ZAFAR IQBAL, MEMBER (TECHNICAL).-(l). This order will dispose of appeal Nos. 492, 493 and 494 of 2001, as these appeals arise out of similar facts and involve common question of law.
2. As per details available from the records, the facts of the A lease are that the appellants exported 74 metric ton of poppy seeds. The post export audit scrutiny of the documents revealed that export of poppy seeds stood banned with effect from 14-01- 1999 vide SRO 28(I)/99. These facts lead to issuance of show cause notice to the appellant whereby the customs authorities asked him to show cause for the commission of said act which; did constitute violation of section 16 of the Customs Act, 1969 though the petitioner denied the charges, yet the adjudication officer held them guilty of the offence of exporting banned goods. He accordingly imposed penalties on all these appellants. The present appeals have been preferred against the said order.
3. The issue before us is that initially the export of poppy seeds was not banned in the Export Policy Order 1998-99, however, vide Notification No. 28(I)/99, poppy seeds were; included in Schedule 1 to the Export Policy Order, with the result! That export of poppy seeds was completely banned.
4. So the question before us is that where a contract for export was entered into before 14-01-1999, would it be right to charge the exporter for the offence under section 16 of the; Customs Act, 1969.
5. The appellant contended that this issue has been examined by the Lahore High Court in Writ Petition No. 13445 of 1999 reported as A. Razzaq and Co. v. Government of Pakistan (PLJ 2000 Lah.
53).
6. It is an illuminating judgment, wherein their lordships have observed as under: It is contended by the petitioner's learned counsel that the export of poppy seeds was freely allowed under the Export Policy Order, 1998 under section 3(1) of Import and Export (Control) Act, 1950 at the time when the petitioner had entered into a contract with the Indian importer on 08-09- 1998 and also established a letter of credit on 23-09-1998 and further that the petitioner had exported a part of the poppy seeds. His claim is that vested rights had come to accrue to the petitioner on the basis of the contract entered into between him and the importer at the time when there was no restriction on the export. It is claimed that the amendment made in the Schedule 1 of Export Policy Order 1998-99 through Notification dated 14-01-1999 had no retrospective operation so as to interfere with the rights of the petitioners or the contracts entered into prior to the issuance of said Notification.
6. In the report submitted by the respondents almost all the facts have been admitted. It has, however, been stated that till September, 1997 there was no restriction on export of poppy seeds from Pakistan. However, on the initiative of Pakistan Narcotics Control Division export of poppy seeds was banned vide Ministry of Commerce SRO 32(I)/97 issued on 22-09-1997. While issuing the Export Policy Order, 19*98 the poppy seeds could not be inadvertently included in the list of items export of which was banned and this defect was rectified on 14-01-1999 by the Ministry by issuing the impugned notification.
7. Import to and export from Pakistan is governed by the Import and Export (Control) Act, 1950 under which is consonance with the trade policy the Government issues export policy order almost every year in terms of section 3 of the Import and Export (Control) Act, 1950. It is not disputed that in Schedule 1 of the Export Policy Order, 1998 the poppy seeds do not figure anywhere in the list of goods export of which was banned. Consequently at the time when the petitioner entered into a contract for the export of goods there was no ban on the export of poppy seeds. Export of a partial shipment was also allowed by the respondents themselves on 08-09-1998. It was much later on 14-09-1999 that the Export Policy Order was amended by Notification No. SRO 28(I)/99 dated 14-01- 1999 and export of poppy seeds was banned.
8. It is a settled proposition in law that a notification cannot have any retrospective effect and operates prospectively unless there is a clear provision to that effect in the legislation itself. The other settled proposition in law is that rights which accrue to or vested in a person on account of his having taken some action on the basis of a contract or a policy cannot be taken away by issuing a Notification. The Supreme Court of Pakistan in Federation of Pakistan v. Chaudhry Muhammad Aslam (1986 SCM R 916) which was a case relating to import of buses was pleased to observe that though the department possesses untrammeled powers and could prospectively prohibit or control the imports all the same even such an intensive power has its limits. Vested rights cannot be allowed to be overridden unless it takes place by unequivocal words by an organ or authority competent. To impair or override the vested rights, It was further observed as under:- "If contracts had been bona fide and legally entered into and given rise to rights and liabilities enforceable at law then certainly vested rights had come into existence which could not be overridden even in the matter of import and export, except on express words of an authority competent to legislate retrospectively, competent to override or impair I such vested rights. An agency or authority not empowered to override or impair vested rights cannot achieve that end simply by giving its dispensation in the form of a I declaration.
Such a vested right was protected and preserved by invoking in aid the principle of promissory estoppel."
Similarly in Al-Samrez Enterprise v. The Federation of Pakistan (PTCL 1987 CL. 99) = (1986 SCM R 1917) the Supreme Court of Pakistan held the following: "If a binding contract was concluded between the appellants and the Exporter or steps were taken by the appellants creating a vested right to the then existing notification; granting exemption, the same could not be taken away and destroyed in modification of the earlier one, on the ground: that under section 21 of the General Clauses Act the Government could exercise the power of modification.
