sector and relevant officers in various ministries. The letter of credit was opened by the petitioner much after the issuance of C.G.O. i.e. On 28-12-1994. The petitioners were aware of contents of C.G.O. But did not adhere to the same. They are, therefore, not entitled to any relief. The petitioner had been collecting the information from the wrong ministries which had nothing to do in the matter which was in the exclusive domain of the Central Board of Revenue. The petitioner had filed 102 bills of entries out of which 68 bills of entries related to the machinery not being locally manufactured which has since been released. So far as the regulatory duty is concerned learned counsel has relied upon the case of Zaman Paper Mills in which it was ruled that the exemption from payment of duty does not include regulatory duty unless specifically so stated.
5. In reply the learned counsel for the petitioner has stated that the contract was entered into between the petitioner and the foreign supplier in May, 1994 much before C.G.O. No. 17 of 1994 came into force and as such the .Vested right which had accrued to the petitioner could not be defeated by the aforesaid Customs General Order. It has been emphasised that the representation made by the Ministry of Industries as also the Ministry of Commerce was well within the knowledge of Central Board of Revenue and it was wrong to suggest that the Board was kept in dark.
6. From the above narration, it follows that the dispute before this Court is as to whether the respondents are on the basis of principle of promissory estoppel estopped from taking up the position that the machinery imported by the petitioner was being locally manufactured in view of the representations and assertions made by the respondents to the contrary.
7. The petitioner has placed on record a copy of the judgment of the Division Bench of Peshawar High Court in the case of Lucky Cement Limited v. The Central Board of Revenue and others (A.W.P.
No. 583 of 1995), decided on 3-2-2000 in which the same questions as are arising in this petition came up for consideration before the Peshawar High Court. In the case too, various letters were written by the Ministry of Industries, Production and Commerce to the effect that the machinery sought to be imported by the petitioner was not being locally manufactured. Later on, the Central Board of Revenue directed the Collectorate of Customs to hike necessary action against six units of Cement including Lucky Cement for realization of the Government due on the component machinery which was confirmed by the State Engineering Corporation to be locally manufactured.
This action of die respondents was challenged by the petitioner by filing the Constitutional petition mentioned above in which it was held as under:-- "As is evident from the letter .Above that a Standing Committee was set up to identify the machinery to be manufactured locally. The list of such item was never identified by the Committee.
The Ministry of Industries vide letter, dated 7-7-.1993 confirmed and verified the items enlisted in the attached Appendix to be imported being not manufactured locally. Even centrial Board of Revenue, vide letter, dated 11-7-1994 and Ministry of Commerce on the basis of letter, dated 20-1- 1994 issued NOC verified such machinery/equipment to be not manufactured locally. We would like to observe with regrets that people sitting at the helm of affairs in Central Board of Revenue and Ministries of the Government art' so ignorant and unconcerned that they did not bother to know the decision of the Cabinet meeting held on June 28, 1993 and the recommendation of the Standing Committee. The BOI on the basis of Memo., dated 10-1-1995 authorized by the Ministry of Industries to verify the goods/items which are manufactured locally, furnished report to Central Board of Revenue revalidating the recommendation of Ministry of Industries. To be cognizant of hardships and difficulties to be faced by the importers Ministry of Industries in an urgent letter vide Memo., dated 14-3-1995, of course after reconsidering the matter, directed that letter, dated 7-2-1995 shall not apply to importers of such Cement Plants who have already opened L.Cs. Before 14-3-1995. The L.Cs. By the petitioner were admittedly opened before this date. After this letter impugned action vide Memo. (Annexure-N) and (Annexure-O) was unwarranted.
It is observed from the record that in this notification no competent Authority has been identified to certify the machinery and equipments that could not be manufactured locally. Even the Exemption Notification No. 484(I)/92, dated 14-5-1992 did not specify the authority/body to authenticate the machinery/plants not to be manufactured locally. While earlier exemption notification such as S.R.O. 286(I)/84, dated April 4, 1984, the Heavy Mechanical Complex Taxila was identified to be the authority to certify those plants and machinery which are not manufactured locally.
