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Civil Appeals Nos. K-42 and K-43 of 1970, decided on 19th August 1976.

(On appeal from the judgment and order of the erstwhile High Court of West Pakistan, Karachi, dated 1st June 1970, in Constitution Petitions Nos. 437 and 627 of 1969).

-- Art. 185(3)-Leave to appeal to Supreme Court-Case involving interpretation of several sections of an Act a3 also of provisions of a subsidiary Act-Questions raised questions of law of public import ance affecting large number of relevant companies-Leave to appeal granted.

-- S. 20-Words and phrases-Word "goods" in section-Includes sea going vessels.-[Words and phrases].

Algoma Central Railway Co. v. The King 1903 A C 478 ref.

-- S. 20-Words and phrases- Word "import" in section-Has no technical meaning and means 'bring in'-Imported article means article brought or carried into a country from abroad-Word "import"---Does not entail .entire process of filing of Bill of Entry, discharging from vessel at a wharf, assessment of value of goods and duty pay able-Tariff Act (XVII of 1934), S. 2.-[Words and phrase].

Black's Law Dictionary and Wharton's Law Lexicon ref.

-- Ss. 20 & 30 read with S. 86 [as amended by Customs and Tariffs (Amendment) Act (XIV of 1957), S. 15], S. 87 and Tariff Act (XVII of 1934), S. 2 & 1st Sched., Chap. 89.01-Sea going vessels-- Dutiability of---Dutiability of goods arises under S. 20, Sea Customs Act, 1878 and S. 2, Tariff Act, 1934, and not from delivery of Bill of Entry, unloading or wharfing etc. of goods as provided in machinery sections of Sea Customs Act, 1878-Section 20, cl. (9) of Sea Customs Act-Categorically provides for levy of customs duties at such rates as may be prescribed by or under any law (such as Tariff Act, 1934)-Vessels being "goods" machinery sections of Sea Customs Act, 187&, applied to importation of vessels even though not imported for home consumption, nor unloaded, wharfed etc.-Vessels exceeding 250 gross tonnage-Dutiable the moment imported from foreign ports to inland port.

It was argued that a sea going vessel was not included in the 'goods for home consumption' and that the entire procedure for levy and collection of import duty was inapplicable to it.

Held: The contention raised by the counsel will hold good only if dutiability of goods arose not under section 2 of the Tariff Act or section 20 of the Sea Customs Act bat from the delivery of the Bill of Entry, unloading of goods at the appointed warehouses, assessment of value of the goods imported for home consumption and assessment of the duty leviable on them as provided in the machinery sections of the Sea Customs Act.

The High Court got over the argument by expressing the opinion that import duty becomes leviable under section 2 of the Tariff Act. The counsel contested this proposition and it was further contested that the Tariff Act prescribes only the rate of duty whereas the dutiability is fixed by the charging section 20 of the Sea Customs Act.

Held further, assuming it for the sake of argument but without holding it specifically that duty is leviable under section 20 of the Sea Customs Act .and that the Tariff Act only prescribes the rate of duty, how can one get over clause (9) of section 20 which lays down in categorical terms that customs duties shall be levied at such rates as may be prescribed by or under any law for the time being in force on goods imported by sea into any customs port.

In, the First Schedule to the Tarif Act, Chapter 89.01, a duty of 15 %. is imposed on vessels exceeding 250 gross tonnage. The two vessels thus became dutiable the moment they were imported from foreign ports to the customs port of Karachi.

The machinery sections of the Sea Customs Act applied to their importation though they were not imported for home consumption, no unloaded and wharfed etc.

---- Ss. 20 & 86-Bill of Entry-Levy of duty-Application of every provision of Sea Customs Act, 1878 to "goods"-Not essential for its being said to have been imported for purposes of filing of Bill of Entry and levy of duty, if any-Neither difficult nor impossible to file a Bill of Entry in respect of a vessel-Bill of Entry-Can be filed "for any other approved purpose" without mentioning: goods being for home consumption or for wharfing-Contention that vessel not capable of being consumed or wharfed, hence, not: liable to duty, overruled.

