M/s Popular Spinning Mills denied injunctive relief by SHC

KARACHI: The Sindh High Court has dismissed the application filed by M/s Popular Spinning Mills Pvt Ltd seeking injunctive relief regarding customs duty collection at the rate of 15 percent in terms on SRO 606(I)/2015.

M/s Popular Spinning Mills Pvt Ltd has filed a suit seeking declaration that SRO No. 565(I)/2014 and SRO No.606(I)/2015 are without jurisdiction and SRO No.565(I)/2006 stands revived.

M/s Popular Spinning Mills Pvt Ltd had submitted that pending final adjudication of the case, Customs authorities may be restrained from collecting customs duty beyond 5.0 percent.

The company submitted that in terms of SRO 565(1)/2006 the rate of customs duty on the raw material quoted board and Aluminum foil was 5.0 percent, and on such promise and grant of exemption, they had established the industry. However, subsequently the rate of duty was increased to 10 percent in terms of SR0 565 and currently to 15 percent under SRO 606.

M/s Popular Spinning Mills submitted such enhancement being confiscatory in nature is against the fundamental rights guaranteed under the Constitution.

Counsel for the company contended that relying upon the  representation made through issuance of SRO No. 565(1)/2006, they incurred heavy expenditure and set up a modern and state of the art plant for the purpose of manufacturing packaging material for liquid food industry;

The SRO No. 565(1)/2006 was amended through another SRO 565, whereby; the concessional rate of duty on the basic raw material i.e. Clay Coated Board and Aluminum Foil was increased from 5.0 percent to 10 percent and subsequently to 15 percent through SRO 606.

They submitted that amendment carried out through two notifications is confiscatory in nature and has crippled their entire industry, which is near to its closure if such enhanced duty is levied on the raw material imported by them. Moreover, they had to pay duty at enhanced rates.

The counsel for Customs contended that increase and decrease in the rate of customs duty is a policy matter and there is no estopple against the legislature as the rate of duty is structured on the basis of fiscal decisions of the government as such levy and enhancement is not confiscatory in nature.

The Court has dismissed the application seeking injunctive relief and restraining Customs authorities from collecting customs duty beyond 5.0 percent, pending final adjudication of the case.

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