ZAHID KURBAN ALAVI, J.- By this common judgment, we intend to dispose of the above seven (7) appeals as they all involve common questions of law and facts.
2. Briefly the facts giving rise to these appeals are that the appellants are engaged in the production of hard porcelain table-ware and their factory is situated at G.R. Road, Gujranwala. It is the case of the appellants that they imported seven consignments of plant and machinery in the year 1991 for installation at its aforesaid factory. The plant Regal Ceramics Ltd. V. Customs, Sales tax and C.L. 855 Central Excise Appellate Tribunal, Karachi (Zahid Kurban Alavi, J.) and machinery reached Karachi and appellants cleared the same after claiming the benefit of exemption from duties and taxes under SRO 1284(1 )/90, dated 13,12.1990 which exempts from the whole of customs duty and sales tax all plant and machinery which is not locally manufactured and is imported for installation in areas specified in Table-1. The said consignments were cleared by the appellants after fulfilling all the requirements, It is further the case of the appellants that they wee served with show-cause notices dated 22.4.199.5 containing the allegations that they had imported the consignments which were released without payment of customs duty and other taxes, leviable thereon. The show-cause notice also contained the allegations that the importers did not qualify for the exemption under SRO 1284(1 )/90, dated 13.12,1990.
3. The appellants replied to the show-cause notices and after hearing, the matter was decided against the appellants. Being aggrieved from the aforesaid decision the appellants preferred appeals before the Customs Excise and Sales Tax Appellate Tribunal at Karachi which was also dismissed vide order dated 7.10.2000. Hence these Special Customs Appeals, on the following legal points:-
(1) Whether the plant and machinery imported by the appellant was exempt from the whole of Customs duty and Sales Tax in terms of SRO 1284(1 )/90, dated 30.12.1990?
(2) That items (1) and (2) of Table-1 of the notification use the words "around these limits", In item
(3) the word "limits" is missing. This change in language clearly implies a change in meaning as held by the Hon'be Supreme Court in Maula Dad Khan V. West Pakistan Bar Council (PLD 1975 SC 469). Whether the absence of the words "items" in item (3) clearly conveys the legislative intent that the unit is not required to be 10 kms away from the municipal limits but only 10 kms away from the specified area?
(3) Whether the CESAT and the respondent No. 2 could either read words into a notification or find certain words to be redundant?
(4) Whether an allegation in the show-cause notice that the goods are not plant & machinery can be said to include an allegation that the plant & machinery is not locally manufactured absolving the respondent No. 2 of the obligation to clearly and specifically make the allegation in the show- cause notice before recording any finding thereon?
(5) Whether a policy of the Government which had not received statutory sanction can be read into a statue or a notification to control its meaning and scope?
(6) Whether the documents furnished by the appellant were "false in material particulars" under Section 32(1) of the Customs Act, 1969, in spite of the fact that these were issued by competent officers, were genuine and stated the facts correctly and truly?
(7) Whether the show-cause notice issued much after the expiry of a period of three years from the date of the clearance of the goods can be said not to be time barred inspire of the judgment of the Hon'be Supreme Court of Pakistan in Federation of Pakistan V. Ibrahim Textile Mills (1992 SCMR 18.98). In the case reported as Pfizer Laboratories Vs. Federation (PLD 1998 SC 64) the Hon'be Supreme Court of Pakistan has held that the functionaries of the State cannot refuse to refund money illegally recovered from the citizens by relying on time bar clauses. Whether the State functionaries can rely on the Pfizer Laboratories judgment to render the provisions of Section 32 nugatory and nullify the effect of the judgment of the Hon'be Supreme Court of Pakistan in the Ibrahim Textile Mills case?
(8) Whether the respondents have passed orders which being contrary to the judgments of the Hon'be Supreme Court of Pakistan are violative of Articles 189 and 190 of the Constitution of Pakistan, 1973 and per incuriam?
(9) Whether any Additional Sales Tax can be charged in the complete absence of means real the respondents filed their comments and contended that SRO 1284(1)/90, dated 13.12.1990 was issued to provide incentive to the industrialists for setting up new units and for expansion or balancing modernization and replacement of existing units by importing machinery to be installed at the factories located in rural areas. The benefit of aforesaid SRO was subject to fulfilment of certain conditions which at a later stage was found that the appellants had not fulfilled the same, It is also asserted in the comments that the goods imported were meant for the factory which is located outside the existing limits of Municipal Corporation, Municipal Committee and Cantonment Boards and 10 Kilo Meters area around Municipal Corporation whereas the factory for which the imported goods were imported is actually situated just 8.3 K.M. From the existing limits of Municipal Corporation's boundaries. The appellants had the knowledge that their factory did not fall under the purview of the distance for which concessional rate of customs duty and other taxes were admissible and deliberately claimed the benefit of SRO 1284< 1 )/90 which was inadmissible to them. The appellants' claim that the indemnity bond furnished by them was discharged and returned to them is incorrect as the provisions of sections 19 and 32 of Customs Act, 1969 empowers them to raise demand. We have heard the learned counsel for the appellants and respondents at length and have perused the record, It is contended by the counsel for the appellants that the goods imported by the appellants are covered under the definition of "plant and machinery" under SRO 1284(1)/90 and the goods were installed in an area other than those mentioned in table-1 of the said SRO. He has further asserted that appellants had furnished the necessary installation certificates which proved that the goods imported were plant and a machinery and have been installed in an area other then those mentioned in Table-1. He has further averred that the goods were imported in the year 1991 and Bill of Entry was filed immediately after the importation of goods and at the most the case falls under section 32(3) of the Customs Act, 1969 and the show-cause notice could only have been issued within six months of the date of filing of Bill of Entry and the show-cause notices are hopelessly time-barred.
