1. JUDGMENT MUHAMMAD MUJIBULLAH SIDDIQUL J.- In this Appeal at the instance of Collector of Customs (Appraisement), directed against the order passed by the learned Customs, Excise and Sales Tax Appellate Tribunal Bench-Ill, Karachi, in Customs Appeal No. K- 619. Of 2002, the following questions of law have been raised.
2. "(1) Whether a refund, claim of regulatory duty time-barred in terms of Section 33 of the Customs Act, 1 969, is entertainable.
(2) Whether a special exemption order for the regulatory duty which has already been paid by the claimant is applicable retrospectively."
3. The relevant facts are that the respondent No. 1, Civil Aviation Authority, imported a consignment of 3 large i.e crash tenders (specialized vehicles) without accessories and spares in October, 1996 and claimed clearance against special exemption order No. 62/96, dated 15.10.1996.
4. At the relevant time a regulatory duty of 10% was also leviable under sub-section (2) of Section 18 of the Customs Act, 1969. The consignment was accordingly released on payment of 10% customs duty as per the exemption order dated 15.10.1996 and 10% regulatory duty in the terms of Section 18(2) of the Customs Act, 1969. The duties were paid on 15.12.1996 and the consignment was cleared. Subsequently, a special exemption order No. 26/97, dated 14.4.1997 was issued by the Central Board of Revenue, whereby in exercise of the powers conferred by Section 18 of the Customs Act, 1 969, the CBR was pleased to exempt as a special case, from the whole of the regulatory duty chargeable thereon, on seventeen (17) i.e crash tenders which were cleared under exemption order No. 50/1996, dated 1.8.1996, 51/1996, dated 7.8.1996, 56/1996, 68/1996, dated 11.11.1996 and 8/1997, dated 19.2.1997. In pursuance of the above special exemption from payment of regulatory duty, an application for refund was submitted by the respondent No. 1 for an amount of Rs.42,15,276/-. The Collector of Customs (Appraisement) rejected the application vide order dated 14.3.2002, observing that there is 40 days delay beyond the stipulated period of six months under Section 33 of the Customs Act, 1969. According to the learned Collector this period of delay of 40 days was computed on the basis of date of issuance of exemption certificate and filing of the refund application.
5. The respondent No. 1 preferred appeal before the learned Customs, Excise and Sales Tax Appellate Tribunal. The learned Tribunal allowed the appeal by placing reliance on the judgment of this Court in the case of M/s. Unique Industries v. Government of Pakistan (citation not given) and on the judgment of Hon'ble Supreme Court in the case of M/s. Pfizer Laboratories v. Federation of Pakistan, PLD 1998 SC 64.
6. The department feeling aggrieved has preferred this Appeal raising the questions of law referred to in the earlier part of this judgment.
7. The learned counsel for the appellant was pointed out that so far, Question No. 1 is concerned, it already stands decided by this Court as well as the Hon'ble Supreme Court and the question No. 2 does not arise out of the order of Tribunal, because the Tribunal has not given any finding on the point of retrospective application of the special exemption order issued by CBR. He was further pointed out that the CBR vide its special exemption order No. 26 of 1997, dated 14.4.1997 has allowed the exemption as a special case from the whole of regulatory duty chargeable thereon, to the specific goods cleared under specific exemption orders including special exemption order No. 62/1996 and therefore, the question of any interpretation on the point of prospective or retrospective operation of the special exemption order does not arise. He was also pointed out that the CBR being apex body in the tax hierarchy is empowered to allow exemptions from payment of customs duty and by virtue' of the provisions contained in Section 223 of the Customs Act, all officers of the customs and other persons employed in the execution of this Act shall observe and follow the orders, instructions and directions of the Board and have no authority to raise any objection to the orders/directions issued by the board or to by-pass the same directly or indirectly and through any process of interpretation. The learned counsel did not dispute this proposition but submitted that notwithstanding, the earlier judgments of the superior Courts, a confusion is still prevailing with the departmental officers particularly on the scope of the provisions contained in Section 33, therefore, a detailed judgment considering his contention that Section 33 is applicable to all kinds of refunds be delivered, which may serve as a guideline for the customs officers in future.
8. As the question of law raised by the Revenue in this Appeal already stands decided by the superior Courts, therefore, the Appeal was dismissed in limine on.
9. 24.8.2004, after hearing the learned counsel for the appellant, for the detailed reasons to be recorded later on.
