Bashiruddin Ahmed Vs. Ministry of Finance, National Board of Revenue

Bashiruddin Ahmed

Vs.

Ministry of Finance, National Board of Revenue

 

Supreme Court

High Court Division

(Special Original Jurisdiction)

Present:

Mainur Reza Chowdhury J

Md. Iftikhar Rasool J

Bashiruddin Ahmed…………………………………Petitioner

Vs.

Ministry of Finance, National Board of Revenue ……………Respondents

Judgment

August 18, 1996.

Case Referred To-

MA Khaleque Vs. Government of Bangladesh and others, 32 DLR 243.

Lawyers Involved:

AJ Mohammad Ali with AKM Asaduzzaman, Advocates—For the Petitioner.

Zakir Ahmed with Md. Oziullah, Advocates—For the Respondent.

Writ Petition No.1920 of 1995.

Judgment

Mainur Reza Chowdhury J.- On an application made under Article 102 of the Constitution by the petitioner Bashiruddin Ahmed a Rule Nisi was issued calling upon the respondents to show cause as to why the impugned order contained in the Nathi No.3 (3) VAT-5/95 corresponding to 25-3-1402 BS (Annexure-M) issued by the Second Secretary (VAT-5) National Board of Revenue should not be declared to have been issued illegally and without any lawful authority and also without appreciating the factual position leading to the sale of abandoned (wreck) and the goods therein.

2. The facts of the case are as follows:

The petitioner is a proprietor of the firm Marine Salvage dealing with marine salvage. A foreign ship named MV Pavlina-I under Panama Flag lodged with jute and jute goods at Mongla Port, sailed out of the port but sank on 19-8-94 within the area of Mongla Port blocking the channel of the river. The said ship was declared wreck and the Chairman, Mongla Port Authority was appointed receiver of wreck under section 273 of the Merchant Shipping Act, 1923 vide a Gazette Notification No.SRO-66-1/81 dated 19-2-81. The receiver took over possession of the wreck MV Pavlina-I and it was so notified for general information in the newspaper the “Daily Janakantha” on 3 1-8-94. A Notification for the sale of wreck inviting sealed tender was published at the instance of the receiver. The petitioner in order to participate in the sealed tender for purchasing the wreck MV Pavlina-I purchased tender schedule on 6-9-94 on payment of requisite fee. The petitioner participated in sealed tender on as is where is basis of the wreck and quoted Taka 1, 40, 50,000.00. His offer being the highest amongst the competitors the Mongla Port Authority accepted the offer of the petitioner and issued a sale order on 22-11-94 on receipt of the entire amount. The said order dated 22-11-94 issued by the receiver is annexed to the petition and marked as Annexure-D. The petitioner on receipt of the sale order started salvaging the jute goods from 5-2-95. The goods salvaged were either burnt or almost rotten due to remaining under water for long time. On the advice of the Port Authority and the Customs Authority the salvaged rotten and burnt goods were stacked on the bank of the river. When the petitioner was about to remove the salvaged goods for want of necessary space to stack further salvaged goods, the Superintendent, Customs, Excise and VAT, Khulna (respondent No. 5) by a letter dated 23-2-95 permitted the petitioner to remove the salvaged goods subject to the assessment and payment of VAT. The petitioner in reply to the aforesaid letter by his letter dated 26-2-95 stated that the salvaged goods would not come within the purview of the assessment of VAT and further requested to accord permission to remove these goods from the present place as the condition of the goods were deteriorating further due to rain. In reply to the said letter dated 26-2-95 the respondent No. 5 by his letter dated 27-2-95 reiterated his earlier demand. On 16-3-95 the petitioner filed application before the respondent No. 3 stating the facts and prayed for exempting the petitioner from payment of VAT on the ground stated in the petition which was received by the office on 18-3-95. The respondent No.3 on receipt of the aforesaid application called for a report from respondent No. 4 by letter dated 12-4-95 with a copy of the petition of the petitioner and directed to give his opinion. On 15-4-95 the petitioner filed another application to the respondent No. 3 stating the facts and prayed for exemption from payment of VAT and to pass necessary order according permission for shifting the salvaged goods. In the meantime a price fixation committee was appointed by the Customs Authority and the said committee submitted their report which was forwarded by the Principal Appraiser on 18-4-95 to the Assistant Collector, Customs, Excise and VAT, Khulna by letter dated 19-4-95. The Assistant Collector, Customs, Excise and VAT prepared a report on 22-4-95 on the basis of the report filed by the Price Fixation Committee and the same was forwarded by the Collector to the Second Secretary (VAT-5), National Board of Revenue vide forwarding letter dated 23-4-95. On receipt of the aforesaid letter dated 23-4-95 along with the report dated 22-4-95 the First Secretary (VAT), National Board of Revenue, Dhaka by letter dated 9-5-95 communicated the decision of the National Board of Revenue to the respondent No.4 that the jute goods and the shipwreck were liable to be assessed for payment of customs duty, VAT and other taxes as those were considered as imported goods to Bangladesh. On receipt of the aforesaid letter dated 9-5-95 the petitioner filed an application to the respondent No.1 on 22-5-95 stating that the facts and laws to the effect that the petitioner is not liable to pay customs duty, VAT, etc. on the jute goods and the wreck and prayed for exempting him from paying the same. But in reply to the petition of the petitioner he was informed of the decision by letter dated 9-7-95 that he is to pay the customs duty and VAT on the assessment of the pride of the ship and the jute goods therein respectively. This is the impugned order which is annexed to the petition and marked as Annexure-M.

