Collector of Customs, Customs House, Chittagong and others Vs. Mahfuzul Huq

Collector of Customs, Customs House, Chittagong and others

 Vs.

Mahfuzul Huq

Supreme Court

Appellate Division

(Civil)

Present:

Md. Ruhul Amin CJ

M.M. Ruhul Amin J

Md. Abdul Matin J

The Collector of Customs, Customs House, Chittagong and others………..Appellants

Vs.

Mr. Mahfuzul Huq….. Respondent

Judgment

September 26, 2007.

Cases Referred to-

Collector of Customs Vs. A. Hannan42 DLR (AD) 167; Collector of Customs Vs. Ahmed Hossain and 39 others 48 DLR (AD) 1995; BLC (AD) 13; Mostafizur Rahman Vs. Government of Bangladesh and 6 others51 DLR (AD); Bangladesh and others Vs. Mizanur Rahman 52 DLR (AD) 149; Khairul Bashar Vs. Collector of Customs 50 DLR 225; Commissioner of Customs and others Vs. Monohar Ali and 26 others 8 BLC (AD)87; Commissioner of Customs Vs. Bangladesh Trader(2004) 9 MLR (AD) 98.

Lawyers Involved:

Naima Haider, Deputy Attorney General, instructed by Mr. Mvi. Md. Wahidullah, Advocate-on-record – For the Appellants.

Not Represented – the Respondent.

Civil Appeal No. 287 of 2001.

(From the Judgment and Order dated June 24, 1998 passed by the High Court Division in Writ Petition No. 1970 of 1993)

Judgment

Md. Ruhul Amin CJ.- This appeal, by leave, is directed against the Judgment dated June 24, 1998 of a Division Bench of the High Court Division in Writ Petition No. 1970 of 1993 making the Rule absolute and thereupon directing the Customs authority to return the Bank guarantee furnished by the writ petitioner, herein the respondent.

2. The writ petition was filed impugning the action of the Customs authority in assessing customs duty and other rates on the imported goods on the basis of SRO dated October 28, 1993 fixing enhanced tariff value subsequent to the opening of the Letter of Credit by the respondent for importing the goods so assessed.

3. Facts stating which the writ petition was filed in short, that the respondent opened Letter of Credit on September 23, 1993 to import Cigarette papers and at that time tariff value in respect of the aforesaid goods was at US$ 1418 per metric ton as was fixed by SRO dated 2.2.93 and the goods for the import whereof letter of credit opened was classified under H.S. Code No. 4813.60, that on arrival of the goods the clearing and Forwarding Agent of the respondent submitted Bill of Entry on November 13, 1993 for clearance of the goods and thereupon Customs authority directed the Agent of the respondent to declare the tariff value of the imported goods at US$ 1800 in the light of the SRO dated October 28, 1993 for assessment of the Customs duty.

4. The said action of the Customs authority was challenged by filing the aforementioned writ petition.

5. It was contended before the High Court Division that as the Letter of Credit was opened on September 23, 1993 when SRO dated February 2, 1993 was in force fixing tariff value at US$ 1418 per metric ton, the direction given by the Custom authority for declaring the tariff value at US$ 1800 per metric ton in the light of the SRO dated October 28, 1993 illegal and without lawful authority, since the said SRO cannot be effected retrospectively and thereby deprive the respondent of his vested right to get the duty of the imported goods assessed on the basis of SRO dated February 2, 1993 which was in forced at the time of opening of the Letter of Credit.

6. As against the aforesaid contention of the writ petitioner it was submitted on behalf of the respondent (in the writ petition) that question of acquiring vested right as was held in the case of Collector of Customs Vs. A. Hannan reported in 42 DLR (AD) 167 and in the case of Collector of Customs Vs. Ahmed Hossain and 39 others reported in 48 DLR (AD) 199 not well conceived or in other words unsustainable in law and facts since facts of those cases are quite different from the facts of the instant case in that in SRO dated February 2, 1993 there was no special terms and conditions on fulfillment of which the duties on the imported goods would have been assessed in special manner or in other words there was no pre-condition on fulfillment of which the importer could have claimed assessment of customs duty on the imported goods in special manner/way, or that importer could have claimed special kind of treatment in respect of his imported goods.