Adverting to the rule of locus Poenitentiae, it is general principle that an authority empowered to issue an order has the power to recall or cancel that order unless it. Has been carried into the effect. In other words, power to rescind could be exercised only if the order had not taken into effect. Once the order became operative, it could not be withdrawn. Acting the NOCs, issued by the respondents 1, 4 and 5, the petitioner opened L.Cs. On 5-12-1993 and 31-5-1994, entered into agreement with the Chinese Suppliers in October, 1993. In pursuance thereof, some of the machinery had reached Pakistan and the NOCs had come into effect, the locus Poenitentiae was not left with respondent to initiate actions against die petitioner. It has been held in the case of Shahnaz v. The Crown (PLD 1956 FC 46) and in It. Col. Bhattacharya v. The State /PLD 1964 SC 503) that power to rescind cannot be exercised once order becomes effective. The Government Ministries/Departments while issuing NOCs had promised and given understanding that machinery imported would be exempted from customs duty and sales tax. Now it cannot tum around and claim duties through the impugned Memos. Such assurance and understanding, no doubt, were binding on the Government and its functionaries on promissory estoppel which is an equitable principle evolved by the Courts for doing justice. It is universal principle in the democratic societies that every one is subject to the rule of law and the Government is on exception. In an almost identical situation similar view was taken in the case of M.P. Mills v. State of U.P. (AIR 1979 SC 621) and Union of India v. Angio Afghan Agencies (AIR 1968 SC 718)."
8. In the present case too the petitioner has placed on record the letter issued by the various Ministries in order to show that it was represented to the petitioner by the Government that the machinery in question was not being locally manufactured. The first document to which reference may be made is letter, dated 25-10-1993 written by the petitioner to the Ministry of Industries and Production seeking information whether the plant and machinery specified in the list appended with the said letter was not manufactured locally. In reply to the aforesaid letter, the Ministry of Industries on 21-4-1994 issued a memorandum to the Central Board of Revenue with a copy to the petitioner confirming the fact that the plant and machinery specified in the list was not being locally manufactured. This memorandum reads as under:- "No. 3(82)/93-DEVIII Government of Pakistan Ministry of Industries and Production (Industries Wing)
Islamabad, the 21st April, 1994 Office Memorandum SUBJECT: MAPLE LEAF CEMENT EXPANSION-REQUEST FOR NOC TO IMPORT CERTAIN MACHINERY FOR CEMENT PLANT The undersigned is directed to forward herewith a copy of M/s. Maple Leaf Cement Factory Ltd.
Letter No. MLC/P&T/10/3135, dated 25th October, 1995 (with enclosures) on the subject mentioned above and to confirm that the following items/machinery are not being manufactured locally as per specifications furnished by the firm:-
1. Stack and Reclaimer . Not manufactured locally , however, following components of the items being manufactured locally. - Conveyor structure - Travel carriage exel wheel - JIB steel structure - Throw of f car - Gangways - Plate form - Cabins - Rail clamps - Conveyor pulleys - Foundation part of strack - Travel wheels - Conveyor belt - Idler - Hyderaulic part - Rails - Electric and Control2. Magnetic eparator
3. Side Scraper . Not being manufactured locally .
However , following parts of (not legible) are being manufactured locally:-- Scraper Blades- Roller Chain - Portal frame- Travelling Chain. - Discharge table- Housing unit. - Foundation parts for tracks. - Travel carriage excel wheel. - Cabin - Carrying Idlers Drive unit -Rails
4. Magnetic Separator Though electric motors are being manufactured locally but it is fixed in the system and as such being a compact unit, the gear unit is not manufactured locally .
5. Metal Detector .
6. Phenumatic cylinder solenoid valve
7. Rotary sluice, dia 1600
8. Atox raw mill
9. Rotary separator
10. Gear unit for atox 40
11. Tools for atox mill. Not being manufactured locally .
However, the part of this item i.e. Rod gates with unit controls, Discharge slides, troughs,Suspension part magneticvibrators, Thyristor units are being manufactured, locally .