-- S. 20-Foreign ships-Dutiability-Foreign ships leave customs port after discharging goods and persons-Hence, held, not imported. so as to be liable to customs duty-Further, such ships, held, neither: registered under Registration of Ships Act, 1841, nor fly national flag.

---- Ss. 20 & 64-Sea going vessels-Import duty, assessment of-Impor ters required to file Bill of Entry including all necessary particulars for fixing value of vessels and assessment of duty-Duty of valua tion of goods and assessment of duty-To be performed by Customs authorities-Clearance of goods could be declined for failure to pay duty thus assessed.

A. K Brohi, Senior Advocate and S. M. Abbas, Advocate-on-Record (absent) for Appellants (in both Appeals).

Muhammad Afzal Lone, Advocate and Muhammad Afzal Siddiqui Advocate-on-Record for Respondents (in both Appeals).

Dates of hearing t 18th, 19th and 20th May 1976.

This will dispose of Civil Appeals Nos: K-42 and K-43 of 1970. In Civil Appeal No. K-42 of 1970, the East and West Steamship Co., Karachi, appellants, were, on 7-7-1966, given a permit by the Central Government to 'import' and 'clear' a ship for which they had placed an order with a steamship building company in Scotland. On delivery the ship was named, by the appellant-Company, M. V. "OHRMAZD" and registered with the Marine Department at Karachi on 8-10-1968 under Registration of Ships Act, 1841. Under section 26 of the said Act the ship, was to be deemed to belong to Karachi Port and was granted permission to fly the national flag.

arrived at Karachi via Chittagong on 19-5-1969: A letter was thereafter written by the appellant to the Controller of Customs, Karachi, respondent No. 1, to grant two months' time to file the Bill of Entry for payment of customs duty. It was stated in the letter that certain disputes bad arisen with the ship building company which bad been referred to arbitration and the price of the ship was to be finally settled. The facility asked for was allowed on the execution of a bond on 28th May, 1969; undertaking to file the Bill of Entry and pay customs duty levied thereon, within a period of two months. Earlier on 15-5-1969 the appellant-Company had made a representation to the Government to abolish customs duty one import of ships but the prayer was rejected and the Government decision was conveyed to the appellant by the Central Board of Revenue on 13^th June, 1;969. On 14th July, 1969, another representation was made to the Government on behalf of Pakistan Ship Owners Association with the same prayer which too was rejected and intimation conveyed by the Central Board of Revenue to the Association by their letter dated 29th August, 1969. In pursuance to these decisions the Deputy Collector Customs, Karachi, respondent No. 2, published on 23-6-1969, a public notice requiring all shipping companies to file Bills of Entry in Import Section of the Customs House alongwith I. G. M. for all Pakistani ships plying under national colour, unless they had already done so. It was further notified on 1st August, 1969, that on the submission of Bills of Entry action will be taken to levy and recover customs duty and that no Pakistani vessel will be allowed port clearance unless customs duty bad been paid. On the issuance of these notices, the 1st appellant filed Writ Petition No. 437 of 1969 in the erstwhile High Court of West Pakistan, Karachi Seat, challenging the legality of the demand for filing of Bill of Entry on grounds which will be noticed presently.

In Civil Appeal No. K-43 of 1970, the United Oriental Steamship Co., Karachi, was permitted by the Government of Pakistan to purchase an ocean going vessel M. V. "GYLFE" under 'pay-as-you-earn' scheme for a total price of 545,000. The terms and conditions of purchase were included in the letter dated 14th January, 1965, issued by the Ministry of Communication. Delivery of the ship was taken by the appellant in March, 1965, and the ship plied between Continental Ports and Far East Ports until it arrived at Karachi on 27th November, 1968. On 23rd July, 1969, the public notice mentioned earlier was issued by the Customs authorities requiring all shipping companies to file Bills of Entry in the Import Section of the Customs House and pay duty on the ships, imported by them. Thereupon the second appellant filed Writ Petition No. 627 of 1969 seeking r similar relief.