7. The High Court Division rejected the aforesaid contention of the respondent upon observing “the difference in facts would make any difference in the application of the principle which is based on interpretation of section 19 and 30 of the Customs Act” and thereupon held “from the above decisions it is clear that the vested right accrued to the petitioner in respect of import at the time of opening of Letter of Credit cannot be disturbed by the subsequent SRO that may be prevalent on the date of presentation of Bill of Entry for release of the goods and as such the petitioner’s import is liable to be assessed at tariff value at the rate of US$ 1418 per metric ton as per SRO dated 2.2.93” and made the Rule absolute with the direction as stated hereinbefore.

8. As against the judgment and order of the High Court Division the writ respondents came with petition for leave to appeal contending that the High Court Division was wrong in holding that on the date of opening of the Letter of Credit the writ petitioner acquired vested right to get the imported goods assessed under SRO dated February 2, 1993 though as a matter of fact the said SRO was superseded by the subsequent SRO dated October 28, 1993, that the tariff value is fixed under section 25(7) of the Customs Act, 1969 and the same has nothing to do with the rate of duty or exemption from duty under section 19 of the Customs Act and as such decisions reported in 42 DLR (AD) 167 and 48 DLR (AD)199 have no manner of application in the instant case and the imported goods are liable to be assessed on the tariff value in operation on the date of presentation of the Bill of Entry, that issue involved in the instant case having been finally decided in the case reported in 5 BLC (AD) 134 wherein it has been held that the imported goods are to be assessed on the basis of tariff value in operation on the date of submission of the Bill of Entry and as such on both counts judgment of the High Court Division is liable to be set aside. Leave was granted to consider the aforesaid contentions.

9. At the outset it may be stated that the facts of the instant case are completely different from the facts as in A. Hannan’s case reported in 42 DLR (AD) 167 since the said case was one of exemption of customs duties but the instant case is a case under sections 18 and 25(7) of the Customs Act.

10. The matter of importer’s acquiring vested right in respect of assessment of customs duty and other levies on the goods imported was argued for the first time before the High Court Division in the case of A. Hannan Vs. the Collector of Customs.

11. The facts of the said case was that in the background of shortage of sugar in the country the Government by public notice decided to allow import of sugar under Wage Earner’s Scheme. All registered importers having valid import registration certificate were allowed to open Letter of Credit for not exceeding 500 metric tons of sugar in the case of each individual importer, that the Letter of Credit was required to be opened within 15 days from the issuance of Public Notice i.e. October 18, 1984 and shipment was required to be completed within 15 days of opening of Letter of Credit, that by subsequent notification dated October 11,1984 the last date of opening of Letter of Credit was extended upto October 31,1984 and the last date of shipment was also extended upto November 30, 1984, that the Government in the Ministry of Finance by S.R.O. dated October 16, 1984 in exercise of powers conferred by section 19 of the Customs Act and section 4(1) of the Sales Tax Act exempted sugar from assessment of customs duty and sales tax leviable thereon in excess of 50% and 10% respectively subject to the fulfillment of the terms and conditions specified in the Public Notice dated October 3, 1984.

12. Mr. A. Hannan, who does not normally deal in sugar, having had seen the attractive provision in the public notice opened Letter of Credit on October 31, 1984 for import of 500 metric tons of sugar and the ship carrying the imported sugar arrived at Chittagong Port on November 24, 1984. In the meantime the Government in the Ministry of Finance by SRO dated November 6, 1984 withdrew the exemption granted earlier and raised the concessional rate of customs duty on sugar from 50% to 75% and the sales tax on sugar remained unchanged.

13. In the aforestate of the matter it was contended by the importer that as he opened the Letter of Credit on October 31, 1984 and made all arrangement for import of sugar before the 30th November, 1984 and as such he had acquired a vested right to get the consignment of sugar in question cleared by paying the special concessional rates of the customs duty and sales tax as allowed by the Government at the rate when the Letter of Credit was opened in terms of Public Notice dated October 3, 1984 read with subsequent Public Notice dated October 11, 1984. It was also the contention of the importer that his vested right cannot be taken away by the Government by subsequent Notification dated November 6, 1984.

