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Custom authorities can seek reasonable information only: SHC

Custom authorities can seek reasonable information only: SHC

KARACHI: An appellate bench of Sindh High Court (SHC) comprising Justice Munib Akhtar and Justice Omar Sial heard the petitions on law point that whether the petitioner/importers of steel pipes are entitled to refundof their guarantees/pay orders furnished by them pursuant to a court order, when as per case of respondent custom officials, the petitioners were required to prove that the incidence of custom duty has not been passed onto the customers in terms of the provisions of section 19-A of the Customs Act 1969.

Importers are integral part of the economy of this country. Reasonable information only should be required to be asked by the department. Government policies and actions should focus on removing business irritants to allow expansion of existing business and to attract new business, observed a division bench of High Court of Sindh deciding 49 identical petitions.

The power of section 19-A must not be used as a garb to harass importers, the order said. The petitions were filed by pipe steel pipe manufacturers including Karachi Tube Mills which were allowed by a division bench of High Court of Sindh, The bench ordered release of guarantee/ security deposited by the petitioners.

The application of Section 19-A of the Customs Act 1969 (incidence custom duty passed on to the enduser) was under challenge by the petitioners. The petitioners were represented by Naveen Merchant advocate while respondents were represented by Masooda Siraj and Kashif Nazeer advocates.

The actual controversy however dates back to year 2013 when government of Pakistan with an aim to promote trade between Pakistan and China allowed concession and exempted them from the payment of custom duty on raw material for manufacturing welded steel pipes. The exemption was under SRO 659 (1)/2007. But when the consignments arrived at the port, department detained the consignment on ground that material imported was “alloy steel” and subject to 5 per cent customs duty. The petitioners contended that consignments in dispute were “non alloy steel” and hence they are entitled to exemption from custom duty.

On 25-9-2013, a SHC bench as an interim arrangement in view of loss to the importers ordered that consignments be released if they pay 50 per cent of the amount to the department and 50 per cent with the Nazir in the form of bank guarantee/pay order.

The petitions were finally disposed of on 4.5. 2015 through a consent order according to which if the consignments in dispute do not have Boron more than 0.0008 per cent as “inherent part” of the steel then guarantee/pay order shall be refunded.

The custom authorities after judgment took refuge behind the section 19-A and asked the petitioners to prove that they comply with the said section and their money will be refunded only when they prove that they have not on-passed the incidence of custom duty to the end user or customer. The petitioners/importers were asked to furnish a number of information and documents while denying the refund forcing the petitioners to file the instant petitions.

Justice Omar Sial who authored the judgment said that Supreme Court judgment/order cannot be interpreted to mean that such a power can be exercised by the department in an unfair and discriminatory manner. A bare look at the list of documents asked by the department suggest a fishing and roving exercise and an attempt to create unnecessary and unfair hurdles in the way of petitioners depriving them of business opportunity, the judgment said terming the exercise as mala fide.

The bench also noted that department has returned money to some importers and refused such release to many others which the bench termed discriminatory, unfair and violative of fundamental rights of the petitioners.

The bench parting with the judgment directed the department to return the guarantees/pay orders to the petitioners within 30 days.