In support of the two writ petitions it was contended by Mr. A. K. Brohi ;-----

(a) That Customs Duty in respect of import of goods by sea is to be levied under the provisions of the Sea Customs Act, 1878 and not under the provisions of the Tariff Act, 1934, which only provides the rates at which duty is to be levied on various classes of goods.

(b) That the Sea Customs Act, 1878, does not envisage the import of ships and that the machinery provisions of the Sea Customs Act, 1878, would therefore not apply in the instant case, and that the Tariff Act, 1934, does not, by itself authorise any levy or demand for payment of Customs Duty, much less in the manner in which the respondents seek to do.

(c) That the words 'goods' and 'import for home consumption' as used in the Sea Customs Act, 1878, have no reference to ocean going vessels or ships and an ocean going vessel is not 'goods' nor can it be 'imported' as such.

The substance of these contentions was that the duty prescribed by the Tariff Act on ocean going vessels could not be levied and collected as there was no provision in the machinery sections of the Sea Customs Act to levy and collect the duty. The notices for filing of Bills of Entry were, -therefore, claimed to be without lawful authority.

The writ petitions were dismissed on 1st June, 1970, by a Division Bench (Mr. Justice Abdul Kadir Shaikh and Mr. Justice G. Safdar Shah), on the finding that a sea going vessel is, within the Sea Customs Act, included in the definition of goods: that 'import' means bringing in by land or sea into Pakistan; and that absence of the procedure and the formalities to be gone through in case of import of a vessel does not affect its dutiability.

Leave to appeal was obtained by the appellants in both cases on 20th August, 1970, as the case involved interpretation of a number of sections of the Sea Customs Act as also of the provisions of the Tariff Act. The questions raised were considered as questions of law of public importance affecting a large number of shipping companies.

In his arguments Mr. A. K. Brohi took us through the provisions of the Sea Customs Act, 1878 since replaced by Act IV of 1969 and the Tariff Act XVII of 1934. He did not dispute that a vessel' is a 'goods' but argued that when a vessel enters a port it is not a goods imported' from a foreign country into Pakistan for home consumption. With reference to the relevant provisions of tyre Sea Customs Act the learned counsel further argued that a Bill of Entry cannot be filed in respect of a vessel as it is not unloaded at a wharf, which, according to the learned counsel, is the condition precedent for levy of customs duty.

We will examine the content of Mr. A. K. Brohi's arguments in the light of the provisions of the Sea Customs Act on which he relied in the course of his address. There was no definition of 'goods' in the Act but vessel was defined in section 3(f) as 'includes anything made for the conveyance by water of human beings or property'. Coastal vessel was defined separately in clause (g). 'Warehouse' is any place appointed or licensed under sections 15 and 16. Section 20 which is more pertinent in the case laid down:----

Except as hereinafter provided customs duties shall be levied at such, rates as may he prescribed by or under any law for the time being in force, on----

(a) goods imported or exported by sea into or from any customs-port from or to any foreign port;

(b) opium, salt or salted fish imported by sea from any customs-port into any other customs-port;

(c) goods brought from any foreign port to any customs port, and without payment of duty, there transhipped for, or thence carried to, and imported at, any other customs port; and

(d) goods brought in bond from one customs port to another.

Section 30 provided that the value of any imported goods shall be taken to be the normal price that is to say the price which they would fetch at the time the bill of entry is delivered to the Customs Collector under section 86 on a sale in the open market between buyer and seller independent of each otter.

Section 86, as amended by Act XIV of 1957 reads as follows:----

The owner of any imported goods shall make entry of such goods for home consumption, for warehousing or for any other approved purpose by delivering to the Customs Collector a Bill of Entry thereof in such form and manner and containing such particulars as the, Chief Customs authority may direct:

Provided that, if the owner makes and subscribes a declaration before the Customs Collector to the effect that he is unable, from want of full information, to make a complete entry of any goods, then the Customs Collector shall permit him, previous to the entry thereof, (1) to examine the goods in the presence of an officer of Customs, or (2) to deposit such goods in a public warehouse appointed under section 15 without warehousing the same, pending the production of such information.

