KARACHI: The MCC Port Muhammad Bin Qasim (PMBQ) and its lawyer Khalid Rajpar meticulously fought a case in respect of construction vehicles/mixer truck and foiled a systematic bid to get new consignments cleared on the basis of order of Custom Appellate Tribunal in respect of a particular consignment of construction vehicles.
The counsel for MCC PMBQ filed a petition challenging order passed by the learned Member (Technical-III), Customs Appellate Tribunal Bench-III, Karachi on the application filed for implementation of the judgment dated 02.12.2021, in Customs Appeals No. H-144 to 161/2021, titled as M/s. Ehsanullah & Co, Peshawar V/s Collector of Customs (Appeals), Karachi and 2 others.
As per details M/s. Ehsanullah & Co. (NTN 1332559-7), Peshawar during July 2019 have imported 18 (Eighteen) “Old and Used Hino/Nissan Concrete Transit Mixer/Dump Truck (Off Highway), of Model 1995 to 2005” which as per relevant Bills of Lading were shipped from Dubai UAE, on 5th May 2019. He then filed eighteen Goods Declarations (all dated 16.07.2019) under the provisions of Section 79 (1) of the Customs Act,1969, through his authorized clearing agent M/s ARW Enterprises CHAL#41/96, Hyderabad and sought clearance under One-Customs from MCC Dry Port, Customs House, Hyderabad (Annex-B).
During the intervening period, import of old and used/second hand Concrete Transit Mixer/Dump Trucks (Off Highway) by the Construction Companies duly registered with Pakistan Engineering Counsel, were subject to regulation in terms of sub-clause (ii) of sub-para (5) of Para 9 and S.No. 10 of Appendix-C and Appendix-I of repealed Import Policy Order 2016, vide SRO 345(I)/2016 dated 18 April, 2016 (Annex-C). By virtue of referred para import of vehicles actually required for their projects in Pakistan was allowed subject to prior pre-shipment inspection from any of the internationally registered inspection companies listed at Appendix-H to the effect that the vehicle is not older than five years.
Since, M/s Ehsanullah & Co had imported eighteen vehicles more than five years old in violation of the provisions of 16, 32(1), (2) and 79(1) of the Customs Act, 1969, read with sub-clause (ii) of sub-para (5) of Para 9 and S.No. 10 of Appendix-C and Appendix-I of repealed Import Policy Order 2016, punishable under clauses (9) and (14) of sub section (1) of Section 156 ibid, further read with SRO 499(I)/2009 dated 13.06.2009, Show Cause Notices all dated 14.02.2020 were issued accordingly.
During pendency of adjudication proceedings, he took the stance that he entered into a Sale Agreement dated 11.01.2013, with M/s Al Waris Auto Parts Tr. LLC Dubai, for the purchase of 950 units of specialized Vehicles against sale consideration of US$ 5,450,000/-. Subsequently, the said contract was amended twice on 30.01.2013 and 25.09.2014 and consequently, the total number of vehicles to be imported was increased to two thousand (2000), for total sale consideration of US$ 15,000,000/- (Fifteen Million Dollars), with mutual agreement that the transactions shall not be made through Letter of Credit. The contract was also registered with M/s Bank Alfalah Limited on 27.11.2015, which was valid till import of entire quantity of the vehicles. The contract registration date expiring on 21.11.2017 was also extended up till 21.11.2019.
Furthermore, in view of contract vested rights have accrued in his favor inter alia and two thousand (2000) vehicles in good working conditions having remaining productive life of five years sought to be imported would have to be compliant with IPO-2013 (Annex-D), prevalent at the time of entering into the binding contract and IPO-2016 cannot be applied retrospectively. Besides, the Respondent filed three Constitution Petition No. D-3485 of 2013 and D-1126 and D-1162 of 2016 which were disposed of vide judgment dated 06.02.2018 (Annex-E) whereby it was held that objection to the importability of vehicles under IPO-2013 is not sustainable and that declared value of the vehicles shall be applicable and the customs hierarchy was restrained to raise any objection to the values and importability.
The case was adjudicated vide common Order-in-Original No.01 of 2020 dated 10.07.2020 (Annex-F) whereby vehicles were ordered outright confiscation for violation of the above provisions of law. The Respondent No.2 assailed the original order and preferred eighteen Customs Appeals under section 193 of the Customs Act, 1969, which were rejected, vide common Order-in-Appeal No.3471 of 2020 dated 18.12.2020 (Annex-G), passed by the Collector of Customs (Appeal), Karachi and original order was maintained.
