Appellate Division Cases
(Civil)
PARTIES
Bangladesh and others…………………………………..Appellant
Vs
Mizanur Rahman………………………………………..Respondent
JUDGES
Latifur Rahman CJ
Bimalendu Bikash Roy Choudhury J
Mahmudul Amin Choudhury J
A.M. Mahmudur Rahman J
Date of Judgment
1st June 2000
JUDGMENT
The Customs Act. Section 25(7), 30, 19, 33
The Customs Act, 1969, 25(7)
Collector of Customs, Chittagong and others Vs. Ahmed Hossain and others, 48DLR(AD)199, Mostafizur Rahman Vs. Govt. of Bangladesh and others, 51DLR(AD)40, 40DLR(HCD)273
The interpretation of section 25 (7) of the Customs Act. He has mainly submitted that the tariff value of the goods having been increased before the submission of bill of entry in exercise of power under section 25 (7) of the Customs Act and section 30 of the said Act providing that the duty has to be assessed on the value of the goods as on the date of the submission of the bill of entry and this not being a case of change in the exemption granted under section 19 of the said Act an error of law has crept in for not clearly understanding the ratio decidendi Civil Appeal No. 114 of 1999
Import of section 19 of the Act. This is the general power to exempt from customs duty under some special circumstances when the Govt. considers it necessary in the public interest to do so it may exempt any goods from customs duty partially or wholly. This is the general power of exemption by the Government on some special considerations. As a matter of fact the rate of duty as enumerated as per section 18 remains the same. Section 18 speaks of “rate of duty” and section 19 speaks of exemption as the Government feels necessary in a particular situation. Sections 18 and 19 are two independent sections one do not control the other. (11)
Hannan’s case was one of exemption of customs duties and that case has no bearing with the rate of duty as contemplated in section 30 of the Customs Act (12)
So the basic question is whether custom authority can increase the tariff value subsequently under section 25 (7) read with section 30. As per section 25(1) the value of
the imported goods shall be the normal price which they would fetch on the date referred to in section 30 on sale in open market between a buyer and a seller independent
of each other. (14)
The Govt. has the power to fix tariff value by publishing notification in the officiall gazette and this power has been vested in the govt. under sub-section (7) of section 25 of the Act to fix tariff value of imported or exported goods by notification (20)
Customs duty is payable by the importer-respondent on the basis of tariff value force on the date of presentation of the bill of entry and not on the basis of invoice or tariff value in force at the time of opening of letter of credit. So the decision in 51DLR (AD) 40 appears to us to be not correctly decided due to the failure of the then Attorney General to point out the distinction between 42DLR (AD) 167 and 48DLR (AD) 199 on the one hand end the case of Mustafizur Rahman on the other. Even he failed to bring to our notice the case of Khairul Bashar Vs. Collector of Customs, 50DLR(AD)225 in which High Court Division correctly noticed the distinction between exemption under section 19 of the Act and declaration of tariff value under section 25 (7) of the Act and did not follow the ratio decidendi of 42DLR(AD) 167 and 48DLR(AD) 199 and held that importer acquires no vested right in the invoice value or the tariff value existing at the time of opening of letter of credit (20)
Being a case under section 25 (7), the learned Judges of the High Court Division failed to appreciate the ratio decidendi of 48DLR (AD) 199 and wrongly held that the duty has to be paid on the tariff value prevalent on the date of issuance of the letter of credit (21)
In the present case the petitioner having released the goods on payment of additional customs duties and sales tax ought to have asked for refund under section 33 of the Customs Act within six months. He having not availed of this alternative efficacious remedy the writ petition is not maintainable on that score as well (23)
ADVOCATES
Mahmudul Islam, Attorney General, (Bazlur Rahman, Deputy Attorney General With him), instructed by S.B. Barua, Advocate-on-Record. For the Appellants Dr. Kamal Hossain, Senior Advocate, (A.F.M. Hasan Arif Advocate with him) instructed by Md. Nawab AH, Advocate on-Record For the Respondents
JUDGMENT
1. Latifur Rahman CJ :- This appeal by the Government of Bangladesh by leave is against
the judgment and order dated 7.7.1997 passed by a Division Bench of the High Court Division making the Rule absolute in part in Writ Petition No.345 of 1991.