14. The importer contended as to his vested right to have the goods cleared at the special concessional rate of customs duty and sales tax placing reliance on the Notification dated 16.10.1984 and because of fulfilling the terms and conditions specified in two Public Notice dated October 3, 1984 and October 11, 1984.

15. In the background of Notifications dated October 3, 1984 and October 11, 1984 the High Court Division considered the question as to whether earlier notifications have created any vested right in favour of the importer, the writ petitioner and as to whether a Notification issued under section 19 of the Customs Act allowing exemption does at all create a vested right or not. The High Court Division had noticed that the importer opened Letter of Credit within time specified and the goods arrived at the time specified and the importer had fulfilled the conditions as were in the public Notifications dated 3.10.84 and 11.10.84.

16. In the case of A. Hannan Vs. Collector of Customs reported in 40 DLR 273 the Letter of Credit having had opened within the specified time and the goods having had brought in Bangladesh within specified time the High Court Division observed “Therefore he had acquired a vested right to be treated in accordance with the Notification dated 16.10.84 allowing exemption of customs duty to the extent of 50%. The subsequent Notification dated 06.11.84 exempting sugar from so much of customs duty leviable thereon as is in excess of 75% cannot destroy or take away or curtail or extinguish the vested right created in the petitioner by the earlier Notification dated 16.10.84”.

17. In the above referred case the High Court Division on consideration of the ratio decidendi of the cases referred to from the bar observed that in the said cases it has been held that the subordinate law making authority in an exemption matter by a fresh notification cannot take away vested right.

18. As against the decision of the High Court Division in the above referred case there was an appeal. In the said appeal, reported in 42 DLR (AD) 167, this Court in the background of the facts and circumstances of the case observed “This is clearly a case of estoppel inasmuch as the respondent had acted on the assurance given by the Government and a right vested in him and that could not be taken away. It was no where mentioned in the Notification that the delivery of the bill of entry will be determining factor…… As has been noticed that the respondent clearly acted upon the Government assurance and imported sugar because of such assurance and, therefore, the Government is now estopped from denying such position….. The respondent acting upon the solemn promise made by the appellant incurred huge expenditure and if the appellant is not held to its promise, the respondent would be put in a very disadvantageous position and, therefore, the principle of promissory estoppel can also be invoked in this case”. The appeal was dismissed.

19. It may be mentioned the Appellate Division maintained the decision of the High Court Division not on the ground that vested right created in favour of the writ petitioner but on the principle of promissory estoppel.

20. The question of importer’s vested right to get the goods imported assessed at the rate which was prevalent on the date of opening of the Letter of Credit came up for consideration in the case of Collector of Customs and others Vs. Ahmed Hossain and 39 others reported in 48 DLR (AD) 199. In the above case the importers in the background of the provision of Sections 19 and 30 of the Customs Act claimed that they had a right to have the goods imported assessed as per S.R.O. in force on the date of opening of the Letters of Credit.

21. In A. Hannan’s case it was the contention of the writ petitioner that a Notification issued under section 19 of the Customs Act shall not subject to provision of section 30 and the provision of said section shall not prevail over the notification issued under section 19 of the Customs Act.

22. This Division in 48 DLR (AD) 199 in the background of the submission of the appellant that in the case of A. Hannan the S.R.O. on the basis of which vested right was pleaded because of fulfillment of the terms and conditions specified in the public notice but in the instant case i.e. case reported in 48 DLR (AD) 199, there were no special terms and conditions and as such the principle of promissory estoppel or acquiring of vested right absent, it was observed: “We do not think that the difference in facts would make any difference in the application of the principle which is based on interpretation of sections 19 and 30 of the Customs Act”.