12. Viberating feeder .
13. Change over gate. Not being manufactured locally .
However , following parts of the same are locally supplies. -Gates -Control Cabinets -Actuators -Position indicators
14. Louver Damper . Not manufactured locally . However , following parts of the units are being manufactured locally .
Dampers.
Actuators.
Limits stitches.
Position indicators.
Drive unit.
15. Conditioning Tower . Not being manufactured locally .
However , items like causing, structure screw conveyor , plate forms, water tanks and piping are being manufactured locally .
16. Electrostatic pre-Cipitor . Not being manufactured locally .However , frames for casings, plate work for castings. Botton hopers for casing inlet and outlet transitions, distribution screens, ladder , and plateforms, screw conveyor Bearing and housings, Dust housings systems, Baffles, Electric control system and Electric parts are being manufactured locally .
17. Preheaters Not being manufactured locally .
However , cyclone, risir, pipe central Tubes Calciner Casing, Distribution Boxes,Cleanout parts, Air lances Door are being manufactured locally .
18. Phuematic kiln seal Not being manufactured locally .
However , items like Rotors, Liner ,Caring Sugqart and AC drives are local supplies.
19. Rotary kiln system
20. Magnetic separators
21. Melt detector .
22. Change over gate.
23. Belt weigher .
24. Roler Press type.
25. Air Separator
26. Rottary Compressors. Not being manufactured locally .
However , work table, hopper plateforms screw conveyor , Diverting pipe, packers, Vibrating screens, level indicators, Rotary feeder , Discharge belts/roller ways Bag Cleaner , Broken Bag Discharger Telescopic chute Drive units. Motorised pulleys, Conveyors belt, and idlers of the parts of this machine are being manufactured locally .
27. Packing machine.
28. Siggal cables.
29. Termination kits Not being manufactured locally .
However , following components/parts shown against respective type of fans are being manufactured locally .
30. Junction Boxes.
Rotor assembly , base frames, guards, Inlet vane controller adulators, Vibration passed spun cones, bearings/housings, V-Belts and pulleys.31. Compressors.
32. Flare Detector .
33. Process instruments
34. Fan.
Fans (large ones like kiln and collet ID. EP and separator fan)
Fans (Dust Collector) Fans (Clinker Collector Rotor assembly , casing, base frame Guards, Inlet vane controller actuators, vibration pads spun (not legible).
2. A copy of IPB's O.M. No. IPB/IMPL/Maple Leaf Cement/Exp/94, dated 31st March, 1994, is forwarded herewith for further necessary action in the matter.
(Sd.)
(S. Zahid Hussain Shah), Section Officer.
Mr. Ali Muhammad Sheikh, Secretary (Mach).
Central Board of Revenue, Islamabad.
Copy forwarded for information to Mr. Muhammad Hanif, Managing Director, M/s. Maple Leaf Cement Factory Ltd., 42-Lawrence Road, Lahore.
(Sd.)
(S. Zahid Hussain Shah), Section Officer."
9. It is also useful to reproduce the contents of letter, dated 15-5-1994 addressed by the Ministry of Commerce to all Banks with a copy to the Secretary Customs, Central Board of Revenue which reads as under:- "No. 24(2)/94-IMP.I, Government of Pakistan, Ministry of Commerce. Islamabad, the 15th May, 1994.
All Banks SUBJECT: IMPORT OF CEMENT MACHINERY.
Dear Sir, The ECC of the Cabinet id its meeting held on 28th June, 1993 had directed that Cement and Sugar Plants shall be importable without any NOC. However, plant and equipment manufactured locally will not be importable. The Standing Committee set up by the ECC of the Cabinet identified parts and machinery of Cement plants which are locally manufactured and will not be importable. A copy of the said list is enclosed which will be operative up to 31-12-1994 and would be applicable to the cases of initial installations, BMR and Expansion also. Banks are requested to consult this list before opening of L.Cs. For import of Cement Plant and equipment etc. Engel: As above.
Yours faithfully (Sd.)
Muhammad Ashraf Khan), Deputy Secretary.
Copy along with a list for necessary action to:-
(1) Secretary Customs, Central Board of Revenue, Islamabad.
(2) Vice-Chairman, Export Promotion Bureau, Karachi.