2. The short fact relevant for disposal of the appeal is that the respondent as writ petitioner opened a letter of credit on 13.04.88 for import of Galvanized Plain Sheets at a time when S.R.O. Dated 18.6.87 was in force providing for the tariff value of imported goods of the said description. The goods arrived at Chittagong Port on 9.8.88 and the respondent submitted bill of entry about 2 years thereafter on 29.1.90. In the meantime S.R.O. dated 18.6.87 was superseded by S.R.O. dated 16.6.88 and 15.6.89 raising the tariff value of the imported goods. The writ-petitionerrespondent paid enhanced sales tax and customs duty on enhanced tariff value and cleared the goods on 6.6.90. His case is that he paid an excess amount of Tk.6, 36,032/- on an enhanced tariff value although in law the imported goods were liable to be assessed on the basis of the tariff value as contained in the S.R.O. dated 18.6.87, during the currency of which he opened the L.C. The further case of the respondent was that the Chittagong Port Authority collected Tk.2, 11,464.56 from him as wharf rent from 21.8.88 to 18.7.90. He contende that under section 25 of the Chittagong Port Authority Ordinance, 1976 the Authority may sell the goods by public auction after the expiry of 75 days from the date on which such goods were placed in the custody of the Authority. The Authority did not do so. The Authority was therefore entitled to realize Tk.23, 793/-as wharf rent for 75 days only from 21.8.88. The writ-petitioner-respondent therefore paid an excess amount of Tk.l, 87,670.56 in respect of wharf rent which the Port Authority, respondent No.4, should be directed to refund.
3. The Government-appellant did not file any affidavit-in-opposition, but appeared through an Assistant Attorney General Appellant No.4 entering appearance through a learned Advocate but did not appear at the time of hearing of the writ petition.
4. The learned Judges of the High Court Division after hearing the parties and following
the case of Collector of Customs, Chittagong and others Vs. Ahmed Hossain and others, 48 DLR (AD) 199, held that the imported goods were required to be assessed as per S.R.O. existing at the time of opening of the letter of credit and realizations of customs
and other duties as per S.R.O. dated 15.6.89 was illegal. Tk.6, 36,032/-was realized from the respondent as excess customs duty, sales tax and other charges illegally and appellant Nos.1-3 were directed to return to the respondent the said sum. As to the claim of refund of Tk.l, 87,670.56 as excess wharf rent, the High Court Division held that there was no illegality in realizing the said sum from the respondent. As such the Rule Nisi was made absolute in part.
5. Leave was granted to consider the submission of Mr. Mahmudul Islam, learned Attorney General, that in this case the tariff value of the goods has been increased before the submission of bill of entry in exercise of power under section 25 (7) of the Customs Act. Section 30 of the said Act provides that duty has to be paid on the value of the goods as on the date of the submission of the bill of entry. This particular case therefore is not a case of change in the exemption granted under section 19 of the Customs Act and the High Court Division failing to notice the distinction of the facts of the present case and the afforested decision in 48DLR (AD) 199 committed an error of law in holding that the duty is to be paid on the tariff value prevalent on the date of opening of the letter of credit. It is his submission that the High Court Division failed to appreciate the ratio decidendi of the aforecited decision in 48 DLR (AD) 199.
6. Leave was also granted to consider that section 33 of the Customs Act provides for remedy of refund of duty wrongly realized from the importer. The respondent did not avail of this remedy which is equally efficacious. In that view of the matter, the High Court Division ought to have discharged the Rule Nisi. Further section 33 of the Customs Act provides that claim for refund is to be lodged within 6 months of payment and the respondent did not take any legal action within 6 V months of making payment and as such the High Court Division ought to have discharged the Rule Nisi for not coming to the Court within the period of limitation.
