The petitioner is a private limited company and opened its letter of credit for , the import of machinery/components parts of machinery for the production of cement. The contract respecting the supply of this machinery was entered into on 14-10-1994, 20-12-1994 and 27-12-1994. According to the petitioner, the company was entitled for exemption on the import of such plant and machinery as is not manufactured locally and is imported during' the period commencing on the 1st of December, 1990 and ending on the 30th June, 1995 for setting up new units and for expansion or balancing modernization and replacement of existing units in terms of S.R.O. No.484(I)/92, dated 14th May, 1992. The grievance being made is that by virtue of a subsequent Notification bearing S.R.O. No.978(1)/95, dated 4th October, 1995 the said notification has been withdrawn. The prayer is that notwithstanding the later notification the respondent authorities directed release of machinery imported by them in terms of S.R,O. No.484(I)/92, dated 14th May, 1992.
2. Learned counsel for the petitioner contended that the petitioner had already imported 90% of the machinery under the earlier S.R.O. And that on account of factors beyond the control of the petitioner the remaining part of the machinery was imported after 30-6-1995 and that since the contract for the import of the machinery which is being sought to be cleared through this Constitutional petition was entered into during the currency of the notification which has now been withdrawn he is entitled to the exemption granted by the earlier S.R.O. Referred to above. It was further contended that the object of the notification whereby machinery was exempted from payment of customs duty was to encourage the import of machinery which is not locally manufactured and secondly to promote industrialization in the rural areas. The petitioner had decided to establish the cement plant and had entered into the contract and opened the letter of credit under a legitimate expectation that he would be entitled to the exemption and the impugned withdrawal besides defeating the purpose behind the earlier notification. Of exemption is arbitrary, unjust and vexatious. He lastly contended that the impugned action is also hit by Article 37 of the Constitution of Islamic Republic of Pakistan, 1973 which enjoined the Government to take steps for development and promotion of industries in the country. In support of the afore-referred submissions, learned counsel relied on Al-Samrez Enterprises v. The Federation of Pakistan 1986 SCM R 1917.
3. Learned counsel for the Customs Department, Mr. Izharul Haq Sheikh, Advocate, on the other hand, has defended the impugned notification by submitting that no claim benefit of exemption envisaged in S.R.O. No.484(I)/92, dated 14-5-1992, the goods have to be imported within the period stipulated therein. He referred to section 6 of Act (XII of 1994) to contend that the benefit granted under S.R.O. Would be available in terms specified in the notification in question. He submitted that the letters of credit for the machinery which has been imported by the petitioner were opened on 13-11-1995 and, therefore, the petitioner cannot claim benefit of the earlier notification.
4. I have heard learned counsel for the parties and have also gone through the record.
5. For a better appreciation of the points raised it is necessary to refer to the S.R.O. Whereby exemption was granted. The main portion of the said S.R.O., relevant for the purpose of the controversy in hand, is reproduced as under: -- "S.R.0.484(I)/92.--- In exercise of the powers conferred by section 19 of the Customs Act, 1969 (IV of 1969) and subsection (1) p of section 13 of the Sales Tax Act, 1990 and in supersession of this Ministry's Notification NO.S.R.O.50(1)/92, dated the 28th January, 1992, the Federal Government is pleased to exempt such plant and machinery as is not manufactured locally and is imported during the period commencing on the 1st December, 1990 and ending on the 30th June, 1995, for setting up new units and for expansion or balancing, modernization and replacement of existing units--
(a) in areas other than specified in Table-I from whole of the customs duty and sales tax leviable or chargeable thereon under the First Schedule to the Customs Act, 1969 or as the case may be the Sales Tax Act, 1990; and
(b) in the industrial estates specified in Table-II from so much of the customs duty and sales tax leviable or chargeable thereon under the First Schedule to the Customs Act, 1969 or as the case may be the Sales Tax Act, 1990, as is specified in Column (3) of the said Table subject to the conditions set out below, namely.--
(1) The importer shall, at the time of import of machinery, make a written declaration on the bill of entry to the effect that the machinery has been imported for a period located in areas other than those specified in Table-I or as the case may be for the areas specified in Table-11.
(2) The importer shall furnish an indemnity bond in the Form set out below to the extent of customs duty and sales tax exempted under this Notification. The said indemnity bond shall be discharged subsequently on production of a certificate from the Assistant Collector, Customs and Central Excise, to the effect that the plant and machinery imported for setting up new units or expansion or balancing modernization and replacement of existing units located in the areas enjoying benefit of concession under this notification, have been duly installed in the aforesaid areas.
(3) The certificate of installation referred to in condition (2) shall be submitted to the Collector of Customs and not later than one year from the date of importation of the plant and machinery to which it relates.
(4) The plant and machinery released under this notification shall not, within a period of eight years from its importation, be used in any area which is not eligible for the same concession. In case this condition is violated, the amount of customs duty and sales tax exempted under this notification and penalties that may be imposed in this behalf shall be recovered under section 202 of the Customs Act, 1969 (IV of 1969).
For the purpose of this notification, machinery shall mean--
(i) machinery operated by power of any description, such as is used in any industrial process including mining and extraction of timber;
(ii) apparatus and appliances, including metering and testing apparatus and appliances specially adapted for use in conjunction with machinery specified in item (i) above;
(iii) power generating plant for operating item (i) above;
(iv) mechanical and electrical control and transmission gear adapted for use in item (i) above; and
(v) component parts of machinery as specified in items (i) and (ii) identifiable as for use or with such machinery."