10. First we would like to take-up the Question No. 2. From the tenor of the question formulated by the appellant, it appears that the Collector of Customs (Appraisement) is of the view that special exemption can be granted by the CBR from the payment of regulatory duty in respect of the imports after the issuance of such special exemption order and no such special exemption can be granted to the imports already made and the goods cleared on the payment of regulatory duty.
11. In this behalf, we would like to observe that in the first instance, the officers of the customs or other persons employed in the execution of the Customs Act, are not empowered under the law to raise objection to the orders, instructions and directions issued by the CBR from time to time and are bound under Section 223 of the Customs Act, 1969 to observe and follow the same. The only, clog on the powers of CBR :obtained in the proviso to Section 223 is that the CBR shall not issue any orders, instructions or directions so as to interfere with the discretion of the appropriate officers of customs in the exercise of their was/'-judicial function. In the present case, the Collector (Appraisement) rejected the refund application by exercising administrative function and not in exercise of quasi-judicial function. Secondly, in the absence of any restriction imposed under the Customs Act, the CBR can allow the exemption to the future as well as past transactions. As the exemptions allowed are not in the nature of orders adversely affecting the assessee, therefore, ..Such orders fall within the purview of beneficial orders and the superior Courts have always up- held the orders issued by the CBR which are beneficial in nature. Thus, no objection can be raised to the relief allowed by way of exemption to the respondent No. 1, in respect of the specific consignments already cleared under the exemption orders shown in the special exemption Order No. 26 of 1997.
12. Now we will take-up the first question, whether provisions of Section 33 of the Customs Act, are applicable to the refund claimed in the facts and circumstances of the present case.
13. The facts are admitted which we have already narrated and need not to repeat them. The Collector of Customs (Appraisement), while rejecting the refund application has not given any finding that after special exemption granted by the CBR, the amount representing the regulatory duty was not required to be refunded. There is no observation to the effect that the special exemption order No. 26 of 1997, dated 14.4.1997 was not within the competence of CBR and that with the issuance of special exemption order, the regulatory duty charged from the respondent No. 1, was not automatically refundable. Thus there is no order that the amount of Rs.42,15,276/- paid as regulatory duty had not become refundable but the sole reason for the rejection of refund claimed was that the claim was preferred beyond the period of six months specified under Section 33 of the Customs Act, and consequently, the refund was in-admissible in terms of Section 33 of the Customs Ac(t, 1969.
14. Before delivering on the point, if Section 33 of the Customs Act, is attracted to the facts and circumstances of the present case, it would be appropriate to reproduce the section which reads as follows:- "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 Clairton is made within six months of the date of payment.
(2) In the case of provisional payments made under Section 31, the said period of six months shall be reckoned from the date of the adjustment of duty after its final assessment."
15. A bare perusal of Section 33(1) shows that it is not a provision under which refund is claimed but it merely provides a period of limitation within which refund of any customs-duties or charges can be claimed which has been paid or overpaid through inadvertence, error or misconstruction. At this juncture, we would like to observe that this provision is to be read along with Section 224 of the Customs Act, which provides that the Federal Government, the Board or the appropriate officer of Customs, may, upon being approached by an aggrieved party is satisfied that the delay was beyond the control of the applicant and that by granting such extension, there is a possibility of some loss or hardship to the applicant being mitigated or presented, extent the time of limitation laid down in any section.
16. The learned counsel for the Revenue was printed out that the period of limitation provided in Section 33 is in respect of a refund of amount claimed to have been paid or overpaid through inadvertence, error or misconstruction. He was further asked to show that this provision was applicable if there was no inadvertence, error or misconstruction and where there is a deliberate act on the part of a customs official/authority. The learned counsel for the appellant had no option but to concede that when the regulatory duty was charged it was chargeable under the law and the regulatory duty was paid as leviable under the law at the relevant time in pursuance of an order of the customs official which was not the result of any inadvertence, error or misconstruction.
17. The learned counsel was not able to deny that the regulatory duty paid became refundable in pursuance of the special exemption granted by the CBR in relation tot he specific imports specified in the special exemption order and j consequently, the refund was claimed, not on the ground that the regulatory duty was charged in j consequence of any order on the part of customs j officials made through inadvertence, error or misconstruction or any amount was paid by the respondent No. 1 on account of any inadvertence, error or misconstruction on their part, but the refund was claimed in pursuance of special exemption order issued by the CBR. The learned counsel for the appellant however, submitted that the departmental view is that since there is no other provision in the Customs Act, dealing with the refund of duties or charges paid by the assessee therefore, notwithstanding, the use of the expressions inadvertence, error or misconstruction in Section 33(1) of the Customs Act, it shall be applicable to all the refunds by way of necessary intendment.