Section 87 provides that on the delivery of such bill the duty (if any) 'leviable on such goods shall be assessed, and the owner of such goods may then proceed to clear the same for home consumption, or warehouse them subject to the provisions contained thereafter. The next relevant section 89 laid down that when the owner of any goods entered for home consumption, and (if such goods be liable to duty) assessed under section 87, has paid the import duty (if any) assessed on such goods and any charges payable under the Act, the Customs Officer may make an order clearing the same; and such order shall be sufficient authority for the removal of such goods by the owner. With reference to the aforementioned provisions of the Sea Customs Act, Mr. A. K. Brohi argued that a sea-going vessel was not included in the 'goods for home consumption' and that the entire procedure)" for levy and collection of import duty was inapplicable to it.

The contention raised by the learned counsel will hold good only if dutiability of goods arose not under section 2 of the Tariff Act or section 2 of the Sea Customs Act but from the delivery of the Bill of Entry, unloading C of goods at the appointed warehouses, assessment of value of the good imported for home consumption and assessment of the duty leviable on them as provided in the machinery sections of the Sea Customs Act.

The learned Judges in the High Court got over the argument by expressing the opinion that import duty becomes leviable under section 2 of tire Tariff Act. Mr. A. K. Brohi contested this proposition and maintained that the Tariff Act prescribes only the rate of duty whereas the dutiability is fixed by the charging section 20 of the Sea CUStOm3 Act. Assuming it for the sake of argument but without holding it specifically that duty is leviable under section 20 of the Sea Customs Act and that the Tariff Act only prescribes the rate of duty, how can one get over clause (9) of section 20 which lays down in categorical terms that customs duties shall be levied at such rates as may be prescribed by or under any law for the time being in force on goods imported by sea into any customs port. A 'vessel' is a 'goods' and in both cases 'vessels' were imported from foreign ports to the customs port of Karachi In the First Schedule to the Tariff Act, Chapter 89.01, a duty of 15 % is imposed on vessels exceeding 250 gross tonnage. The two vessels thus became dutiable the moment they were imported from foreign ports to the customs port of Karachi.

The word 'import' carries the natural meaning of 'bringing in' and has no technical meaning. Mr. A. K. Brohi construed the word 'import' as entailing the entire process of filing Bill of Entry, discharging from the vessel at a wharf, assessment of value of the goods and the duty payable on them. We, however, see no warrant for placing this artificial meaning on the word 'import'. In Black's Law Dictionary, 'importation' is defined as 'The act of bringing goods and merchandise into a country from a foreign country' and 'imported' in general, has the same meaning in the Tariff laws that its etymology shoves, in porto, to carry in. To 'import' is to bear or carry into. An imported article is one brought or carried into) a country from abroad. In Wharton's Law Lexicon 'import' is given the meaning 'goods or produce brought into a country from abroad'. In order to explain entry No. 89.01 of the Tariff Act under which duty of 15 % is levied on vessels exceeding 250 tons gross weight, the appellants conceded that ships brought from foreign countries for inland use were 'imported' within the Sea Customs Act. It followed that the machinery sections of the Sea Customs Act applied to their importation though they were note imported for home consumption, nor unloaded and wharfed etc.

We appreciate that 'vessel' is not a 'goods' which can be discharged from a conveyance at a wharf but let that not be so. It is not necessary that every provision of the Sea Customs Act should be applied to a 'goods' before it can be said to have been imported for purposes of filing Bill of Entry and levy of duty (if any).