It will be inequitable and unjust to deprive a person who acts; upon such assurance of the right to exemption and expose him to unforeseen loss in the business transaction by suddenly withdrawing the exemption after he has made legal commitments. It is in this perspective that a right is created in his favour and a subsequent withdrawal of exemption cannot be given retrospectively operation by an executive act to destroy this right.
Vested right was created and the transaction was not open to doubt as fraudulent and no attempt to evade the payment of duty was made.
Retrospective operation cannot be given to executive orders so to destroy contractual rights and obligations already accrued."
Reference may also be made to Taj Mahal Hotel Limited etc. v. Karachi Water and Sewerage Board etc. (1997 SCM R 503) in which it was observed that a Notification or an administrative order could not operate retrospectively to the disadvantage of a person affected by it. In Hashwani Hotels Limited v. Federation of Pakistan and others (PLD 1997 S.C. 315) it was laid down that the Notification and/or an executive order can only operate prospectively and not retrospectively. It was further held that:- "Reverting to the question, whether such a direction can affect the loan agreements which were already concluded prior to such direction, it may be observed that it is a well- settled principle of interpretation of a notification and/or an executive order that the same can operate prospectively and not retrospectively. This principle is equally applicable to a statute in the absence of any express or implied intendment contrary to it."
Reference may also be made to Messrs. Army Welfare Sugar Mills Limited and others v. Federation of Pakistan and others (PTCL 1993 CL. 188) = (1992 SCM R 1652) in which it was laid down that a notification which purports to impair an existing or vested right or imposes new liability or obligation cannot operate retrospectively in the absence of legal sanction. If an authority is competent to make an order it has the power to undo it but the order cannot be withdrawn and rescinded once it has take legal effect and certain rights are created in favour of an individual. It was further held that the doctrine of promissory estoppel was applicable in Pakistan against Government and its functionaries subject to following exceptions:
(i) The doctrine of promissory estoppel cannot be invoked against the legislature or the laws framed by it because the legislature cannot make representation;
(ii) Promissory estoppel cannot be invoked for directing the doing of the thing which was against the law when the representation was made or the promise held out;
(iii) No agency or authority can be held bound by a promise or representation not lawfully extended or given;
(iv) The doctrine of promissory estoppel will not apply where no steps have been taken consequent to the representation or inducement so as to irrevocably commit the property or the reputation of the party invoking it: and
(v) The party which has indulged in fraud or collusion for obtaining some benefits under the representation cannot be rewarded by the enforcement of the promise.
In the present case there is no averment by the respondent that the petitioner has acted fraudulently nor the fact that he had entered into a contract with the importer and opened a letter of credit prior to coming into force of the Notification been disputed.
9. It follows from the above that the Government in the exercise of its powers under the Import and Export (Control) Act, 1950 can allow or prohibit the import and export of any goods subject however to the rider that the notification issued by it in this behalf would operate prospectively and cannot affect the rights vesting in a person on the basis of the contracts entered into or the other steps taken for export and import, both on the principle of promissory estoppel and theory of vested rights.
10. In the present case it is not denied that at the time when the petitioner had entered into the contract and had opened the' letters of credit there was no prohibition in any law for the. Export of poppy seeds from Pakistan. It has been contended by the respondents that it was due to an accidental omission. Even if that be so, a third person like the petitioner cannot be made to suffer for the fault of the respondent department. It is also interesting to notice that the import of poppy seeds in Pakistan is not banned. Furthermore, under the Narcotics Control Act, 1997 there is no bar for dealing with or being in possession of poppy seeds. Narcotic drug has been defined in section 2 to mean coca leaf, cannabis, heroin, opium, poppy straw and all manufactured drugs, however, poppy straw means all the parts, except seeds, of the opium poppy after sowing. Reading the two definitions together it becomes clear that poppy seeds do not fall within the definition of narcotic drug.
11. Before concluding this discussion it may be stated that the importer to whom the goods were sent by the petitioner faced a similar difficulty which resulted in filing of a Constitutional Petition bearing No. 18876/98 before the High Court of Punjab and Haryana at Chandigarh. In that case too importer had been issued a license for import of poppy seeds from Pakistan and certain other countries. Subsequently, however,notifications were issued by virtue of which the import of poppy seeds from Pakistan were banned. This was done by amending para-8 of the Foreign Trade Regulation Rules 1993. The High Court was pleased to hold that valuable rights of the importer cannot be defeated on the basis of a notification which could not materially vary the terms and conditions of the license to the disadvantage of the importer in that case.
As a result of what has been stated above, this petition is allowed. The notification bearing No. SRO 28(I)/99 dated 14-01-1999 is held to be only of prospective operation and would be ineffective against the rights of the petitioner who shall be allowed to export the poppy seeds of the quantities mentioned in the contracts/letter of credit...."
7. In view of the said judgment all these appeals are allowed and orders passed by the Collector of Customs (Adjudication) are hereby set aside.