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ISLAMABAD: The Supreme Court has allowed the Collector of Customs, Karachi to encash 50 percent bank guarantee of oil marketing companies, payable as regulatory duty, saying the rest of the amount will remain intact till the final determination of the Customs Appellate Tribunal on petitioners’ claim.

A three-judge bench, headed by Chief Justice Umar Ata Bandial, on Monday, heard the appeals of oil companies challenging the levy of regulatory duty on the appellants’ cargoes of motor spirit.

Euro Oil (Pvt) Limited, Taj Gasoline (Pvt) Limited, My Petroleum (Pvt) Limited, HASCOL Petroleum Limited, and Puma Energy Pakistan (Pvt) Limited have filed appeals against the Sindh High Court (SHC)’s judgment. The bench disposed of their appeals as the counsels did not press them.

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The bench remanded the case to the Customs authority for the determination of the petitioners’ claim with regard to the benefit of SRO 806. The court said the authority shall not be influenced by the SHC’s judgment.

The SHC on 11-04-23 dismissed the petitions and held that the petitioners are not entitled to the protection and benefit under SRO 806(I)/2022. It noted that neither vessel’s Bill of Lading nor private contract established that the cargo was at high seas for a matured commercial understanding between the supplier and buyer.

The petitioners have sought the benefit of SRO 806(I)/2022 dated 20.06.2022, whereby, they are exempted from paying regulatory duty on their consignments/cargo of “motor spirit”.

The federal government, Revenue Division, on June 20, 2022, under section 18(3) of the Customs Act, 1969 had issued SRO No.806(I)/2022 “to levy regulatory duty at a rate of ten per cent on import of motor spirit with the stipulation that the regulatory duty shall not be levied on cargoes for which LCs had already been opened or were at high seas.

The imports of motor spirit where customs duty at a rate of ten per cent is paid shall be exempted from the levy of regulatory duty. The notification shall remain in force till the 30th June 2022.“ The effect of the SRO 806 was that if on or before 30-06-22 the letter of credit had been established or the cargo was on the high seas, no regulatory duty would be imposed.

Farogh Naseem, representing HASCOL Petroleum Limited, argued that on 28-06-2022 his client’s and other petitioners separately notified that the tanker vessel MT Onex Precious carrying their motor spirit cargoes had arrived at the outer anchorage of Port Qasim and was ready to discharge the same.

However, due to the long queues of ships at Port Qasim, the vessel remained parked waiting its turn until 16-07-2022 when it was finally allowed to discharge the petitioners’ cargoes of imported motor spirit.

The dispute with the Customs authorities arose when after decanting of the cargoes, they sought to charge and recover regulatory duty at the rate of 10 per cent on his client’s cargoes of imported motor spirit and refused to release the same until the regulatory duty was paid. The Customs authorities gave justification that SRO 806 had expired on 30-06-22 and therefore, they cannot claim benefit of it.

Farogh stated that the SHC had erred in dismissing their petitions on the ground that under SRO 806(I)/2022 not only the letter of credit should have been established prior to 20-06-22, but also the goods ought to have been on the high seas prior to 22-06-22.

He submitted that a notification or an SRO is to be interpreted according to whatever has been stated therein. Nothing is to be added or subtracted if the words in the SRO or the notification are clear. The court cannot explore the policy behind a notification or SRO if the words contained in the said SRO are clear and not admit any ambiguity.

Faisal Siddiqui, appearing on behalf of the department, contended that the petitioners cannot have the benefit of exemption after the expiry of the SRO. He questioned how SRO 806 can override Section 30 of the Customs Act.

After hearing the arguments, the court disposed of the appeals.

Copyright Business Recorder, 2023


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Tulukan Mairandi Jul 11, 2023 10:16am
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