7. At the outset it may be mentioned that in the case of Mostafizur Rahman Vs. Govt. of
Bangladesh and others, 51 DLR (AD) 40, the importer opened the L.C. at the prevailing rate of tariff value as on the date of opening of letter of credit. Subsequently Govt. refixed the tariff value by issuing a subsequent S.R.O. in exercise of power conferred under section 25 M (7) of the Customs Act, 1969. In that case the appellant challenged the subsequent S.R.O. Contending that the tariff value could not be enhanced giving retrospective effect as the said subsequent notification affects the veste right of the importer. In that case in support of the contention of the appellants, the case of Abdul Hannan, 42DLR (AD) 167 and the case of Ahmed Hossain, 48DLR (AD) 199 were cited. In that case nobody appeared on behalf of the revenue and consequently we directed Mr. K.S. Nabi, the then learned Attorney General to appear before us and to submit whether the facts of that case was distinguishable from those cited decisions of the appellate division and whether the ratio decidendi of those two reported decisions will apply in the reported case of 51 DLR (AD) 40. Mr. K.S. Nabi in fact did not point out any distinction
from the facts of the reported decisions with the case of mustafizur Rahman. Hence we decided that case on the question that a vested right of the importer by such notification can not be taken away. In that decision although leave was granted to consider the question of fixation of tariff value under section 25(7) of the Customs Act, 1969, the matter was left open for consideration in a proper case as the learned Advocate of the appellant did not argue that point and we only confined ourselves with the question of applying the vested right of the appellants in that reported case.
8. Mr. Mahmudul Islam, learned Attorney general appearing in the present case on behalf of Bangladesh has practically reopened the question left by us as to the interpretation of section 25 (7) of the Customs Act. He has mainly submitted that the tariff value of the
goods having been increased before the submission under section 25 (7) of the Customs Act and section 30 of the said Act providing that the duty has to be assessed on the value of the goods as on the date of the submission of the bill of entry and this not being a case of change in the exemption granted under section 19 of the said Act an error of law has crept in for not clearly understanding the ratio decidendi of the reported decision in the case of Collector of Customs Vs. Ahmed Hossain, 48DLR (AD) 199 and wrongly holding that duty is to be paid on the tariff value prevalent on the date of issuance of the letter of credit.
9. As the matter has been agitated before us we are called upon to decide the ratio decidendi of 48DLR (AD) 199 wherein abdul Hannan’s case of both of the High Court Division and of the Appellate Division were considered to understand the true import and
distinction between section 19 on the one hand and sections 25 (1), 25 (7) and 30 on the other hand.
10. It will be worthwhile now to refer to the relevant sections of the Customs Act. Section
18 of the Customs Act speaks of, goods dutiable, “Except as hereinafter provided, customs duties shall be levied at such rates as are prescribed in the First Schedule or under any other law for the time being in force”. This section primarily enumerates the rate of duty of customs for goods imported into or exported from Bangladesh. This rate of duty is prescribed only by the Legislature from to time either by the Finance Act or by any other appropriate legislation. It is the primary duty of the Parliament to levy taxes including customs duty, section 18 clearly says that rate of duty of customs is either prescribed by the first schedule in Finance Act or by any other law of the Parliament. Section 19 reads as follows : General power to exempt from customs duties: … (1) If the Government is satisfied, after consultation with the Board, that it is necessary in the public interest to do so, it may, subject to such conditions, limitations of restrictions, if any, as it Gazette, exempt any goods imported into, or exported from Bangladesh or into or from any specified port or station or area therein, from the whole or any part of the customs duties chargeable thereon. 2. An exemption granted under sub-section (1) shall be effective from the date mentioned in the notification issued under that sub-section (1).