The Importer still being aggrieved preferred 2nd Appeal(s) under Section 194-A of the Customs Act, 1969. The Appellate Tribunal on the basis of misconceived various case law and without taking into account that the vested rights of the importer/Respondent No.2 were only limited to the time during which the IPO-2013 was enforced (that too subject to projects in Pakistan and actual requirement) and none of the provision is contained in the said policy for implementation once it is repealed and IPO-2016 is enacted, vide judgment dated 02.12.2021(Annex-H), allowed all the eighteen appeals and set aside the orders passed by the fora below. The judgment was honored to the extent of seized vehicles by predecessor Collector, MCC, Hyderabad. Following referred judgment, another bunch of 36 identical stuck-up vehicles was also released vide Order-in-Original 01 of 2022 dated 12.03.2022, passed by the Deputy Collector of Customs (Adjudication) Hyderabad.
The importer during May 2022 imported another lot of 33 old and used vehicles of Model 1992-2000, more than five years old (Annex-I), claimed to be part of so-called binding contract and stressed for clearance under the terms and conditions of repealed IPO-2013. Since, the Respondent No.2 has not placed on record the detail of projects for which the vehicles are actually required and have been imported coupled with sub-clause (d) of sub-para (2) of Para 10 of current IPO-2022 promulgated vide SRO 545(1)2022 dated 22.04.2022 also prohibit/restrict import of more than five years old and used vehicles, the Goods Declarations filed by Respondent No.2 have not been processed.
The importer without providing information and justifying clearance of vehicles under repealed IPO-2013, filed application before the Customs Appellate Tribunal for implementation of the judgment dated 02.12.2021, in Customs Appeals No. H-144 to 161/2021. The Appellate Tribunal vide common Order dated 13.09.2022 (Subject matter of instant petition) has been pleased to dispose of application with the directions to the Respondent Collectorate to implement the judgment dated 02.12.2021 in letter and spirit within seven days of receipt of order with the observations that non-release of imported vehicles or yet to be imported is illegal.
The MCC approached the FBR for Legal advice and Law and Justice Division’s advised the FBR and MCC concerned to implement the judgment in its letter and spirit, with the advice that, if the referring Division want further clarification, the very court which passed the judgment be approached. The referred judgment has been passed on altogether different issues and have no implications on the matter of so-called “Binding Contract”.
Since, the impugned order has been passed illegally, without jurisdiction on the basis of mis-conceived judgments involving distinguishable facts and law and no remedy is provided under the Customs Act, 1969 for impugning such an illegal and ultra varies order, the MCC decided to contest the matter.
The main contention of the department was that In case the Respondent is allowed to import vehicles older than five years under the refuge of private contract purportedly signed in between the Respondent and foreign supplier by availing benefit of repealed conditions of IPO-2013 and providing detail of contracts in Pakistan to substantiate actual requirement, the entire scheme of import of vehicles and fulfillment of procedural requirement under sub-clause (d) of sub-para (2) of Para 10 of current IPO-2022, shall become redundant.
It was further contended that Custom Appellate Tribunal has seriously erred in law and failed to appreciate that the Importer since the institution of the case has been mis representing the case just to deceive the customs hierarchy on the unwarranted plea that by virtue of binding contract, he has accrued vested rights to import the vehicles, having remaining productive life of five years in terms of Paragraph 9(i)(5) of the Import Policy Order 2013, with fulfillment of other conditions contained therein and moreover the issue of importability of the vehicles under IPO-2013, has also been taken up in the Constitutional Petitions No.D-3293 of 2013, No.1126 of 2016 and No.1162 of 2016 and had been concluded in his favor vide judgment dated 06.02.2018, by maintaining that the vehicles imported under binding contract are in accordance with the terms and conditions of IPO-2013. The Appellate Tribunal has completely distracted from the issue and failed to appreciate that bare reading of said order make it abundantly clear that the issue before the Honourable High Court in the referred petitions was regarding valuation of the vehicles and fulfillment of requirement of permanent mounting of concrete mixer on the vehicle as provided under Chapter 87 of Customs Tariff. The Respondent No.2 is attempting to get undue benefit by misinterpreting the order dated 6.02.2018 passed by this Honorable High Court, claiming that matter of binding contract had been decided in his favor.
It was further submitted that the Appellate Tribunal while concluding impugned order has seriously erred in law and failed to take into account that the importer has entered into a private contract for the import of more than five years vehicles without having valid contracts and actual requirements of the project at the relevant time in clear defiance of the import policy order issued from time to time. Under such circumstances, the conclusion of the Appellate Tribunal that wasted right accrued to the Respondent No. 2, are altogether misconceived. The Appellate Tribunal while arriving on such conclusion has relied number of case law involving distinguishable facts and circumstances and not at par with the case in hand against the Respondent.
A division bench of High Court of Sindh while hearing the petition by the MCC PMBQ stayed the implementation while issuing notice to the importer.
The point to decide before the bench is that whether a contract which expired can give protection to later / new imports and whether order of tribunal passed in respect of certain number of vehicles or a particular GD is extendable to future imports under the same expired contract.