' SABIHUDDIN AHMED, J.---All these appeals arise from identical orders passed by learned Appellate Tribunal dismissing nineteen (19) appeals preferred by the appellants involving similar facts and common question of law.
2. Basically the facts appear to be that the appellants which is the State Cement Corporation imported machinery for the manufacture of Port Land Cement on different occasions in 1993. Such machinery was chargeable to 20 per cent ad valorem customs duty under PCT Chapters 84 and 85 which was raised to 30 per cent after the enforcement of the Finance Act, 1992. However, vide S.R.O. No, 286(I) /84, dated 4-4-1984 the Federal Government, approved projects were exempted from the whole of customs duty subject to certain conditions, one of which was that the machinery was otherwise liable to customs duty at the rate not exceeding 20 per cent. However, by a subsequent S.R.O., No,379(1)/92 dated 14-5-1992 S.R.O. No,286 was amended and the total exemption from customs duty was substituted by provision for 10% duty in respect of machinery covered by the aforesaid notification.
3. Admittedly, the appellant imported machinery in several consignments after July, 1992. The rate of duty was declared to be 30 per cent ad valorem and Notification No, S.R.O. No,286(I)/ 84 was mentioned ostensibly for the purpose of claiming exemptions. It is nevertheless admitted that the appellant paid customs duty at the rate of 10 per cent ad valorem and got the goods cleared by furnishing indemnity bond for the remaining 20 per cent. Such bonds were also subsequently discharged as stated by the learned counsel for the appellants. After almost two years of the arrival of the goods the respondent No,1 issued show-cause notices to the appellant alleging that the benefit of exemptions in terms of S.R.O. No,286(I)/ 84 was only available when the normal rate of duty on the imported machinery did not exceed 20 per cent and the appellant had obtained the benefit of such exemption through misdeclaration depriving the Government of legitimate revenues of various amounts. The appellants contested the notices but the respondent No,1 passed orders directing the appellants to pay the difference between the duty leviable (30 per cent ad valorem) and the duty paid (10 per cent ad valorem) as well as penalty at the rate of 10 per cent ad valorem. The appellants preferred an appeal before learned Tribunal which was dismissed by the impugned order.
4. Mr. Zamiruddin Ahmed, Advocate for the appellants in the first instance argued that the exemption from customs duty was provided under a definite policy for promoting industrialization.
Under the original notification it was payable on machinery not otherwise subject to duty exceeding 20 per cent because at that time all the machinery for manufacturing of Port Land Cement was liable to duty at such rate. However, when the rate of duty was enhanced in 1992 to 30% corresponding amendment should have been made in the notification, which otherwise made no sense. This apparently was not done inadvertently. However, such amendment must be read into the notification otherwise it would become meaningless.
5. Mr. Raja Muhammad Iqbal, Advocate and Mr. Jawaid Farooqui, Advocate for the respondents vehemently contested this proposition and argued that the Court could not read something into statutory instrument which did not exist. Since we intend to decide these appeals on a different point, we would prefer not to express a final opinion.
6. Mr. Zamiruddin Ahmed, learned counsel for the appellant argued in the alternative that even if his interpretation was not accepted the fact remains that his claim for exemption founded upon such interpretation could under no circumstances be treated as a conscious misdeclaration in terms of section 32 of the Customs Act, 1969 and the Tribunals blows gravely erred in holding to the contrary. Learned counsel further argued that even if it be held that the imported goods were not entitled to the benefits of exemption the duty short levied on account of inadvertent error or misconstruction could be recovered after serving notice upon the appellants within six months on payment of duty in terms of section 32(3) of the Customs Act, 1969. .7. On the other hand, Mr. Raja Muhammad Iqbal, learned counsel for respondent argued that it was not a case of inadvertence or misconstruction but one of conscious misdeclaration on the part of the appellants and the- respondents were fully justified in demanding payment within three years in terms of section 32(2) of the Customs Act.