(3) Ministry of Industries and Production, (Industries Wing), (Mr. S. Zahid Hussain Shah, SO), Islamabad with reference to their No. 3(34)/92-Dev. II (Vol. II), dated 11-4-1994. (Sd.)
(Muhammad Ashraf Khan), Deputy Secretary."
10. As already noted above, the memorandum, dated 21-4-1994 was addressed to the Central Board of Revenue with a copy to the petitioner. The said Board did not at any stage object to the contents of the aforesaid letter which clearly shows at least tacit consent of the Central Board of Revenue. It is also apparent from the letter, dated 15-5:1994 that the question of local manufacture of the machinery and plant was considered by the Standing Committee set up by the Economic Coordination Committee of the Cabinet. This letter, dated 15-5-1994 was addressed by the Ministry of Commerce to all the Banks. A copy of this letter/memorandum was marked to the Central Board of Revenue which did not, however, object to it. It was on the basis of these letters that the petitioner had entered into contract and established letters of credit. If the Central Board of Revenue had any objection it should have been raised at that stage.
11. The learned counsel for the respondents has contended that the representations made by the Ministry of Industries and Production and Commerce have no validity inasmuch as the question as to whether the machinery was locally manufactured or not, could only be decided by the Central Board of Revenue.
12. This contention of the learned counsel cannot be accepted; firstly, for the reason that in the matter relating to production of local machinery the Ministry of Industries and Production as well as Commerce were relevant Authorities and secondly, that no procedure for determination of the question as to whether or not the goods were being locally manufactured has been specified in the two notifications nor the Authority for that purpose had been specified and lastly, the Ministry of Industries had addressed memorandum dated 21-4-1994 to the effect that the aforesaid machinery was not being locally manufactured. The Ministry of Commerce also sent a copy of the letter, dated 15-5-1994 to the respondent-Board but again no objection was raised to it. If the Central Board of Revenue was of the view that the machinery in question was being locally manufactured, it should have objected to it at that time. It is the case of the petitioner that on the basis of the memorandum and letters that the machinery was not being locally manufactured, the petitioner had planned and had imported and installed the machinery and if the petitioner had known that they had to pay import duty on the same, the petitioner would not have gone for expansion of its existing unit and installation of the machinery.
13. As regards the legal position, the view taken by the Peshawar High Court in the case of Lucky Cement has already been reproduced above. In addition> thereto the principle of promissory estoppel has been explained by the Supreme Court of Pakistan in the case of M/s. Army Welfare Sugar Mills Ltd. v. Federation of Pakistan and others (1992 SCMR 1652 = PTCL 1993 CL. 188) where the legal position regarding the principle pf promissory estoppel has been summarized.
14. Ch. Muhammad Hussain, learned counsel for the respondents next maintained that as the Central Board of Revenue had vide Customs General Order No. 17, dated 13-10-1994 made the position clear that the machinery and plant were being manufactured in Pakistan, the petitioner could not claim that it had acted on the representation that the machinery was not manufactured in the country. In this respect it may be noted that this position is belied by the Central Board of Revenue's letter, dated 25-4-1995 which reads as under: ~ Government of Pakistan Central Board of Revenue Islamabad the 25th April, 1995.
"From Muhammad Sulaiman, Secretary To. The Collector of Customs (Appraisement)/(Preventive) Customs House, Karachi.
The Collector of Customs, Customs House,Nabha Road, Lahore.
The Collector of Customs and Central Excise, Multan, Hyderabad, Quetta, Faisalabad, Gujranwala, Peshawar and Rawalpindi.
SUBJECT: LOCALLY MANUFACTURED MACHINERY-CEMENT PLANT.
I am directed to refer to the subject noted above and to enclose herewith lists of locally manufactured goods confirmed by State Engineering Corporation for six units mentioned below:-
(1) M/s. Lucky Cement Ltd. Dated 11-7-1994
(2) M/s. Saadi Cement Ltd. Dated 10-7-1994 and 23-7-1994
(3) Hattar Cement Ltd. Dated 13-7-1994
(4) Khushab Cement Ltd. Dated 13-7-1994
(5) Panjabi Cement Ltd. Dated 13-7-1994
(6) Kohat Cement Ltd. Dated 13-2-1995
(2) For each unit there are two lists as List L-1 and List L-II. List L-1 indicates the machinery/components locally manufactured and List L-II shows parts/components manufactured locally in the column of local scope of supply.