11. Now let us try to understand what is the import of section 19 of the Act. This is the general power to exempt from customs duty under some special circumstances when the
Govt. considers it necessary in the public interest to do so it may exempt any goods from customs duty partially or wholly. This is the general power of exemption by the Government on some special considerations. As a matter of fact the rate of duty as enumerated as per section 18 remains the same. Section 18 speaks of “rate of duty” and section 19 speaks of exemption as the Government feels necessary in a particular situation. Sections 18 and 19 are two independent sections one do not control the other. Section 25 (1) of the Customs Act reads as follows: “Value of imported and exported goods. -(1) The value of any imported goods shall be taken to be the normal price, that is to say, the price which they would fetch, on the date referred to in section 30 on a sale in open market between a buyer and a seller independent of each other.” Section 25 (4) of the Customs Act reads as follows: “The value of any exported goods shall be taken to be the normal price, that is to say, the price which they would fetch, at the prescribed time, on a sale in open market for exportation to the country to which the goods are consigned between seller and a buyer independent of each other.” Section 25 (7) of the Customs Act reads as follows:
“(7) Notwithstanding anything contained in this section, the Government may by notification in the official Gazette, fix for the purpose of levying customs duties, tariff values for any goods imported or exported as chargeable with customs duty advalorem.
Provided that any imported or exported goods the declared value of which is higher than its tariff value fixed under this sub-section shall be chargeable with customs duties on the
basis of its declared value. Section 30 of the Customs Act reads as follows: “Date of determination of the value and rate of import duty-(l) The value of and the rate of duty applicable to any imported goods shall be the value and the rate of duty in force(a) in the case of goods cleared for home consumption under section 79, on the date on which a bill of entry is presented under that section; (b) Above sections 25 (1), 25 (4) and 25 (7) are alternative modes of fixing tariff value. But section 30 speaks of the effective date of determination of the value of imported goods and rate of duty.
12. In the light of the above sections as cited above it will be necessary to consider the factual aspects of the case of Abdul Hannan. In the case of Abdul Hannan, there was acute shortage of sugar as a result of which a notification was issued declaring some exemptions under section 19 of the Customs Act and section 4(1) of the Sales Tax Ordinance, 1982 exempting sugar from so much of custom duties and sales tax in excess of the rate mentioned in the notification. As by notification under section 19 of the Customs Act certain exemptions were given it was argued in that case that on the basis of subsequent S.R.O. the enhanced customs duty cannot by levied as the petitioners have acquired a vested right to get the consignment cleared at a lower rate which was in force on the date when letter of credit was opened as per the S.R.O. exempting the duty under section 19 of the Act. As a matter of fact in Hannan’s case special facts and circumstances of that case were pleaded in view of the notification under section 19 of the Act. In the reported decision of Abdul Hannan, 40DLR (HCD) 273 it was clearly noticed that Hannan’s case was one of exemption of customs duties and that case has no bearing with the rate of duty as contemplated in section 30 of the Customs Act. That decision of the High Court Division clearly spelt out the import of sections 18 and 19 and made the Rule absolute on consideration that by notification under section 19 a vested right was created in favour of the importer. In that decision it was held clearly that section 30 does not refer to section 19 of the Act at all. As a matter of fact section 30 will operate only in so far as “rate of duty” levied under section 18 is altered or amended. It has no reference to exemption under section 19 at all. That decision of 40DLR was challenged before the Appellate Division by the Collector of Customs. This Division apart from the question of vested right also considered the principle of promissory estoppel as the importer imported the goods on the assurance of the Govt. as notified in the public notice. This Division found it to be a clear case of principle of promissory estoppel. As a matter of fact in Hannan’s case section 19 was in issue and section 30 was not relevant in that case at all. Although it was argued in 42DLR (AD) case that the notification under section 19 of the Customs Act is always subject to the provision of section 30 which will prevail over the notification issued under section 19 of the Customs Act. But the case was decided only on the ground of principle of promissory estoppel. As a matter of fact in Hannan’s case High Court Division considered the question of vested right and this Division considered
the principle of promissory estoppel.
13. In view of the fact that now we have spelt out relevant sections we are to see whether in the present case the ratio decidendi of 48DLR (AD) 199 really applies or not in the case before us. We have earlier found that section 18 speaks of rate of duties of customs. Section 25 (1) of the Act speaks of value of imported goods and section 25 (4) of exported goods, section 25 (7) speaks of fixing tariff value of imported or exported goods for the purpose of levying customs duties and section 30 speaks of effective date of determination of value and rate of import duty. Thus sections 25 (1), 25 (4) and 25 (7) read with section 30 are alternative modes of fixing value for the purpose of levying customs duty for any goods imported or exported as chargeable for customs duty.