Nor do we find any difficulty much less an impossibility in the filing of a Bill of Entry in respect of a vessel. Section 86 which makes provision for delivering a Bill of Entry reads:

"The owner of any imported goods shall make entry of such goods for home consumption, for warehousing or for any other approved purpose by delivering to the Customs Collector a bill of entry thereof in such form and manner and containing such particulars as the Chief Customs authority may direct:

Provided that if the owner makes and subscribes a declaration before: the Customs Collector to the effect that he is unable, from want of full information, to make a complete entry of any goods, then the Customs Collector shall permit him, previous to the entry thereof, (1) to examine the goods in the presence of an officer of Customs, or (2) to deposit such goods in a public warehouse appointed under section 15 without warehousing the same, pending the production of such information."

Mr. A. K. Brohi laid stress on the words 'for home consumption' and for warehousing. It was said that a vessel is not consumed and nor can it be wharfed. But there remains the clause 'or for any other approved purpose'. When a sea-going vessel is imported it is for the approved purpose of carrying goods and persons from port to port. Assuming that the last clause did not apply to a vessel, even then a bill of entry can be filed without mentioning that it is for home consumption or for wharfing or for any other purpose. The object of filing the bill of entry is to furnish necessary particulars of importation so that the value of the vessel and the custom duty payable on it may be assessed. In case of ordinary goods the owner can not receive the goods unless he has paid the duty (if any). In, the case of vessel it will not be allowed to leave the port or given clearance unless the duty assessed on it is paid.

It was debated in the High Court that what will happen to foreign ships which carry goods and, persons to a customs-port in Pakistan The answer is very simple. It is not 'imported' as after discharging goods and persons it leaves the customs port. It is not registered under the Registration of Ships Act, 1841, nor does it fly the national flag.

The High Court has relied on a foreign decision in Algoma Central Railway Co. v. The king (1903 A C 478) (wrongly cited as West Lancashire Rural District Council v. The Lancashire & Yorkshire Railway Company) ((1902) 3 T L R 19): Mr. A. K. Brohi distinguished this judgment on the ground that duty under the Canadian Law was payable on the entry of the vessel in the Registration Book and not in the manner provided for in our Sea Customs Act. This judgment is however relevant on the point that 'ships' are 'goods' and that a ship is imported into a country. At page 481 of the report their Lordships of the Privy Council have observed;

"Several difficulties have been suggested. In the first place, it is said that ships are not 'goods'. It is not necessary to refer to or discuss the language of the Canadian Customs Act, because the Customs Tariff, 1897, itself places 'ships in the schedule or list of 'goods' subject to duty'. Secondly, it was argued that ships could not be 'imported' into a country. It is not easy to understand that argument; this ship was brought into Canada. Nothing more can be required to satisfy the word 'imported'."

Another point urged before the High Court was that the, Sea Customs Act does not lay down the procedure for assessment and collection of customs duty on a vessel. The learned Judges were seemingly impressed by the argument and said: "We would, while upholding the levy of custom duty on the vessels leave the matter of the recovery thereof to the authorities concerned to be made in accordance with law". We do not agree with the opinion expressed by the learned Judges. The rate of duty is prescribed in the Tariff Act. The appellants are under the Sea Customs Act required to file Bill of Entry which will include all the necessary particulars for fixing the value of the vessels and assessment of duty therein. This function is to be performed under the Sea Customs Act by the Customs authorities and unless the duty is paid they can decline to give port clearance under section 64 of the Sea Customs Act. In case of default there are other provisions in the Act for recovery of the unpaid duty.

In arriving at the conclusion that the appellant had imported dutiable vessels into Pakistan, the learned Judges relied also on the provisions of the Imports and Exports (Control) Act, 1950. Mr. A. K. Brohi had a cavil against this line of reasoning. It was contended by him that the provisions of another statute could not be imported into the Sea Customs Act for the purpose of determining whether a vessel is imported as a 'goods'. We agree with the learned counsel but even if no help is derived from the Imports and Exports (Control) Act, it is obvious that the two vessels in question were imported and became dutiable when they first entered the Customs port of Karachi.

We accordingly find no merit in any of the contentions raised in support of two appeals and dismiss them with costs.

.--I agree.

.-I agree.

S. A. H. Appeal dismissed.

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