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KARACHI: Sindh High Court (SHC) has dismissed the reference applications against Pakistan International Airlines (PIA) pertaining to duty and taxes on re-importation of engines sent abroad for repairs.

The collector of Customs filed the applications against the decision of Customs Appellate Tribunal, which gave its verdict in the favour of PIA.

According to the written order of SHC bench comprising Justice Muhammad Junaid Ghaffar and Justice Agha Faisal on Wednesday, various show-cause notice(s) (44 in number) were issued to PIA demanding payment of duty and taxes on the re-importation of engines sent abroad for repairs.

The applicant’s stance was that the value of repair has not been correctly declared at the time of re-import of engines, resulting in lesser payment of duty and taxes. On the other hand, PIA’s case was that they are willing to pay the duty and taxes on the actual cost of repairs charged to them; however, for the purposes of duty and taxes freight SCRA 150 to 193 of 2015 Page 3 of 7 amount of 20% on such cost and 1% insurance charges are not to be added to the value.

The order further said: “The counsel for Collector Customs submitted that the Appellate Tribunal erred in placing reliance on a letter issued by the Deputy Collector Customs Air Freight Unit, which according to counsel had no authority to enter into any settlement and exempt payment of the amount due.

“The counsel further submitted that 1% flood relief surcharge remains outstanding and was never paid under the amnesty scheme; therefore, (PIA) is liable to pay the same and relied upon the recommendations of Alternate Dispute Resolution Committee (“ADRC”) dated 26.06.2007.

“On the other hand, counsel for the respondent submitted that during pendency of the proceedings, the respondent had availed amnesty scheme notified vide SRO 485(I)/2007 and 463(I)/2007 both dated 09.06.2007 and admittedly paid the duty and taxes as per the said amnesty scheme within the stipulated time i.e. 30.06.2007; hence no question of payment of any further amount arises.

“According to him, the recommendations of the ADRC has no relevance as FBR had never approved or otherwise rejected it and much before that amnesty scheme was announced and availed.”

The court observed that show-cause notice did not allege any separate or independent short levy of 1% flood relief surcharge, and talks only about duty and taxes for which the applicant had permitted the availing of the amnesty scheme.

The court upheld the order of the tribunal which bench declared is correct in law and facts and depicts correct legal position and dismissed reference applications against its decision.

Copyright Business Recorder, 2021

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