3. The learned Counsel appearing for the petitioner has submitted that the wreck in question was not imported or brought into Bangladesh and, therefore, it was not subject to payment of any customs duty. The raw jute and jute goods was meant for export and the VAT having already been paid by the manufacturer and he being only consumer was not required to pay any VAT for jute or the furnished jute goods. He further argued that the wreck was a prize of the Government and not a wreck which was imported or brought into Bangladesh and, therefore, there was no question of payment of any import duty. He has compared the wreck purchased by the petitioner to drift timber, which comes into the territories of Bangladesh of which the Government becomes owner and it is the Government which has to pay the import duty. The petitioners being a purchaser of commodity owned by the Government he is not liable to pay any customs duty.

4. Section 23 of the Customs Act, 1969 provides that all goods, derelict, jetsam, flotsam and wreck, brought or, coming into Bangladesh shall be dealt with as if they were imported into Bangladesh. The learned Counsel for the petitioner has argued that the wreck of MV Pavlina-I was neither brought nor came into Bangladesh. It was a ship which came to Bangladesh and then sailed out and became a wreck when it sank. Therefore, the provision of section 23 of the Customs Act was not applicable in the present case. He has compared the wreck to drifting timber which comes into the territories of Bangladesh from another country. It is a prize of which the Government becomes the owner. He has referred to the decision in the case of MA Khaleque Vs. Government of Bangladesh and others, reported in 32 DLR 243. A Division Bench of this Court inter alia, held that in view of the provision of section 45 of the Forest Act it is quite clear that the drifted timber coming through the river waters from India became the property of the Government Bangladesh and had vested with its Forest Department. It is further observed that taking in to consideration the provision of section 23 of the Customs Act, in the absence of any exemption from payment of customs duties under section 19 of the Customs Act, if anyone was to pay any customs duty for the relevant drifted timber of Indian origin, it was to be paid by the Forest Department of the Government. Since the petitioner became entitled to collect the drift timber in absolute terms on the clear legal assumption that the drift timber were the property of the Government of Bangladesh through its Forest Department, the petitioner had no obligation to pay any customs duties or any other taxes to the Government on such drift timber. The position of the petitioner was that of a subsequent lessee under the Government with the right to collect all drift timber. The Government being the initial absolute owner of such drift timber, the petitioner could not be saddled with any import duties and taxes being subsequent lessee.

