Messrs SANA Enterprises Vs Collector of Customs Peshawar.

2013 P T D 438

[Peshawar High Court]

Before Waqar Ahmad Seth and Rooh-ul-Amin Khan, JJ

Messrs SANA ENTERPRISES through Sole Proprietor, Peshawar

Versus

COLLECTOR OF CUSTOMS, PESHAWAR and 3 others

Writ Petitions Nos.1801-P and 1802-P of 2012, decided on 29th August, 2012.

Customs Act (IV of 1969)---

----S. 32(2)(3)---S.R.O. 509(1)/2007 dated 29-6-2007---Constitution of Pakistan, Art. 199--- Constitutional petition---Demand notice issued by Customs Authorities in absence of statutory show cause notice---Legality---Importer (petitioner) imported consignments of "Acetate Tow" and availed concession under S.R.O. 509(I)/2007 dated 29-6-2007, wherein sales tax on import and supply of textile and articles thereof was chargeable at 0%--- Subsequently during scrutiny of import clearance it was observed that "Acetate Tow" was meant for making cigarette filter rods and the benefit of S.R.O. in question had been wrongly extended to the importer---Demand notice was issued to the importer---Validity---Demand notice was always in consequence to the proceedings of show cause notice and adjudication---Customs Authorities had issued demand notice in absence of statutory show cause notice as provided by S. 32(2)(3) of Customs Act, 1969 and without adjudication or final determination as to whether the importer could have availed the benefit of S.R.O. in question---Impugned demand notice was issued by Customs Authorities without lawful authority and jurisdiction---Constitutional petition was allowed, impugned demand notice was set-aside and Customs authorities were directed to issue show cause notice to the importer and thereafter conclude adjudication proceedings.

Zahid Idris Mufti for Petitioner.

Abdul Rauf Rohaila for Respondents.

Date of hearing: 29th August, 2012.

JUDGMENT

ROOH-UL-AMIN KHAN, J.---Through this single judgment, we propose to dispose of instant Writ Petition No. 1801 of 2012 as well as the connected Writ Petition No. 1802 of 2012 as common questions of law and facts are involved in both these Writ Petitions.

2.Brief facts, relevant for decision of this case are that the petitioner is general order importer under the name and style of Messrs Sana Enterprises and imports various kind of goods for onward sale and is registered in the sales tax department under the relevant provision of Sales Tax Act, 1990. The petitioner imported three consignment of "Acetate Tow" having assessed value of Rs.24647687 and cleared the same through Messrs Group Seven Custom Agency from Customs Dry Port, Peshawar during 2010-2011. The petitioner availed the concession under S.R.O. 509(I)/2007 dated 29-6-2007 wherein the sale tax on textile and article thereof was chargeable @ zero percent, on the supply and import thereof. During audit proceedings and scrutiny of import clearance data for the period 2010-2011, it was observed that the petitioner imported three consignment of "Acetate Tow" which is a cellulose fiber meant for making Cigarettes filter rods and the benefit of aforesaid S.R.O. had wrongly been extended to the petitioner because serial No.2 of the table included in the S.R.O. 509(I)/2007 dated 29-6-2007 clearly indicates that only "textile and article thereof" falling under Chapter 50 to Chapter 63 of Pakistan Customs Tariff, qualify for zero rating facility. "Acetate Tow" being an exclusive raw material for Tobacco Industry/Cigarettes Filter Rod does not qualify for the benefit of the above said S.R.O., therefore, demand notice dated 26-5-2012 was issued to the petitioner for deposit of amount of Rs.5168867 within ten days, which has been impugned in the instant Writ Petition.

3.Learned counsel for the petitioner at the very outset contended that the impugned demand notice is violative of the mandatory provision of Customs Act, 1969, which has been issued without providing any opportunity to the petitioner to defend his case. The statutory show-cause notice under section 32(2)(3) of the Customs Act, 1969 has not been issued.

4.Learned counsel for the respondents argued that the petitioner had not disclosed the real position at the time of clearance of goods and had wrongly availed the inadmissible concession under S.R.O. 509(I)/ 2007 dated 29-6-2007 which has caused massive revenue loss to the government exchequer.

5.Without going into the merits of the case, suffice it to say that the demand notice is always in consequence to the proceedings of show cause notice and adjudication. In the instant case, respondent No.2 has issued the demand notice in absence of statutory show cause notice as provided by section 32(2)(3) of the Customs Act, 1969 and without adjudication or final determination as to whether the petitioner would be able to avail the benefit of S.R.O. 509(I)/2007 dated 29-6-2007 or otherwise.

6.Since not much discussion would be required to hold that the demand notice dated 26-5- 2012 issued by respondent No.2 is without lawful authority and jurisdiction, which is set aside. However, the respondents/department is directed to issue show cause notice to the petitioner within fifteen (15) days after receipt of this order and thereafter shall conclude the adjudication proceedings within two months positively. These Writ Petitions are allowed in above terms.

MWA/344/P Case remanded.