1. ORDER: ZAFAR IQBAL, MEMBER (TECHNICAL).--(1). This appeal has been preferred against the order passed by the Deputy Collector of Customs, Adjudication Collectorate, Karachi-I. The appeal challenges a demand of Rs, 1,56,31,124/- on account of non-payment of regulatory duty and short levy of customs duty for non-application of statutory rate. The demand relating to nonpayment of customs duty was vacated by the adjudication officer as the appellant produced the documents verifying the payment of customs duty amounting to Rs, 61,96,053/-. Hence the present appeal is restricted to the challenged amount of regulatory duty.
2. 2.The main contention of the appellant is that special exemption order No, 63/97, dated 12-08-1997 grants exemption to all machinery and equipment if the same is meant for use in the PTA plant and the import does fall within a specified period.
3. 3.The department, on the other hand asserts that special exemption order, in view of CGO 12/1981, will have restricted application and that too, to the extent of spare parts as sanctioned in the original order.
4. In order to properly evaluate the arguments advanced on both the sides it will be appropriate to reproduce the special exemption order No, 63/97. It reads as follows:-- "...in exercise of the powers conferred by section 20 of the Customs Act, 1969 (IV of 1969), the Central Board of Revenue, is pleased to exempt, as a special case, machinery and equipment imported by M/s. ICI Pakistan Limited for their PTA project from whole of regulatory duty chargeable thereon in respect of the consignments for which bills of entry for home consumption had been filed during the period commencing from 01-05-1996 to 29-01-1997.
4. This order is issued only to facilitate the release of undertakings. No cash refund will be admissible under this order as the objective of this order is to formalize an arrangement for purely technical reasons...."
5. 5.We observe that said order is unambiguous in its language and allows exemption from whole of regulatory duty on the goods imported by M/s. ICI Pakistan Limited for their PTA plant during 01-05- 1996 to 29-01-1997. Thus the order passed by the Deputy Collector of Customs (Adjudication), does not appears to be sound for the following reasons:-- "(a)The language of SRO 560(1)/96, dated 01-07-1996 (that granted) exemption from regulatory duty from 30-01-1997) is different from the language of the Special Exemption Order. SRO 560(1)/96 is applicable to machinery not manufactured locally that was imported for the initial installation phase of the PTA project. The Special Exemption Order on the other hand grants exemption to all machinery and equipment on the condition that it is imported for the PTA project and is imported within the specified period.
(b) In any event in order to qualify for exemption under the heading "machinery and equipment for initial installation" it is not necessary that such machinery should actually be immediately installed after import. Machinery meant for and/or imported for initial installation even if not actually installed for any reason qualifies for exemption insofar as the Special Exemption Order No, 63/97 is concerned. The Special Exemption Order No, 63/97 is wider in scope than SRO 506(1)/94 or 560(1)/96 as unlike these notifications it does use the word "initial installation" a pre-condition of exemption. The department is bound by the contents of the Special Exemption Order and cannot read other conditions that are extraneous to the order into it.
6. (c)The CGO No, 12/81 issued by the Central Board of Revenue on 14-09-1981 ruled that "the benefit of the same concession as admissible on the plant and machinery should be given to so much of the spares as are provided for in the original sanction". The spares under reference were imported by the appellant as a part of the original sanction as approved by the A Board of Investment, Government of Pakistan in the package of incentives as granted to Petrochemical Industries, in' particular to PTA projects. Thus inCGO No, 1281, exemption from the whole of regulatory duty was available to the spares of machinery imported under the original sanction.
7. (d)Installation was a pre-requisite for an exemption under SRO 506(1)/94. This was not the case in the Special Exemption! Order as by this order all machinery and equipment imported by the appellant for the PTA project was exempted from regulatory duty, provided that it was imported within the specified period therein."
8. 6.On the basis of said reasons, we are of the opinion that the order passed by the Deputy Collector of Customs (Adjudication), is not based on the sound legal reasoning, the: same is accordingly set aside and the appeal is allowed.