JUSTICE (R) ABDUL MAJEED TIWANA, CHAIRMAN.--(l). This appeal, which has ultimately reached this Bench in the circumstances stated in its order, dated 20- 9-2000, is directed against the Order-in-Original No. 15, dated 31-5-2000, by which Collector of Customs, Peshawar, had directed the appellant company to pay full duty and taxes leviable on the imported unbleached sack kraft paper after holding that it was not entitled to the benefits of S.R.O No. 108/95, dated 12.2.1995. He also imposed on it the penalty equal to the amount of duty and taxes payable as aforesaid for violation of section 104 of the Customs Act, 1969.
1. The appellant company had, for their factory in Gadoon Amazia, N.W.F.P, imported 339 reals of unbleached sack kraft paper vide bill of entry No. 1083/09/Arzoo/2000, dated 11.2.2000, in order to avail of the concession of S.R.O No. 108(I)/95, dated 12-2-1995, which, being operative for five years, was expiring on 11-2-2000 and for that purpose they furnished bank guarantee to the extent of 25% of the liable duty and taxes and also deposited Rs. 3,600000 in cash with the Customs Authorities.
The goods were to be inbounded in the private bonded house of the appellant at Godoon Amazia on 11.2.2000 in order to avail of the concession of the said S.R.O and the appellant alleged that the same had been so inbounded. On physical check, the Customs Authorities found that out of 339 reels of imported' goods, only 87 reels had been inbounded till the evening of 11-2-2000 and the remaining 252 reels did not reach the appellant's warehouse on the said date despite its assertion that the same were on their way and likely to reach there before the expiry of that date. The department, therefore, cleared 87 reels in terms of the said notification, dated 12.02.1995, but refused the clearance of the remaining 252 reels on the ground of their inbonding after the expiry of the prescribed period on 11.2.2000. On these facts, the Customs Authorities at Peshawar demanded payment of duty and taxes total amounting to Rs. 895370/- leviable thereon. On appellant's refusal to pay it, the Collector of Customs, Peshawar, vide show cause notice, dated 8.4.2000, alleging violation of section 104 of the Customs Act, 1969, demanded payment of Rs.
3052000/- as customs duty and Rs. 1765851/- as sales tax. The appellant contested the notice and the adjudication proceedings initiated by the Collector of Customs ended in the manner indicated in the opening paragraph of this judgment. Aggrieved by that order, the appellant came up in appeal to this Tribunal.
2. It may be mentioned here that this appeal was ordinarily to be filed before Islamabad Bench of this Tribunal but it was not functioning and the appeal, as per directions of the leamed Federal Law Secretary, was instituted before the Karachi Bench of this Tribunal and on the appointment of the Chairman of the Tribunal and Lahore Bench becoming functional, it was transferred here for disposal.
3. We have heard the leamed counsel for the appellant company, who is also one of its directors, as also the leamed representative of the respondents at sufficient length. The main contention of the former was that the goods in question had reached territorial waters of Pakistan on 7.2.2000, vide IGM of that date and the same had been imported on that date which was within the prescribed duration of SRO 108(I)/95, dated 12.02.1995, expiring on 11.2.2000. He argued that after completing necessary formalities at Karachi sea-port and Customs House, the goods were despatched for the factory of the appellant in Industrial Estate of Gadoon Amazia under safe transportation scheme, some portion of which reached the destination on 11.2.2000 while other on the following day or still later on account of some unavoidable obstruction on the way during long inland journey. He submitted that there was no illegality or mala fide on the part of the appellant if they submitted bill of entry to the Customs Authorities at Peshawar for their clearance some time prior to the arrival of a portion of the consignment in their private bonded warehouse located in their factory premises, nor there was any evasion of, or attempt to evade, any amount of customs duty and taxes, for the payment of which they had already furnished bank guarantee and deposited substantial amount in cash with Customs Authorities. In his opinion, the Collector of Customs, Peshawar, as adjudicating officer, had done sheer injustice to the appellant and he had been running from pillar to post to seek his remedy against an unjust order until he reached this Bench in his itinerary.
4. The learned departmental representative, in support of the impugned order, contended that the concession provided by the aforesaid SRO ended on 11.2.2000 by efflux of time and if the major portion of the consignment of goods in question did not reach the bonded warehouse of the appellant within the prescribed period, they were not entitled to avail of the statutory concession and were bound to pay full duty and taxes leviable thereon and lawfully demanded from them.
5. After hearing both the parties, we are of the view that there was a good deal of substance in the above contentions of the appellant's counsel/representative. Notification SRO No. 108(I)/95, in its preamble has used the words 'Federal Government is pleased to direct that a quantity equal to one- fourth of imported consignment of such raw materials and components as are imported for the exclusive manufacture of goods by recognized industrial units located in the approved industrial estate of Gadoon Amazia in the Province of North- West Frontier................. '. In this part of the preamble the word 'imported' has twice figured, and as per condition (i) of the notification, the manufacturer has to have suitable in-house facilities to manufacture the goods in respect of which he claims exemption under this notification. Under condition (v) of the notification, the manufacturer has to furnish bank guarantee to the Collector of Customs to his satisfaction equivalent to the customs duty and sales tax in respect of which exemption is sought. Other conditions prescribed by the notification are not relevant for our purpose here though the appellant might have complied with those as well. Condition (i) ibid required the appellant to have suitable in-house facilities to manufacture the goods imported under concessionary duties and taxes and it did not say that he must have suitable in-house facilities for storing such goods, but still the appellant seems to have such facilities in the form of a private bonded house in the factory premises. In other words, the appellant, in order to avail of the concessions under the said notification, was to import goods before its expiry on 11.2.2000 and then manufacture the end- product from them in its factory in Gadoon Amazia. The word 'imported' has been used in the notification but no where explained or defined therein. We have, therefore, to ascertain its meaning from other para meterial laws. Section 2(6) of the Imports and Exports (Control) Act, 1950, defines 'Imports' and 'Exports' "to mean respectively bringing into, and taking out of, Pakistan by sea, land or air". Section I6 of the Customs Act, 1969, which is the parent legislation for the notification under discussion, is also in similar terms though it does not specifically used the words Import' and 'Export'.
6. It is apparent from the record, especially the IGM, dated 7.2.2000, that the goods had entered sea port Karachi on this date and after satisfying necessary port and customs legal formalities they were despatched up-country for their destination in industrial estate of Gadoon Amazia under the safe transportation system and the portion of the goods actually reached the destination on 11.2.2000, while the other portion was still on its way. It was not one of the requirements of the above-mentioned notification that the goods must have reached the factory premises of the appellant on or before 11.2.2000, the last date for the expiry of that notification, but what was actually required was that they must [have been imported i.e. Reached Pakistan on or before the said I date and they did reach accordingly.
7. In view of the above, the refusal by the Customs Authorities to clear or release the remaining 252 reels imported by the appellant on the ground that they had not reached the private bonded warehouse of the appellant on or before the expiry date of the said notification, the initiation of adjudication proceedings and the demand for payment of full amount of duty and taxes on those goods as a result of those proceedings, all were misconceived and without lawful authority. The appeal is, therefore, accepted, the impugned order is set aside and the respondents are directed to release the goods in terms of the concession available under the aforesaid notification.