Chairman, National Board of Revenue and others Vs. Beximco Infusions Ltd

Chairman, National Board of Revenue and others (Petitioners)

Vs.

Beximco Infusions Ltd (Respondent)

Supreme Court

Appellate Division

(Civil)

Present:

Shahabuddin Ahmed CJ

MH Rahman J

ATM Afzal J 

Mustafa Kamal J

Latifur Rahman J

Judgment

November 24, 1994.

The Investment Board Act 1989 (Act No. XVII of 1989), section 11

Since the decision of the Board of Investment is deemed to be the decision of the Government order of the Board of Investment to allow exempted rate for releasing the disputed machinery the National Board of Revenue shall implement the same and the respondent should get the benefit of SRO in question…………..(13)

Lawyers Involved:

AW Bhuiyan Additional Attorney-General, instructed by B Hossain, Advocate-on Record—For the Petitioners.

Rafique-ul Huq, Senior Advocate, instructed by Mvi Md. Wahidullah, Advocate-on-Record — For the Respondent.

Civil Petition for Leave to Appeal No. 320 of 1994.

( From judgment and order dated 12 January 1994 passed by the High Court Division  in Writ Petition No. 3693 of 1992)

Judgment

 ATM Afzal J.- This petition by the Chairman, National Board of Revenue and other related officers (we are surprised to see the Member (Operations) Board of Investment (No. 4) among them) is from judgment and order dated 12 January 1994 passed by a Division Bench of the High Court Division making the Rule absolute in Writ Petition No. 3693 of 1992.

2. This case, we find, is a typical example of what may be called, bureaucratic foolhardiness which is often complained of as a disincentive for the would-be investors in this country despite the much-vaunted Government policy of favourable investment climate and opportunity and strong legislation in their behalf such as the Investment Board Act,1989 (Act No. XVII of 1989) etc.

3. Facts of the case are simple and undisputed. The writ-petitioner-respondent company upon getting necessary approval from the Board of Investment under the aforesaid Act for setting up an Intravenous Fluid Industry (IV Fluid) for producing a life-saving medicine, with foreign collaboration (Dutch and German) imported entire machineries from West Germany which arrived at the Chittagong Port all by 7-2-1991. The company availed of the benefit of payment of customs duty at the rate of 10% ad valorem and of exemption from payment of sales tax and development surcharge for the said machineries under SRO dated 25-7-1990 upon furnishing a certificate as required and prescribed under the said SRO from the proper authority of the Board of Investment. It is important to remember that the condition for availing the benefit under the said SRO is that the importation of machineries and parts must be with the approval of competent authority for the establishment of industry or for balancing, modernisation, replacement or extension of an existing industry and must be accompanied by a certificate from the proper authority in that behalf.

4. As the machineries were awaiting clearance at the Port the cyclone and tidal bore of 29th April 1991 admittedly overtook them and part of the same was damaged. In order to make replacement of the damaged parts of the capital machineries, the company again opened LC on 5-5- 1992 for importation of the same and, in fact, imported them under an invoice dated 10-6-1992 and bill of lading dated 28-6-1992. The company offered to pay customs duty under the aforesaid SRO dated 25-7-1990 for the machineries to be replaced(imported anew) but the National Board of Revenue would not agree and insisted for payment of usual duties and taxes, etc. only on the ground that the company could not bring the required certificate from the concerned officer of the Board of Investment. Its letter dated 5-7-1992 (Annexure H (1)) is reproduced below which will speak for itself:

GONOPROJATRONTI BANGLADESH SARKER

JATIYO RAJOSHO BOARD,DHAKA.

Nothi No-1(119) ka sha –9-91-492

Tarik: 05-07-92 eng

21-03-99 bang

prarok: Rashida Chowdhury, Ditiyo sochib(Shulko)

Prapok: Managing Director,

Beximco Infusions Ltd

17 Dhanmondi abashik aleka.

Road no.2,Dhaka.

Bishoy: bigoto april ’91 mashea ghurnijhorer karpne khotigrosto muldhoni jontrapati/jontransho er puno: amdanir somoy shulko moukuf prosonge.

Sutra; C o M –6 tarik 27-4-92

Uporokto bishoy o sutrer aborate nimno sharkhor kari nadisto hoiya janaitechea je, S, R, o 282-ain/90/9318/shulko, tarik 25-7-90 e bornito shortaboli orthat alocho jotransho guli shilpo sthaponer jonnoi jothopojukto katripakher anumodon crome amdani kora hoiyachea a morme nidistho choke biniyog boarder shongshlisto karmakarter certificate prodaner shorto puron na hoyai apnar anurodth anujaye 90% er otirikto shulko moukuf karite jatiyo rajosho board aporagota p[rokash karitechea.

Shakkhor/ aspasth

(Rashida Chowdhury)

ditiyo sochib(shulko)

5. The company sought help of the Board of Investment which upon examining the matter took the decision to recommend for realising the dispute machinery at the exempted rate i.e., on the basis of SRO dated 25-7-1990. The Board’s letter dated 7-7-1992 (Annexure I) addressed to the Chairman, national Board of Revenue is reproduced below:

            GONOPROJATRANTI BANGLADESH SARKER

                                                    BINIYOG BOARD

                        PRODHAN MONTIR KARJJAYALOY (OPERATION BIVHAG)

Shilpo bhavan,91, motijheel  banijik aleka, Dhaka.

Smarok no bi: I:/CC (1145) /90/

Tarik: 07-07-92 eng

03-91 bang

Borabor

Chairman,

Rajosho board,

Segunbagicha, Dhaka.