8. To appreciate the above contention, it may be appropriate to reproduce section 32 of the Customs Act, 1969 which reads as under:-- "32. Untrue state, error, etc.-- If any person, in connection with any matter of customs,--
(a) makes or signs or causes to be made or signed, or delivers or causes to be delivered to an officer of customs any declaration, notice, certificate or other document whatsoever, or
(b) makes any statement in answer/to any question put to him by an officer of customs which he is required by or under this Act to answer, knowing or having reasons to believe that such document or statement is false in any material particular, he shall be guilty of an offence under this section.
(2) Where, by reason of any such document, or statement as_ aforesaid or by reason of some collusion, any duty or charge has not been levied or has been short-levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within three years of the relevant date, requiring him to show-cause why he should not pay the amount specified in the notice.
(3) Where, by reason of any inadvertence, error or misconstruction any duty or charge has not been levied or has been short levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within six months of the relevant date requiring him to show cause why he should not pay the amount specified in the notice.
(4) . .
(5) . .
9. There is considerable force in Mr. Zamiruddin Ahmed's contention that the mere fact that the officials charged with the duty to collect customs duty subscribed to the petitioner view point and released the imported goods upon payment of 10% customs duty and subsequently even discharged the indemnity bond furnished by them showed that his interpretation of the relevant notification was at least plausible, if not altogether correct. We asked both M/s. Raja Muhammad Iqbal and Javed Farooqui as to whether no responsibility devolved upon the hierarchy of customs officials to levy and assess duty according to law and they had really no answer. We are rather amazed at the line of reasoning put forward to the effect that while an assessee is required to interpret the law and relevant notification correctly and could be held guilty of a penal offence for not doing so in terms of section 32(1) of the Customs Act, no responsibility of any kind would devolve on custom officials. We may add that in case short levy or evasion became possible due to collusion of some customs officials the mere fact that no such official was involved and no notice was served in terms of section 32(2) of the Customs Act indicates that the entire exercise was mala fide.
10. It is well-settled that an erroneous interpretation of statutory notification cannot be deemed to be a false declaration in terms of section 32(1) of the Customs Act. Mr. Javed Farooqui, however, referred to an unreported judgment of the Hon'ble Supreme Court in Government of Pakistan v.
Quetta Textile Mills (Civil Appeal No,860-K of 1990) which was referred to in the Commentary on Customs Act published by Jawed Umer Law Associates (First Edition) P-281. Unfortunately, we have not had the benefit of going through the judgment as a copy was not available with the learned counsel. However, as far as it can be gathered from the commentary, the respondent had claimed the benefit of exemption from duty under a particular notification providing such exemption to import machinery which was not manufactured locally. The High Court had accepted their plea that claiming benefit under a particular notification did not amount to misdeclaration. The Hon'ble Supreme Court, however, accepted the Government appeal holding that the respondent had made a misdeclaration when they were aware of the fact that the machinery imported by them was also manufactured locally.
11. The above decision, therefore, seems to be of no help to the respondents as in the instant case no misdeclaration of fact has been alleged. In fact Raja Muhammad Iqbal placed before us a copy of a bill of entry filed by the appellant wherein the rate of duty of 30% was declared but concessionary rate in terms of S.R.O. No,286 was claimed. In the circumstances, we are clearly of the opinion that no conscious misdeclaration of fact can be attributed to the appellant and no conclusion having been alleged the short payment can only be attributed to a misconstruction or error in the interpretation of the relevant notification. The provisions of section 32(3) of the Customs Act would therefore, be clearly attracted in short fall in the duty could have only been recovered within time specified in section 32(3) of the Customs Act. It may be mentioned that such recovery cannot be made after the expiry of a period of six months as held, inter alia, by the Hon'ble Supreme Court in Federation of Pakistan v. Ibrahim Textile Mills Ltd. (1992 SCM R 1898). Learned counsel for the respondent attempted to argue that this would cause great loss to the public exchequer. We regret to say that we cannot allow the respondents to avoid a clear requirement of law and the State and the citizen must be treated alike. The appellant cannot be foisted with liability arising from gross inefficiency of public official and in case the Government is so minded, the Civil Servant (Efficiency and Discipline) Rules confer adequate power to recover losses suffered through negligence or breach of orders. For these reasons all the appeals are allowed and the impugned orders are set aside.
…and 18 more citing cases