ISLAMABAD: A full bench of Supreme Court of Pakistan, comprising Chief Justice Mian Saqib Nisar, Justice Umar Ata Bandial and Justice Faisal Arab partly allowed an appeal filed by Pakistan Customs against a seller of steel, copper scrap slapped with Regulatory Duty (RD) at a rate of 25 per cent.

The appeal assailed a judgment by a Sindh High Court bench which held that irrespective of the notification, the respondent was not liable to pay regulatory duty.

Leave was granted on 7.12.2011 “to consider whether the High Court erred in law to hold that Section 31 and 31-A excludes application of Section 131 of the Customs Act, 1969 for the purpose of calculation of duty and taxes for export purpose.”

The bench hearing the counsel in detail held that while adopting the rule of harmonious interpretation of statutes, we find that sub-section (2) provides the general rule that all goods exported from Pakistan shall not be charged with export duty, whereas sub-section (3) provides the exception to such general rule, in that it specifically authorizes the Federal Government to impose a CIVIL APPEAL NO.1079 OF 2011 (4) regulatory duty, by notification in the official Gazette, on all or any of the goods imported or exported. A combined reading of both the sub-sections makes it abundantly clear that neither do they conflict with each other nor does either have supremacy over the other. ‘Regulatory duty’ has been examined in the judgment reported as Messrs Sh. Abdur Rahim, Allah Ditta Vs. Federation of Pakistan and others (PLD 198 SC 670) wherein the rationale for conferring the power to impose such duty was discussed. This Court held in the judgment (supra) that regulatory duty is meant to remove/check distortions in the market and to ensure stability, and that the Federal Government was validly delegated with the power/discretion to impose the same (regulatory duty). Therefore, the two sub-sections are consistent. Hence, the notification issued by the Federal Government under Section 18 (3) of the Act imposing a regulatory duty on certain export items is valid and legal and such duty would be chargeable from the date of the notification, i.e. 13.3.2010 till 30.6.2010.

The bench further held that “In the light of the above, this appeal is partly allowed. It is dismissed to the extent that where the goods declarations were filed before the date of the notification, i.e. 13.3.2010, no regulatory duty was payable by the respondent. However, where the goods declarations were filed on or after such date, the respondent was liable to pay regulatory duty as envisaged by the notification and to this extent, the appeal is allowed”.