Bishoy: Amdani krito components and parts raiyati hare khalas proshonge

Mesars Baeximco Infusions Ltd., dhaka tader notun  shilpo protistane prathomik bhave sthapon  kolpe invoice no.760.390, tarik 28-11-90 er biporite amdani krito jontrapati abong jontransho chottogram bondor ye thaka obosthai 29 april ’91 er jhore o jolochashea khotigrosto hoi. Anumodito servaire dara todonto purbok ukto khotigrosto jontropatir poriman nirnoy kora hoi. Bortomane udokta punorai khotigrosto components parts guli  amdanir jonno rinpatro khulia yeha raite hare khalasher suparish er jonno attro boarde abedon koriachen. Bishoyte ottro board kotrik jotha jotho babhea porikha onte dekha jai je, khotigrosto components parts guli tadert plant tir oporiharjo ongsho abong aiguli protisthopon kora na hole tader mul plant ti chalu kora sombhov hobe na. Ye motabosthai bortomane pro forma invoice no.2304 92/02, tarik 24-4-92 er biporite amdanikrito components abong  parts guli raiyate hare khalasher jonno attro board kotrik songshilsto katripakkher nikot suparish korar sidhanto korar sidhanto grihito hoyeachea.

Otoyeb uporolikhito proforma invoice ye ullekhito components parts guli raiyate hare khalasher proyojoniyo babostha grohoner jonno anurodth kora jachea.

(Dr. S. Ohah Farooque)

sodosho (operation)

Nirbahi chairman biniyog board, dhaka.

6. The aforesaid two letters are material among the large number of correspondence which have been annexed to the writ petition for understanding the point at issue. The National Board of Revenue by its letter dated 22-9-1992 (Annexure-P) finally informed the company that it would not get the exemption under the aforesaid SRO giving the same reason as in its letter quoted above. The company then moved (or driven to) the High Court Division in writ for relief which it got after two years of waiting.

7. By the impugned judgment the High Court Division upon considering the law and facts of the case declared the orders issued by petitioners No. I and 2 and impugned in the writ petition to have been passed without lawful authority and further that the respondent is entitled to get the disputed machineries released on payment of duty at the concessionary rate i.e., 10% ad valorem without any VAT and AIT.

8. The learned Additional Attorney-General seeking leave to appeal from the said judgment submits that the disputed machineries being fresh import of machinery parts and not being for replacement of capital machineries imported earlier the respondent was not entitled to the benefit of SRO dated 25-7-1990. Secondly, he submits that the Board of Investment not having issued a formal certificate as required under the said SRO for the disputed machineries, the recommendation made by it was not binding on the National Board of Revenue and, as such, it was open to it (NBR) to demand usual duties.

9. As to the first submission, it will be seen that the National Board of Revenue never said in its orders that the disputed machineries were not meant for replacement of the machineries which were damaged by the cyclone and tidal bore or that the respondent had imported other machineries/parts for a different purpose not related to the approved project under the false plea of replacement of damaged machineries. On the contrary, the only reason given by the National Board of Revenue for rejecting the respondent’s prayer was that the required certificate of the Board of Investment, a pre-condition for exemption, was not there (vide the letter quoted above).

10. The Board of Investment which is the proper authority under the aforesaid Act has certified that the disputed machineries were imported for replacement of the damaged components and parts without which the original could not be made functional (vide BOI’s letter quoted above). So, the first contention is plainly untenable.

11. As to the second contention, it is true that the Board of Investment has not issued a formal certificate as required under the aforesaid SRO but the question is Can the National Board of Revenue afford to ignore the decision of the Board of Investment as conveyed to it by way of recommendation in the facts of the present case? To say that it can will amount to defy the letter and spirit and the purpose of the Investment Board Act,1989.

12. The Board of Investment was established under the Act to encourage investment in the industry in private sector and to provide necessary facilities and assistance in the establishment of Industries. Section 3 of the Act says that the provisions of the Act and the rules made thereunder shall have effect notwithstanding anything to the contrary contained in any other law for the time being in force. Section 11(5) provides that at the time of approving an industrial project under sub section (4) the Board shall give its decisions on all facilities that may be required for implementation of the project in due time…; Sub-section (6) says that a decision given by the Board under sub-section (5) shall be deemed to be a decision given by the Government or by such other person or authority as is authorized by or entitled to give such decision under the provisions of the relevant law on the relevant subject, and such decision shall be implemented accordingly.

13. It is true that strictly the decision of the Board of Investment to recommend for releasing the disputed machinery at the exempted rate was not given at the time of approving the project under section 11(4) but it cannot be gainsaid that it was given in exercise of its power for implementation of the project following its approval of the same. The scheme of the Act seems to be that the decision of the Board of Investment relating, inter alia, to facilities for implementation of a project in due time shall be implemented as a Government decision. Not only that, under section 11(6) when the Board of Investment decides that the respondent should get the benefit of SRO dated 25-7-1990 it amounts to a decision of the National Board of Revenue itself “which shall be implemented This being the position in law and fact., we fail to see on what good reason and why the National Board of Revenue became so adamant. As for the non-issuance of a required certificate by the Board of Investment under the aforesaid SRO which was insisted by the National Board of Revenue, the former explained the technical difficulty in a subsequent letter to the National Board Not represented — Respondents of Revenue dated 9i92 (Annexure L) but nevertheless again recommended for releasing the disputed machinery at the exempted rate. But the Chairman, National Board of Revenue put his foot down.

14. The officer of the Board of Investment who conveyed the recommendation of the Board to the National Board of Revenue for exempted rate in favour of the respondent has now figured as petitioner No. 4 in this petition along with the Chairman, National Board of Revenue This only highlights the casual and thoughtless manner in which the Government affairs are conducted.

For the reasons, the petition is dismissed.

Ed.

Source: 51 DLR (AD) (1999) 36

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