6. The Federal Government, it seems, proceeding on the premise that the benefit envisaged in the afore-referred notification had expired w.e.f. 30th June, 1995 as contemplated therein, issued yet another notification bearing S.R.O. No.978(I)/95, dated 4th October, 1995 and granted exemption on customs duty and sales tax in excess of 25 %o of the duty and tax leviable on plant and machinery qua which letters of credit were opened prior to 30th June, 1995 and were intended to be cleared under Notification S.R.O. No.484(I)/94, dated 14th May, 1992. This S.R.O. Is reproduced as under:-- "In exercise of the powers conferred by section 9 of the Customs Act, 1969 (IV of 1969), and subsection (1) of section 13 of the Sales Tax Act, 1990, the Federal Government is pleased to exempt customs duty and sales tax in excess of twenty-five per cent. Of the duty and tax leviable on plant and machinery and is not manufactured locally, used for setting up new units and expansion, balancing, modernization and replacement of existing units the letters of credit of which were opened prior to the 30th June, 1995 and were intended to be cleared under Notification S.R.O.
484(1)/92, dated the 14th May, 1992 since expired, for all areas entitled to concessions in that Notification subject to fulfilment of conditions set out therein and that the machinery covered under the definition of 'machinery' given in said notification."
7. A bare reading of section 19 of the Customs Act and subsection (1) of section 13 of the Sales Tax Act, 1990 would indicate that the Federal Government has got the power to levy the Customs Duty as also the power to exempt any goods so imported from the levy of the duty subject of course to conditions specified therein. An exemption was granted on goods but that was subject to the conditions that the same are imported "during the period commencing 1st December, 1990 and ending on the 30th June, 1995". Admittedly the goods which are subject-matter of this petition were not imported during the afore-referred period. On the contrary the admitted position is that the letters of credit were issued in November, 1995 (Annexure "A") and the Bill of Lading is dated 29th August, 1996. That being so the petitioner cannot claim exemption on the basis of 8 S.R.O.484(I)/92, dated 14th May, 1992.
So far as the arguments of the learned counsel for the petitioner that on the basis of the principle of legitimate expectations the exemption once granted cannot be rescinded as the contract for the import of the machinery was executed during the currency of the exemption period is concerned I am afraid the same is not tenable for two reasons. Firstly the notification on the basis of which the petitioner is claiming exemption itself stipulated that this concession would be available only to those goods which are imported during the period specified therein and secondly section 31-A of the Customs Act clearly laid down that the amount of duty is payable irrespective of the fact whether the withdrawal takes place before or after the creation of a contract for the sale of goods or opening of letter of credit. Section 31-A of the Customs Act reads as under:-- "31-A. Effective rate of duty.--- (1) Notwithstanding anything contained in any other law for the time being in force or any decision of any Court, for the purposes of sections 30 and 31, the rate of duty applicable to any goods shall include any amount of duty imposed under section 18, section 2 of the Finance Ordinance, 1982 (XII of 1982), and section 5 of the Finance Act, 1985 (I of 1985), and the Anti-dumping or Dumping and Countervailing Duties) Ordinance , 1983 (III of 1983) and the amount of duty that may have become payable in consequence of the withdrawal of the whole or any part of the exemption or concession from duty whether before or after the conclusion of a contract or agreement for the sale of such goods or opening of a letter of credit in respect thereof."
Section 31-A of the Customs Act was inserted on account of the exposition of law in Al-Samrez Enterprises v. The Federation of Pakistan 1986 SCM R 1917 wherein it was observed that retrospective effect cannot be given to executive orders so as to destroy the contractual rights and the obligations The import and effect of section 31-A of the Customs Act came up for consideration before the Honourable Supreme Court in Molasses Trading and Export (Pvt.) Limited v. Federation of Pakistan and others 1993 SCMR 5 wherein at page 1922 it was observed as under:-- "The language of section 31-A, as discussed above, clearly envisaged and stipulates that the consequences that flow from the act of withdrawal or modification of an exemption notification, shall take effect with reference to the date of its issue, irrespective of the fact that the contract for the import of goods and the L.C. Had come into existence prior to such date. This effect has been now prescribed by a mandatory provision of law by legislative flat, to use the phrase earlier mentioned. The Courts would, therefore, have to give effect to it notwithstanding the decision in the case of Al---Samerez Enterprise."
"However, mere opening of the L.Cs. Or the conclusion of the contract as argued by the learned counsel would not exempt the petitioner from the payment of regulatory duty in view of the powers conferred under section 31-A of the Customs Act, 1969. In case of exemption granting notifications if the same are still holding the field as already stated the regulatory duty in those cases cannot be claimed."
There is another aspect of the matter and that is that, levy and chargeability of a duty has nexus with the day on which the goods are to be imported. In The Lahore Textile and General Mills Limited v. The Collector of Customs, Lahore and 2 others PLD 1988 Lah. 563 at page 571 it was observed as under:-- "Under subsections (1) and (2) of section 18 of the Customs Act, customs duties and regulatory duties become leviable no sooner the goods inter alia are imported into Pakistan or exported therefrom. The only question that arises is when can it be said that goods are 'imported' into Pakistan. The Supreme Court of Pakistan in East and West Steamship Company v. The Collector of Customs PLD 1976 SC 618 held that the word 'import' carried the meaning of 'bringing in' or ' to bear or carry into' and an imported article was one which was brought or carried into a country from abroad and it did not necessarily entail the entire process of filing bill of entry, discharging the goods from the vessel-at a wharf, the assessment of the value of the goods and the duty payable on them. No sooner, therefore, the vessel touches a Pakistan Port the goods can be stated to have been imported."
9. For what has been discussed above there is no merit m this petition which is dismissed with no order as to costs.