(3) You are requested to initiate necessary action for realization of the Government dues immediately on the components/machinery/parts mentioned as locally manufactured of the aforesaid units. Further orders will also follow.
(4) The Board's letter issued after February, 1994, forwarding Ministry of Industries and Board of investment's letters stating that these are not locally manufactured are hereby withdrawn as on re-checking the above listed Items have been confirmed to be locally manufactured.
(Sd.)
(MUHAMMAD SULAIMAN)
CHIEF (CUSTOMS TARIFF)
15. From the above it is clear that the central Board of Revenue had itself conceded that some parts of the machinery were being manufactured locally while other parts were not being manufactured here. Therefore, obviously the Customs General Order issued by the Central Board of Revenue had no effect. Purthermore, the determination that the goods were being Manufactured locally by the Central Board of Revenue could only be arrived at after a factual inquiry with which the concerned persons should have been associated. (See Suhail Jute Mills Ltd. And others v. Federation of Pakistan and others (PLD 1991 SC 329 = PTCL 1991 CL. 388).
16. Be that as it may, the rights which vested in the petitioner on having entered into a firm contract with the foreign supplier could not be taken away by issuing a Notification or Customs General Order. The petitioner had entered into firm contract with the seller before CGO No. 17 of 1994 was issued and the vested rights which had accrued to the petitioner could not have been taken away by an executive fiat. It was so held by the Supreme Court of Pakistan in Al-Samrez Enterprises v. The Federation of Pakistan (1986 SCMR 1917 = PTCL 1987 CL. 99), M/s. M.Y. Electronics Industries (Pvt.) Ltd. v. Government of Pakistan and others (1998 SCMR 1404 = PTCL 1998 CL. 450) and Collector of Customs and others v. Ravi Spinning Ltd. And others (1999 SCMR 412 = PTCL 1999 CL. 710). It may be mentioned that the provisions of section 31-A have rightly not been relied upon by the learned counsel for the respondents as the dispute in the present case is not with respect to the withdrawal of exemption but only as to whether or not the goods were being locally manufactured.
17. It now remains to dispose of the objections raised by the learned counsel for the respondents that the petition was not maintainable as it is directed against issuance of a show-cause notice and no order detrimental to the interest of the petitioner has been passed. This contention of the learned counsel cannot prevail firstly for the reasons that it is by now well-settled that the Constitutional petition can be maintained against issuance of a show-cause notice. If any authority is needed reference may be made to Education Dinshaw Limited v. Income Tax Officer (PLD 1990 SC 399 = PTCL 1990 CL. 604), Graton Industries Ltd. v. Government of Pakistan (1999 SCMR 1072 = PTCL 1999 CL. 359), Attock Cement Pakistan v. Collector of Customs, Collectorate of Customs and Central Excise, Quetta and others (1999 PTD 1S92), Ghazi Fabrics International Limited, Gulberg- III, Lahore v. Water and Power Development Authority, Lahore and others (PLD 2000 Lahore 349).
Furthermore, the question, involved in this petition is as to whether doctrine of promissory estoppel has application in the present case. For that reason too the petition can be maintained directly. In this respect reference may be made to M/s. Julian Hoshang Dinshaw Trust and others v. Income Tax Officer and others (1992 SCMR 250 = PTCL 1992 CL. 181), M/s. Central Insurance Co. And others v.
The Central Board of Revenue, Islamabad and others (1993 SCMR 1232), Collector of Customs v.
M/s. S.M. Ahmad & Company (Pvt.) Ltd., Islamabad (1999 SCMR 138) and Maple Leaf Cement Factory Limited v. Federation of Pakistan and others (1999 PTD 3907).
In view of above, this petition is allowed and the notice, dated 4-12-1999 issued by the Central Board of Revenue is declared to be without any lawful authority and of no legal effect. No order as to costs.