KARACHI: The Sindh High Court (SHC) has upheld the order of the Customs Appellate Tribunal that the Federal Board of Revenue (FBR) has no authority either to enhance or restrict exemption as it is the prerogative of the Parliament only.
A division bench of the SHC comprising Justice Muhammad Junaid Ghaffar and Justice Agha Faisal gave this verdict in the appeals of director through additional director of PCA (Law) and collector of customs through additional collector of customs (law) against the decision of the Customs Appellate Tribunal, Karachi.
According to a written order of the bench on Thursday, M/s. R. J. Corporation & others (respondents) had imported LED panel lights under HS code 9405.1090 and filed goods declaration claiming benefit of customs duty vide Sr. No.24 of Part I of the Fifth Schedule to the Customs Act, 1969, and exemption of sales tax vide Sr. 15(ii) of the Table 3 of the Sixth Schedule to the Sales Tax Act, 1990, and that of Income Tax vide CL77 PT-IV of the Second Schedule to the Income Tax Ordinance, 2001.
After examination of the goods, it was observed that they were not meant to work and operate with the renewable energy sources like the solar energy or wind energy whereas they were to be operated on alternate current rather than direct current, and as a consequence thereof, it was alleged that the above concession is not available, the court order stated.
Based on these allegations show-cause notices were issued, and thereafter Order-in-Originals were passed against the respondents. Appeals of the respondents against the order were allowed by the tribunal.
The order stated that the respective collectorates had cleared the subject goods by extending the benefit of the above exemption, and after releasing of the same it was alleged that the said exemption was not available.
“It appears that such proceedings were initiated pursuant to some letter of FBR dated 12.02.2016, wherein, it was clarified that the exemption would only be available where the voltage of LED lights does not exceed 60 Watts,” the order added.
The order quoting the observations of the decision of the tribunal stated, “Such clarification or finding of FBR in respect of an exemption available under the Act comes from nowhere, as FBR has no role to play in such matter. It has been further observed that FBR has no authority either to enhance or restrict an exemption. It has been further observed that in any case this letter of FBR could not be applied retrospectively on the respondents goods which were already cleared after accepting the claim of exemption.
Based on these facts the tribunal concluded that the applicant(s) had no case to rely upon an interpretation given by the FBR inasmuch as the same was against the very statute and cannot be accepted, and therefore the entire case as set-up by the applicant department including allegations of mis-declaration within the contemplation of s.32 of the Act has no basis.
“We do not see any reason to differ from the conclusion so drawn by the Tribunal; hence we are of the view that there appears to be no justifiable cause with the Applicant(s) to challenge such finding of the Tribunal, which, in the given facts and circumstances of the case, is in line with the settled principles of law, and therefore, apparently no question of law arises out of the order of the Tribunal,” the bench declared.