23. The question of vested right of the importer to have the imported goods assessed in the light of tariff value prevalent on the date of opening of the Letter of Credit and not on the basis of the tariff value introduced subsequent to the opening of the Letter of Credit came up for consideration in the case of Mostafizur Rahman Vs. Government of Bangladesh and 6 others reported in 51 DLR (AD) 40. In the said case Letter of Credit was opened on May 2, 1989 and at that time relevant S.R.O. dated June 16, 1988 was in forced, but later on by the S.R.O. dated June 15, 1989 tariff value in respect of importer’s goods (Cigarette paper) changed from Tk. 150 to Tk.200/- per ream. Importer’s goods arrived at Chittagong on November 15, 1989. The import manifest was submitted to the Port /Customs authority on December 2, 1989. In between January 28, 1990 and March 10, 1990 by different S.R.Os. tariff value was changed from Tk. 200 to Tk. 300/- and then from Tk. 300 to Tk. 315/-. The importer got the goods release and thereupon made a representation to the authority for exemption from payment of additional duties and taxes leviable on the basis of the enhanced tariff value introduced by the notification dated March 10, 1990. But nothing was done and then the importer moved the High Court Division in writ jurisdiction alleging that authorities’ action illegal and arbitrary.

24. It was contended from the side of the respondent that under section 25(7) of the Customs Act tariff value can be re-fixed.

25. In the case points for consideration were whether the enhancement of the tariff value by the notifications giving retrospective effect arbitrary and without reasonable basis and, whether by the impugned notifications tariff value could be enhanced giving retrospective effect which was prevalent at a lower rate when letters of credit were opened for importing the goods which is not only illegal but also affected the vested right of the appellant. The first point was not pressed but the second point was pressed placing reliance on the decisions in the cases reported in 48 DLR (AD) 199 and 42 DLR (AD) 167. The Court in the case in question observed that the importer has a vested right to have his goods assessed in the light of the tariff value that was prevalent on the date of opening of the Letter of Credit. The aforesaid view was taken upon placing reliance on the decisions reported in 42 DLR (AD) 167 and 48 DLR (AD) 199.

26. It may be mentioned in the aforementioned case there was no Notification under section 19 of the Customs Act.

27. The question of vested right of the importer to have his imported goods assessed on the basis of the customs duty or tariff value prevalent at the time of opening of the Letter of Credit came up for consideration in the case of Bangladesh and others Vs. Mizanur Rahman reported in 52 DLR (AD) 149 (the same case has also been reported in 5 BLC (AD) 134). In this case provisions of sections 18, 19, 25, 30 and 79 of the Customs Act came up for consideration. This Division has observed “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 48 DLR (AD) 199 it is difficult to hold in the face of sections 25(7) and 30 that earlier SRO will prevail when the letter of credit was opened and not the subsequent SRO 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 acquire vested right in the invoice value or the tariff value prevailing at the time of opening of letter of credit. The Government has the power to fix tariff value by publishing notification in the official gazette and this power has been vested in the Government 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, 51 DLR (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 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 51 DLR (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 42 DLR (AD) 167 and 48 DLR (AD) 199 on the one hand and 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 50 DLR 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 42 DLR (AD) 167 and 48 DLR (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 51 DLR (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 importer has to pay tax and duty on the basis of tariff value in force on the date on presentation of bill of entry”.

28. So it is seen from the aforesaid reported decision there is change of the view taken and the decision made earlier that the importer has a vested right to have his imported goods assessed on the basis of the customs duty or tariff value prevalent at the time of opening of the Letter of Credit, except in exceptional facts and circumstances as were in A. Hannan’s case.

29. In the case reported in 52 DLR(AD) 149 it has been held that importer is to pay the customs duty on the basis of the tariff value prevalent 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”.

30. In the case of Commissioner of Customs and others Vs. Monohar Ali and 26 others reported in 8 BLC (AD)87 the question came up for consideration whether assessment of customs duties and other taxes on the imported goods were to be made on the basis of the clean report of finding (CRF) in terms of section 25A of the Customs Act, 1969 that was prevalent at the time of opening of the Letters of Credit, but withdrawn by a S.R.O. subsequent to the opening of the Letters of Credit and as such the importers cannot claim assessment of the customs duties and other taxes on the basis of CRF certificate. This Division held “Having discussed the relevant law and decisions with regard to vested right and promissory estoppel we are of the view that the position of the parties in the present case is like those arising out of promise made under section 19 of the Customs Act to exempt the import taxes and duties under special circumstances. The importers having acted on the promise made by the appellant under section 25A of the Act to accept the price determined by the government appointed inspectors and the appellants cannot go back on that promise as it was meant to be binding on them”.