18. The learned Tribunal has referred to the judgment of this Court in the case of M/s. Unique Industries v. Government of Pakistan (citation not given) in which it has been held as follows:- "We have considered the submissions of the learned counsel of the parties, In our view Section 33 will not come into play as none of its ingredients are attracted in the instant case. However, we find that the letter dated 27th June, 1992 is very clear in terms, specified directions were given to the respondents Nos. 2 and 3 for refund of the amount as observed above which they were bound to comply, therefore, there was no need for the petitioner to move any application. Section 223 also supports the case of the petitioner that subordinate functionaries of Customs have to follow the orders of the CBR, which has not been done in the instant case.
19. In the circumstance's, mentioned above, we allow this petition with direction that the petitioner shall approach the respondent No. 4 along with all relevant documents for verification and scrutiny so that the amount of refund payable to the petitioner may be determined within a period of three months from the date the petitioner approaches the respondent No. 4."
20. The ratio of the judgment of Hon'ble Supreme Court in the case of M/s. Pfizer Laboratories v.
21. Federation of Pakistan (PLD 1998 SC 64) shall be referred to subsequently.
22. The scope of provisions contained in Section 33(1) of the Customs Act, which are analogous to the provision of Section 40 of the Sea Customs Act, 1878, have been considered by a Division Bench of the Customs, Excise and Sales Tax Appellate Tribunal Peshawar Bench in the case of Dr. Tariq Safi v.
23. Assistant Collector of Customs, PTCL 2002 Cl. 588. We find very elaborate and erudite discussion in the above judgment of learned Tribunal and we would like to refer the observations made in the above judgment, with approval. A ruling given by the CBR on 18.12.1937 was cited which reads 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."
24. The learned Tribunal has held in its judgment under reference by placing reliance on the judgment of Hon'ble Supreme Court of Pakistan in the case of M/s. Pfizer Laboratories v. Federation of Pakistan, 1998 CL. 354, that if amount has been recovered which is unlawful, it ought to be refunded without awaiting any formal refund claim under Section 33 of the Customs Act, 1969. The point whether the period of limitation prescribed for refund of charges pertaining to payment made as a result of inadvertence, error or misconstruction came for consideration before a Division Bench of this Court with reference to the provisions contained in Rule 11 of the Central Excise Rules, 1994 which are analogous to the provisions contained in Section 33 of the Customs Act, 1969, in the case of Orient Straw Board v. Assistant Collector of Central Excise and Land Customs, PTCL 1985 (CL) 1, Amal Mian, J. (as his lordship then was), speaking for the Division Bench observed that, the rule provides that if repayment is claimed on the ground that the same has been paid through inadvertence or error or misconstruction shall not be allowed unless written claim is. Lodged within a period of one year from the date of such payment, It was held that the petitioner had paid the amount under protest and not ,due to inadvertence or error or misconstruction and therefore, Rule 11 of the Excise Rules was not attracted.
25. This point again came for consideration before another Division Bench of this Court in the case of M/s. Asbestos Cement Industries Ltd. v. The Superintendent Central Excise and Land Customs, PTCL 1991 CL. 332. It was reiterated followed the dictum laid down in the case of Orient Straw Board (supra) that where any payment was not due to inadvertence or error or misconstruction, Rule 11 of the Central Excise Rules was not attracted.
26. The issue again came for consideration before a learned Single Judge of the Lahore High Court in the case of Kohinoor industries Ltd. v. Government, of Pakistan, PTCL 1994 CL. 280. In this case the petitioner was subjected to double tax who approached the tax officials for refund of the excess amount charged as double duty which could not be legally charged and recovered under the law.