14. It is to be kept in mind that in the present case which we are dealing now, the question of general exemption under section 19 is not at all attracted. In the present case, the SRO was in force on 3.6.87, goods arrived on 9.8.88 and the bill of entry was submitted on 29.1.1990 and in the meanwhile new S.R.O. came into force on 15.6.88 wherein tariff value was raised. By subsequent S.R.O. dated 15.6.89 tariff value was further raised. Consequently when the goods were released on 6.6.90 the importer-respondent was charged with sales tax and customs duties on the tariff value as increased by the subsequent S.R.O. resulting in increase of sales tax and custom duty. So the basic question is whether custom authority can increase the tariff value subsequently under section 25 (7) read with section 30. As per section 25(1) the value of the imported goods shall be the normal price which they would fetch on the date referred to in section 30 on sale in open market between a buyer and a seller independent of each other. On the other hand when tariff value is fixed by notification in the official gazette in exercise of power under section 25 (7) normal price under section 25(1) shall not be applicable. On the basis of change of price in the foreign market from time to time Government increases or decreases tariff value of goods to be imported in the country to prevent evasion of payment of proper custom duty by under invoicing or to prevent smuggling out of foreign exchange by over invoicing. This power of the Government to fix tariff value was not
questioned in the writ petition by the writ petitioner respondent. So charging and realization of enhanced sales tax and custom duty cannot be objected to as the above provisions of section 25 (7) and 30 provide both the value and the rate of duty applicable to any imported goods on the date on which bill of entry is presented under section 79 of the Act. Hence the learned Judges of the High Court Division failed to understand the true import of 48DLR (AD) 199 and wrongly made the Rule absolute in this particular case. Had it been a case of general exemption under section 19 of the Act then probably the arguments of vested right or promissory estoppel were available but this being a case of fixing tariff value and not rate of duty we are afraid that principle would apply in the fact of the present case which is distinguishable from 48DLR (AD) 199 which was wrongly relied upon by the learned judges of the High Court Division.
15. Mr. Hasan Arif, learned Advocate appearing for the respondent in a very candid manner submitted that if any legal infirmity is found in a case this Court can always reopen the matter and decide the correct principle of law.
16. Dr. Kamal Hossain appearing on behalf of the writ-petitioner-respondent submitted that the ratio decidendi of the case of 48DLR (AD) 199 has been correctly followed by the learned Judges of the High Court Division in disposing the present case.
17. It is to be kept in mind that 48DLR (AD) 199 is a case under section 19 of the Customs Act and the case was decided on the basis of Abdul Hannan’s case. In 48DLR (AD) 199 case this Division primarily decided the question of acquiring vested right in the matter of getting exemption from customs duties on the basis the earlier notification and the same could not be adversely affected by subsequent notification made by the Govt. in exercise of the power of the delegated legislation. The very important distinction which was found in Abdul Hannan’s case was also noticed by us in 48DLR (AD) 199 in the following terms: “In reaching the said conclusion sections 19 and 30 of the Customs Act were interpreted and it was held that notification issued under section 19 is independent of the rate of duty mentioned is section 30 and there is on connection between section 19 and section 30.”
18. Dr. Kamal Hossain also pointed out two decisions of the High Court Division as reported in 12BLD (HCD) 5 and 47DLR (HCD) 57. In respect of these two decisions, we observed that Abdul Hannan’s case of this Division and the High Court Division were not properly appreciated by the Judges of the High Court Division. We also disapproved these two decisions. It may be mentioned that both the decisions of the High Court Division are relating to notifications under section 19 of the Act in exercise of the delegated legislation.
19. Dr. Kamal Hossain further argued that by executive decision notification is published
declaring tariff value and retrospective effect cannot be given by such notification published subsequent to the opening of the letter of credit. In reply to the same Mr. Mahmudul Islam argued that section 30 of the Act gives authority to the executive to give retrospective effect to the notification published by the executive authority fixing tariff value in exercise of power under section 25 (7) of the Act. Since section 30 provides for effective date of determination of tariff value from the date of presentation of the bill of entry by the importer we find no merit in this contention of Dr. Kamal Hossain.