31. It may also been mentioned that this Division noticed that section 30A of the Customs Act, 1969 came into in force on 1.7.95 and the goods were imported subsequent thereto, but in the light of the provision of section 30A was of the view that the provision of the said section did not exclude the operation of section 25A of the Customs Act and that upon noticing that at the relevant time in section 25A of the Customs Act there was no non-obstantive clause observed “Therefore section 25A would prevail over all other sections including sections 25(7) and 30A of the Customs Act” and thereupon held that the importers’ goods are to be assessed on the basis of the CRF certificate.

32. The question of assessment of customs duties on the imported goods on the basis of the duty prevalent earlier, or in other words acquiring of vested right by the importer to have the imported goods assessed at a rate, on previous occasion assessed in respect of the similar kind of goods came up for consideration in the background of provisions of sections 25(1) and 30A of the Customs Act as well as claim of vested right in the case of Commissioner of Customs Vs. Bangladesh Trader reported in (2004) 9 MLR (AD)98 and in the said case it has been observed “The Appellate Division explained under what circumstances decision was given in 51 DLR (AD) 40, which was as case under section 25(7) of the Customs Act. The Appellate Division after discussing the implications of sections 18 and 19 as well as section 30 of the Customs Act held that no vested right has been acquired by the importer to pay customs duty etc, on the basis of tariff value declared by notification (SRO) in force on the date of opening of the letter of credit and the importer has to pay tax and duty on the basis of tariff value in force on the date of presentation of the bill of entry and the argument of acquiring vested right may be tenable in case of exemption case granted in special circumstance as in Hannan’s case and thus the principle laid down in the cases reported in 42 DLR AD 167 and 48 DLR AD 199 were distinguished. The Appellate Division also found it difficult to understand as to how an importer could acquire vested right in the invoice value or the tariff value prevailing at the time of opening letter of credit”.

33. It has been observed in the same case, placing reliance on the decision reported in 52 DLR (AD) 149, “that no vested right accrued even though at the time of opening of the Letter of Credit there was a notification (SRO) providing for lesser tariff value. In the present case on previous occasion the Customs authority made assessment on the basis of invoice value. So there is no question of acquiring vested right by the respondent merely on the basis of earlier assessment. ……… So in the present cases in terms of provision of sections 25(1) and 30A of the Customs Act normal value has to be fixed on the imported goods”.

34. In the case reported 52 DLR (AD) 149 upon reviewing the earlier cases i.e. cases reported in 42 DLR (AD) 167, 48 DLR (AD) 199 and 51 DLR (AD) 40 it has been observed that no vested right is acquired by the importer to pay the customs duty and other taxes on the basis of tariff value declare by the notification in force on the date of opening of the Letter of Credit.

35. In the instant case the writ-petitioner claimed assessment of customs duties and other levies on the imported goods on the basis of the tariff value prevalent on the date of opening of the Letter of Credit and not on the basis of the subsequent S.R.O. introducing tariff value different from the tariff value prevalent at the time of opening of the Letter of Credit.

36. It is seen from the judgment of the High Court Division that the said Division in hold that the importer has a vested right to pay the customs duties and other taxes on the basis of the tariff value prevalent on the date of opening of the Letter of Credit placed reliance on the decisions in the cases reported in 42 DLR (AD) 167 and 48 DLR (AD) 199. It may be mentioned there was no notification under section 19 of the Customs Act or any other law providing special exemption as to payment of customs duties and other taxes in the case which was for decision before the High Court Division i.e. the said case was not a case of exemption of customs duty under section 19 of the Customs Act. There was also no case of promissory estoppel in the case wherein the judgment under appeal was passed. In that view of the matter the High Court Division was in error in holding that the respondent acquired vested right to get his goods assessed at the duties and levies prevalent at the time of opening of Letter of Credit. There is no question of vested right or promissory estoppel because of the provision of section 30 of the Customs Act in the matter of assessment of customs duty, and other levies on imported goods at the rate prevalent on the date of opening of Letter of Credit, except where there is a case of exemption of customs duty and other levies pursuant to notification under section 19 of the Customs Act, 1969 or some other law.

In the background of the discussions made hereinabove we find merit in the appeal.

Accordingly, the same is allowed without any order as to costs.

Ed.

Source: 2007, (AD)

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