27. Ultimately the matter was agitated before Lahore High Court invoking the writ jurisdiction. As is the position in the present case, the charging of duty not warranted in law was not disputed but a plea was taken that refund claimed was barred by time as it related to the period for the year 1968 to January, 1977 and the refund was claimed in the years 1977 ad 1978. It was argued that the amount for the period beyond one year was not refundable being barred by time. A plea was taken that any amount paid under mistake of law and compulsion was liable to be refunded and the period of limitation in Rule 11 of the Excise Rules was not applicable, It was submitted that the excise duty sought to be refunded was neither paid through inadvertence nor through error or any misconstruction. Reliance was placed on various judgments from Indian jurisdiction and was argued that there is no law of limitation especially for public bodies on the virtue of returning what was wrongly recovered under colour of public laws and that in democratic setup it does not behove of the public authorities to refuse to return money illegally recovered. Reference was made to the law laid down by the Supreme Court of India in the case of Sales Tax Officer v. Kanhaiya Lal (AIR 1959 SC 135) and State of Madhya Pradesh v. Bhailal Bhai (A.I.R. 1964 S.C. 1006), wherein Rule 11 of the Central Excise Rules, 1944 was interpreted. The expression mistake of law was distinguished from the words inadvertence, error or misconstruction, It was held that error is not synonymous with mistake, It was observed by Supreme Court of India that word error used in Rule 11 means some clerical or arithmetical error. The expressions inadvertence was also interpreted in the same sense, It was held that the expressions inadvertence, error or misconstruction connoted mere compilation and calculation in the arithmetical sense, It merely intended to resolve or finalise the disputes as to accounting, It was ultimately held by the learned Single Judge of the Lahore High Court that Rule 11 of the Central Excise Rules does not apply to a case where the amount of tax is paid under a mistake of law was distinguished from the words inadvertence, error or misconstruction, It was held that error is not synonymous with mistake, It was observed by Supreme Court of India that word error used in Rule 11 means some clerical or arithmetical error.
28. The expressions inadvertence was also interpreted in the same sense, It was held that the expressions inadvertence, error or misconstruction connoted mere compilation and calculation in the arithmetical sense, It merely intended to resolve or finalise the disputes as to accounting, It was ultimately held by the learned Single Judge of the Lahore High Court that Rule 11 of the Central Excise Rules does not apply to a case where the amount of tax is paid under a mistake of law or fact or under compulsion and that the claim of refund of any amount realized without any authority of law, if not barred by any specific statutory provision enforceable in law can be recovered.
29. The point in issue was considered in-depth by the Hon'ble Supreme Court in the case of Messrs Pfizer Laboratories Limited v. Federation of Pakistan (PLD 1998 SC 64). All the judgments referred by us were considered and approved, In this case a claim of refund under Customs Act was rejected, although the amount of customs duty and sales tax sought to be refunded was exempted under Section 19 of the Customs Act and Section 7 of the Sales Tax Act, 1951. In this case, refund application was submitted after one and half years of the payment which was rejected for the reason that the application was not filed within six months as provided in Section 33 of the Customs Act. After elaborate resume of the case-law from Pakistani, Indian and English jurisdiction various principles were deduced by the Hon'ble Supreme Court including the following:-
(i) The Customs-duties and charges referred to in Section 33 of the Act should be chargeable and payable by an importer or exporter and that due to inadvertence, error or misconstruction, more amount was paid or recovered than what was due and payable. The claim for the refund of such an excess amount should be made within six months as envisaged in above Section 33, but where the duty or tax charged and recovered was not payable at all, above Section 33 has no application.
(ii) That if the customs duty or any other levy was realised and realization was outside the statutory authority, the provisions of Section 27(1) of the Indian Customs Act, 1982, providing limitation of six months was not attracted.
30. (i.e) That when any excise duty is recovered which was not leviable limitation of one year provide din Rule 11 of the Central Excise Salt Rules 1944 is not applicable nor an alternate remedy by way of suit will be a bar to a Constitution petition.
(iv) That payment of excise duty or any other tax without knowledge that the same is exempted under a notification is refundable on the same footing as if there was no lawful imposition.
31. The Hon'ble Supreme Court of Pakistan has further observed as follows:- "The above resume of the case-law of Indian, English and Pakistani jurisdictions indicates that the latest judicial trend is to deprecate and to discourage withholding of the citizen's money by a public functionary on the plea of limitation or on any other technical plea if it was not legally payable by him. It is also evident that claims for the refund of the amount paid as a tax or other levy on account of mistake as to want of constitutional/legal backing or because of exemption are at par. It is also apparent that such payments are held to be not covered by Rule 11 of the Central Excises Rules, 1944, or Section 27(1) of the Indian Customs Act, 1951, or Section 33 of the Act etc."
