MR. S.M. KAZIMI, MEMBER (TECHNICAL).-(l). This judgment disposes of the appeal filed by Dr. Tariq Safi against the Refund Order C. No. CUS/Refund/12/99/4737 dated 09.09.2000 passed by the learned Assistant Collector of Customs, Dry Port, Peshawar.
2. Briefly, the facts of the case are that Dr. M. Tariq Safi, Peshawar, imported a consignment and sought it's clearance against bill of entry No. 59/97 dated 22.01.1997 declaring the goods to be X- Ray Equipment valued at US$ 12,948.00. On detailed examination, the consignment was found to be Toshiba TCT-300 1989-model C.T. Scanner valued at US$ 67,815.00. The case was adjudicated vide Collector of Customs, Peshawar's Order-in-Original No. 16 of 1997 issued under in C. C.No.V- CUS(8)ADJ/12/97/2824 dated 15.04.1997 directing confiscation of the goods under clause 9 of section 156(1) of the Customs Act, 1969, and allowing the owner an option to pay fine of Rs. 4 lac under section 181 in lieu of its confiscation with assessment on import value of US$ 67,815/- i.e. Pak Rs. 2,737,060/-. A personal penalty of Rs. 1 lac was also imposed under section 156(l)(9)(i) of the Customs Act, 1969, and a redemption fine of 5% was also imposed on the importer for violation of provisions of SRO 1108(I)/94, dated 14.11.1994. Vide order dated 20.10.1997 in Appeal Case Order No. 109/IB/97, the Islamabad Bench of this Tribunal remanded the case to the Collector for decision de novo. The Collector heard the party again and passed Order-in-Remand No. 16/98 dated 15.04.1998 where he modified his previous order only to the extent of waiving the 5 % redemption fine imposed upon the importer for violation of SRO 1108(I)/94. The party again appealed against this order dated 15.04.1998 and vide its order dated 19.10.1999 in Appeal Case No. 60/IB/99, the Islamabad Bench of this Tribunal modified Collector's order to the extent that it reduced the redemption fine from Rs. 4 lac to Rs. 1 lac and the personal penalty from Rs. 1 lac to Rs. 40,000/- only. Dr. Tariq M. Safi applied on 02.03.1999 for refund of the waived 5% redemption fine (Rs. 136,853/-), already deposited vide T.C. No. 75 dated 22.04.1997. The Assistant Collector of Customs, Dry Port, Peshawar, issued a notice C. No. Collector/Adj/GH/2/95/51 dated 17.01.2000 requiring the claimant Dr. Tariq Safi to show cause why the claim for refund of Rs. 136,853/- should not be rejected as time-barred in terms of section 33 of the Customs Act, 1969. After hearing the arguments of the claimant, the Assistant Collector rejected the claim as time-barred. Hence this appeal.
3. During the course of hearing before us, the learned counsel for the appellant argued that the provisions of section 33 do not apply to such cases. As a rule, such refunds should be allowed automatically, even without a formal refund claim.
4. The learned Departmental Representative and the representative from the Collectorate opposed the appeal on the ground that all refunds are governed by section 33 of the Act. They invited attention to CBR's letter C. No. 10(122) CUS.Ref/96 dated 28.02.1996 which requires claimants to file application for refund of such amounts within 6 months of the date of the decision/order so passed in his favour. They prayed for dismissal of the appeal.
5. Having heard the parties and on perusal of record of the case, we find that section 33 of the Customs Act, 1969, provides as hereunder:- "33. Refund to be claimed within six months.-(1) No refund of any customs duties or charges claimed to have been paid or over-paid through inadvertence, error or misconstruction shall be allowed unless such claim is made within six months of the date of payment.
(2) In case of provisional payments made under section 81, the said period of six months shall be reckoned from the date of adjustment of duty after its final assessment.".