4. Mr. Jawaid Farooqi, learned counsel for the respondents has support the decision of respondents.In order to appreciate the contentions of counsel for appellants, it is necessary to reproduce the relevant clause of SRO 1284(1)/90 which reads as follows:- EXEMPTION FROM CUSTOMS DUTY AND SALES TAX ON IMPORT OF PLANT AND MACHINERY.
Notification No. S.R.O. 1284/(1 )/90, dated 13th December, 1990. In exercise of the powers conferred by Section 10 of the Customs Act, 1969 (IV of 1969), sub-section (2) of Section 2 of the Finance Ordinance, 1982 (XII of 1982), and Section 13 of the Sales Tax (Amendment) Act, 1990 (VII of 1990), 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 on balancing modernization and replacement of existing units:-
(a) In areas other than mentioned in Table-1 from whole of the customs duty, surcharge and sales tax leviable or chargeable thereon under the First Schedule to the Customs Act, 1969, or, as the case may be, the 'Finance Ordinance, 1982 or the Sales Tax (Amendment) Act, 1990, and
(b) in the areas specified in the Table-11 from so much of the Customs duty leviable thereon under the First Schedule to the Customs Act, 1969, as is specified in column 8 of the said Table and whole of the sales tax chargeable thereon under the Sales Tax (Amendment) Act, 1990.
Subject to the conditions set out below namely:-,
(1) For the purpose of this Notification, machinery shall mean.
(1) 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 appellants specially adapted for use in conjunction with machinery specified in items (i) above;
(iii) power generating plan for operating item (1) above;
(iv) mechanical and electrical control and transmission gear adopted for use in item (1) above; and
(v) component parts of machinery as specified in items (i), (ii), (iii) and (iv) above, identifiable as for use in or with such machinery.
(2) The importer shall, at the time of import of machinery, make a written declaration on the bill of entry to the collect that the machinery has been imported for a project located in areas other than those specified in Table-1 or for the areas specified in Table-ll, as the case may be.
(3) The importer shall furnish an indemnity bond in the Form set out below to the extent of customs duty, surcharge and sales tax exempted under this Notification. The said indemnity bond shall be discharged subsequently on the 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, has been duly installed in the aforesaid areas.
(4) The certificate of installation referred to in condition (3) shall be submitted to the Collector of Customs not later than one year from the date ofimportation, of the plant and machinery to which it relates.
(5) The plant and machinery released under this Notification shall not, within a period of eight years 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, surcharge and sales tax exempted under this Notification and penaIties that may be imposed in this behalf shall be recovered under section 32 of the Customs Act, 1969 (IV of 1969).
It is also necessary to reproduce section 32 of the Customs Act, 1969 which reads as follows:
(32) (Untrue) statement error, etc. 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 reason to believe that such documents or statement is false) in any material particular, he shall be guiIty of an offence under this section.
(2) Where, by reason of any such document of 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 short-leyied 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 way he should not pay the amount specified in the notice.
(4) The appropriate officer, after considering the representation, if any, of such person as is referred to in sub-Section (2) or sub-section (3) shall determine the amount of duty payable by him which shall in no 'case exceed the amount specified in the notice, and such person shall pay the amount so determined.(5) For the purposes of This section, the expression "relevant date" means:-
(a) in any case where duty is not levied, the date on which an order for the clearance of goods is made;
(b) in a case where duty is provisionally assessed under section 81, the date of adjustment of duty after it s final assessm ent;
(c) in a case where duty has been erroneously refunded, the date of its refund.
(d) in any other case, the date of payment of duty or charge."
On the above question.
The learned Tribunal has recorded the findings as under:-- "The importer/investor under the said SRO is granted exception of total customs duty and sales tax.
But it is not free from all conditions. The taxes so exempted are of public money and, are in the nature of trust money for the conditional period of eight years is prescribed and accepted by the importers. If he violates the condition of the SRO or violation is detached within the agreed period, he is liable to pay the calculated amount of customs duty, taxes and sales tax. Other words he is liable to pay the trust money and there is no limitation for the recovery of trust money. However, in view of the condition of the SRO the trust money would come to an end after eight years as agreed in these cases."
5. Whilst section 32 of the Customs Act provides for a period of six months and three years subject to reasons for non-duty or short levy, the Tribunal through its impugned order has discussed at length para (5) of the Notification reproduced above and has tried to bring it within the ambit of eight years from the date of importation. The Tribunal should have appreciated that a clear reading of para (5) is made then a notice under section 202 of the Customs Act, 1969 can only be given if the machinery is shifted from the area, It is not the case of the Customs that this machinery was shifted in fact they have made it a case of mis declaration under Section 32 of the Customs Act.
6. If section 32 of the Customs Act is to be applied then under the sub-section (2) the notice is to be served by Customs Authorities within 3 years of the relevant date, In this case the machinery was imported in the year 1991 and the notice was given in 1995. The show-cause notice is patently barred by limitation. Findings of the Tribunal based on the interpretation of SRO 1284( 1 )/90, dated 1.12.1990 is illegal and totally unjustified keeping in view that nowhere it has been alleged that the machinery has been shifted from the place where it was installed.
Based upon the findings above we allow the Sp. Customs Appeals and the Registrar is directed to send a copy of this judgment under the seal of the Court to the Customs, Excise and Sales Tax Appellate Tribunal. The Tribunal, shall pass orders to dispose of the case conformable to the decision of this Court.