32. From the case-law discussed above, it is abundantly clear that Section 33 of the Customs Act and Rule 11 of the Central Excises Rules, 1 944 are attracted to such applications for refund only where any payment or overpayment has been made as a result of inadvertence, error or misconstruction.
33. The provisions contained in Section 33 of the Customs Act cannot be extended to any other situation by any process of interpretation, intendment; presumption or assumption. By now, it is established principle of the interpretation of the tax laws that one has to look merely at what is clearly stated. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.
34. In the end, we would like to refer another very important principle of law and administration of justice, that, the laws are not to be interpreted and the documents are not to be constructed in a manner, which led to the anomalous results and absurdities. Keeping the above principle in view, we find that the plea taken by the respondent shall lead to the absurd consequence. As already observed, the CBR has the authority to grant exemptions in respect of future as well as past transactions. The officers of customs subordinate to CBR have no authority to challenge the exemptions granted by the CBR. In fact, the Collector of Customs (Appraisement) has not directly challenged the exemption granted by the CBR but has attempted to render the exemption granted by the CBR, ineffective, indirectly, It is also an established principle of law that if smoothing cannot be done directly it cannot be allowed to be done indirectly as well.
35. In the light of the above principles, we have examined the special order No. 26. Of 1997, dated 14th April, 1997. Through this special exemption order the CBR has exempted as a special case, from the whole of regulatory duty chargeable i.e crash tenders which were cleared vide exemption Order No. 50/1996, dated 1.8.1996.
36. The period of limitation in Section 33(1) of the Customs Act, 1-969 is six months from the date of payment. Although we do not have the exact date of clearance of the consignment under exemption order No. 50 of 1996, dated 1.8.1996, but we have the date of clearance of the consignment under exemption order No. 62 of 1996, dated 15.10.1996. Under this exemption order the consignment was cleared on 20th of October, 1996. These facts are available in the memo, of appeal and the Order-in-Original of the Collector of Customs (Appraisement). If on the same analogy we presume that the consignment under exemption order No. 50 of 1996, dated 1.8.1996 was cleared within 10 days or even 15 days, the date of payment of the regulatory duty would be 15.8.1996. If the period of six months from the date of the payment of this regulatory duty is computed from 15.8.1996, it will expire on 14.2.1997. The CBR has granted special exemption in respect of this import on 14.4.1997. Now if the plea of Collector of Customs is accepted that the refund can be allowed by recourse to Section 33(1) of the Customs Act, 1969, the exemption granted by the CBR can never be acted upon for the simple reason that the exemption was granted on 14th April, 1997 and the period of six months from the date of payment of the regulatory duty expired on February, 1997. Similar, would be the case in respect of the exemptions for the consignments cleared under exemption order No. 51 of 1996, dated 7.8.1996 and 56/1996, dated 16.9.1996.
37. The Collector of Customs has totally ignored the above factual position while rejecting the application for refund for the reason that the application was beyond the period of limitation provided in Section 33(1) of the Customs Act, 1969. It is difficult to hold that the CBR would allow the exemptions by special exemption order No. 26/1997 in respect of specific imports which were already beyond a period of six months on the date of grant of exemption, knowing that the exemption order cannot be acted upon. A public functionary body like CBR can never be expected to play such a mischief with any assessee and particularly with another public functionary namely Civil Aviation Authority. Thus, the only inference which can be drawn is that the CBR allowed special exemption to the respondent No. 1 with full knowledge that the transactions on which exemption was being granted are beyond the period of six months from the date of exemption and the order was passed with clear comprehension that such refunds were in respect of regulatory duty imposed in accordance with the law, for the time being in force and not as a result of inadvertence, error or misconstruction and shall become refundable by another deliberate, and intentional exercise of jurisdiction which shall not be hit by the period of limitation provided in Section 33(1) of the Customs Act. Consequences which will follow on the acceptance of the plea raised by the Collector of Customs cannot be attributed to the CBR which is the apex body in the hierarchy of tax administration in the country.
38. Consequent to the above discussion, we hold the view taken by the Customs, Excise and Sales Tax Appellate Tribunal that the provisions contained in Section 33(1) of the Customs Act are not attracted to the refund claimed in the present case is not open to any exception. The point of law already stands decided by various benches of this Court as well as Hon'ble Supreme Court of Pakistan, and therefore, the Appeal is liable to be dismissed in limine. As already observed, we have recorded the detailed judgment just for the future guidance of the tax officials.