6. It is clear that the aforesaid provisions disallow sanctioning of refunds only in cases where the duties or charges, claimed as refund, were paid through (i) inadvertence; (ii) error; and (iii) misconstruction on the part of the claimant where such claim is filed after expiry of limitation of six months from the date of payment. The provisions of section 33(1) of the Customs Act, 1969, are analogous to the provisions of section 40 of the Sea Customs Act, 1878, which read as hereunder:- "40. No refund of charges erroneously levied or paid, unless claimed within three months:-No customs-duties or charges which have been paid, and of which repayment, wholly or in part, is claimed in consequence of the same having been paid through inadvertence, error or misconstruction, shall be returned, unless such claim is made within three months from the date of such payment.".
7. In the Customs House, Karachi's Compilation of "General Manual of Orders Relating to Customs and Tariff Laws" (published in 1967), the following ruling No. 1229-Cus, 1/37 dated 18.12.1937 of the Central Board of Revenue is reproduced at page 78 thereof, as follows:- "Section 40 not in itself an authority for refund: Section 40 of the Sea Customs Act is not in itself - an authority for refunds; it merely lays down the time-limit for the consideration of a certain class of refunds, vis; those which become payable because there has been error, inadvertence or misconstruction. The actual right to a refund, therefore, is not derived from any provision of the law, but from what may be called the common law position that money should not be retained by Government to which the Government have no just claim.".
8. There being no material difference between the provision 40 of the repealed Sea Customs Act, 1878 and that of section 33(1) of the Customs Act, 1969, the Clarification cited in paragraph 7 above shall still have force despite the CBR's ruling in its C. No. 10(122) Cus. Ref/96 dated 28.02.1996 as the former is the correct interpretation of the provisions of law under section 33(1) of the Act when read in the light of the Honourable Supreme Court of Pakistan's judgment dated 28th November, 1997 in Civil Appeal No. 48/1993 (PTCL 1998 CL 354).
9. Notwithstanding what has been stated above, even otherwise the imposition of 5 % redemption fine by the Collector on the claimant was ab-initio unlawful. "Redemption fine" is understood to be the fine imposed in lieu of confiscation of goods under section 181 of the Act. Collector, as an Adjudicating Authority, is authorized to confiscate the offending goods, to allow option to the owner, under section 181 of the Act, to pay fine (commonly known as "redemption fine") in lieu of confiscation of goods and to impose penalty on offenders including importers. In his Order-in- Original No. 16 of 1997, the Collector had already imposed fine of Rs. 4 lac in lieu of confiscation under section 181 and penalty of Rs. 1 lac under section 156(l)(9)(i). His order of imposition of the "redemption" fine of 5 % (even without specifying the base to which this 5 % related) upon the importer was ab-initio extra-legal, vague and unlawful. "Fine" on person of the importer could only be imposed by a special Judge (Customs & Taxation) if the importer was tried under clause 14 of section 156(1) or under any other relevant penal provision and was convicted by the said Judge. By ordering waiver of his imposition of redemption fine of 5% on importer in his Order-in-Remand No. 16/98 dated 15.04.1998, the Collector pre-empted the action, which would have otherwise been taken at the appellate stage. The imposition of the said redemption fine being unlawful ab-initio, the recovery of the amount is also unlawful and ought to be refunded to the appellant-cw/n- claimant without awaiting any formal refund claim under section 33 of the Customs Act, 1969.
10. For the reasons given in paragraphs 5 to 9 above, we hold that CBR's letter C. No. 10(122)Cus.
Ref/96 dated 28.02.1996 is not a correct interpretation of the provisions of section 33(1) of the Customs Act, 1969. We are of the view that the opinion cited in paragraph 7 above still holds good.
Since the appellant did not pay the amount of Rs. 136,853/- through any error, inadvertence or misconstruction on his part, we hold that the refund of the said amount may be allowed, if otherwise due and admissible, without applying the time limitation prescribed under section 33(1) of the Customs Act, 1969. The impugned order dated 09.09.2000 is set aside accordingly and the case is remanded to the Assistant Collector of Customs, Dry Port, Peshawar, for decision de novo to allow the refund, if otherwise due and admissible, without reference to the time limitation of section 33(1) of the Act. The appeal stands disposed of accordingly.
11. Inform all concerned.
12. Announced.