5. So far as section 23 of the Customs Act, 1969 is concerned the submission made by the learned Counsel for the petitioner appears to us to be a narrow interpretation of the words “brought” and “coming” into Bangladesh. The vessel MV Pavlina-I is a foreign ship that entered the territorial water of Bangladesh i.e. it was brought into the territorial water of Bangladesh which sailed out, caught fire, sank and became a wreck. In a situation like this where a foreign ship comes into Bangladesh and then turns into a wreck will, in our opinion, come within the meaning of wreck brought or coming into Bangladesh of wreck under section 23 of the Customs Act. His analogy with drift timber that comes into Bangladesh became the property of the Government of Bangladesh is not correct, Section 460 of the Merchant Shipping Ordinance, 1983 (Ordinance No. XXVI of 1983) provides for the claim of the owners to wreck. It reads as follows:

“460. (1) The owner of any wreck in the possession of the Receiver of wreck upon establishing his claim to the same to the satisfaction of the Receiver within six months from the time at which the wreck came into the possession of the Receiver shall upon paying the salvage and other charges, be entitled to have the wreck or the proceeds thereof delivered to him.

(2)…………………….

(3)………………………”

6. This shows that the owner of a vessel continues to own and has claim over the wreck of that vessel within six months. Therefore, the wreck does not become the property of the Government like drift timber making the Government liable for the customs duty. Of course with the expiry of six months the wreck becomes vested in the Government but it is not a ‘prize’ of the Government as in the case of drift timber. The owner reserves his right within six months to salvage the wreck arid sell the same in which case the owner would have had to pay the customs duty.

7. In the instant case it also appears from Annexure-D that the Mongla Port Authority informed the petitioner that his offer of Taka 1,40,50,000.00 was accepted on certain conditions, one of which was-

“ ???? ????? ???? ???? ????????? ?????? ???? ??????? ??? ???/?? ????? ?????? ??? ?????, ??, ????? ??????? ?????? ?????? ??????????? ?????? ?????? ????? ?????”

8. It is clear that the petitioner’s offer of Taka 1, 40, 50,000.00 was accepted and he was allowed to take the wreck and the goods on the condition of payment of customs duty and VAT. The petitioner having paid the said amount and applied to remove the goods shows that he purchased the wreck and jute goods on the conditions fixed by the Mongla Port Authority including payment of customs duty and vat. Having accepted those terms we find no illegality in the impugned order passed by the respondent No. 5 which reads as follows:

“ ??????? ???? ? ??????? ????? ?????? ??? ??????? ??-?-?? ??????? ??????????? ????????????? ???? ????? ???? ??????????? ?????? ?????? ?? ???? ??????? ?? ????? ????, (?????? ?????? ??????) ??? ??????? ??? ????? ?????? ?? ??? ?????? ???? ???????? ??? ?????? ????? ?? ????? ?????? ????? ????”?

9. The order merely demanded what the petitioner had agreed to pay when his offer to purchase the wreck, jute and jute goods was accepted by the Mongla Port Authority. The learned Counsel has also argued that the offer of Taka 1,40,50,000.00 was a composite price offered by him for the wreck, jute and jute goods, but the impugned order has not separately stated the price of the wreck, jute and jute goods. This is a matter we think, that can be determined and clarified. It cannot render the order illegal as it has only directed the petitioner to pay import duty on the wreck and VAT on jute and jute goods which he had agreed to pay as conditions for the acceptance of his offer. We, therefore, have no reason to declare that the impugned order Annexure-M passed by the National Board of Revenue was illegal and without lawful authority.

In the result, the Rule is discharged without any order as to costs.

The stay order granted by this Court earlier is hereby vacated.

Ed.

Source: 52 DLR (HCD) (2000) 33

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