20. As we have stated earlier that section 25 (1) of the Act provides for determination of
value of imported goods on the basis of normal price and sub-section (7) provides for fixing of tariff value by the Government by notification published in the official gazette for the purpose of levying of customs duty and as section 25 (7) was not interpreted in 48DLR (AD) 199 it is difficult to held in the face of sections 25 (7) and 30 that earlier S.R.O. will prevail when the letter of credit was opened and not the subsequent S.R.O. when new tariff value was declared for levying customs duty. The argument of acquiring vested right may be tenable in case of exemption granted in a special circumstance as in Hannan’s case but it is difficult to understand that normal importer would acqire vested right in the invoice value or the tariff value prevailing at the time of opening of letter of credit. The Govt. has the power to fix tariff value by publishing notification in the official! gazette and this power has been vested in the govt. under sub-section (7) of section 25 of the Act to fix tariff value of imported or exported goods by notification. As a matter of fact the then Attorney general could not bring to our notice the distinguishing feature between Hannan’s case and the case of Mustafizur Rahman, 51DLR (AD) 40 which was a case under section 25 (7) of the Act. As the present case is under section 25 (7) of the Customs Act we are of the view that customs duty is payable by the importer-respondent on the basis of tariff value in force on the date of presentation of A the bill of entry and not on the basis of invoice or tariff value in force at the time of opening of letter of credit. So the decision in 51DLR (AD) 40 appears to us to be not correctly decided due to the failure of the then Attorney General to point out the distinction between 42DLR (AD) 167 and 48DLR (AD) 199 on the one hand end the case of Mustafizur Rahman on the other. Even he failed to bring to our notice the case of Khairul Bashar Vs. Collector of Customs, 50DLR(AD)225 in which High Court Division correctly noticed the distinction between exemption under sec tion 19 of the Act and declaration of tariff value under section 25 (7) of the Act and did not follow the ratio decidendi of 42DLR(AD) 167 and 48DLR(AD) 199 and held that importer acquires no vested right in the invoice value or the tariff value existing at the time of opening of letter of credit. We therefore review our opinion expressed in that decision in 51DLR (AD) 40 and hold that no vested right is acquired by the importer to pay sales tax and custom duty on the basis of tariff value declared by notification in force on the date of opening the letter of credit. The imported has to pay tax and duty on the basis of tariff value in force on the date of presentation of bill of entry.
21. In view of our discussions above we hold that this being a case under section 25 (7), the learned Judges of the High Court Division failed to appreciate the ratio decidendi of
48DLR (AD) 199 and wrongly held that the duty has to be paid on the tariff value prevalent on the date of issuance of the letter of credit.
22. Now coming to the question of refund we may refer to section 33 of the Act which reads as follows: “Refund to be claimed within six months-(l) No refund of any customs duties or charges claimed to have been paid or over-paid through inadvertence, error of misconstruction shall be allowed, unless such claim is made within six months of the date of payment.” 23. The respondent could have applied to the relevant authority for refund within six months. The respondent did not take any steps within the time limit as contemplated under the law and this was indeed a efficacious remedy which the respondent did not avail of and on that ground as well the learned Judges of the High Court Division ought to have discharged the Rule in this case. In this connection, the case of Mohammad Brothers Vs. Collector of Customs, 48DLR (AD) 58 may by referred to where it has been held that when a provision for appeal in a statute is attended with an inviolable and non-relaxable condition of payment of fine or extra duty in full then it can be said that the petitioner has no equally efficacious remedy. In the present case the petitioner having released the goods on payment of additional customs duties and sales tax ought to have asked for refund under section 33 of the Customs Act within six months. He having not availed of this alternative efficacious remedy the writ petition is not maintainable on that score as well.
24. Consequently, the appeal is allowed without any order as to costs.
Source: III ADC (2006) 866