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Civil Petitions for Leave to Appeals Nos. 66‑K and 97‑K of 1984, decided on 29th May, 1985.

(On appeal from the judgment of the High Court of Sind, Karachi, dated 24‑11‑1983, in Constitutional Petition No. D‑379/83).

‑‑‑Art. 185(3)‑‑Customs Act (IV of 1969), Ss. 26,. 129 & 219‑‑Standing Order No. 22 of 1960‑‑Karachi Port Trust Manual Rules 98‑‑Import of goods‑‑Transit trade agreement with Afghanistan‑‑Procedure and documentation for‑‑Customs authorities refusing to transport goods to Afghanistan unless letter of credit was produced‑‑Orders challenged Leave to appeal granted to consider points of general importance: (i) that Customs authorities had no authority to make orders either under Customs Act (IV of 1969) or under any other law for time being in force in Pakistan; (ii) that action of said Customs authority was in violation and infringement of terms of bilateral agreement between two countries in regard to transit facilities; (iii) that importer had a right to transit of his goods through Pakistan without being required to produce Jawaznama or letter of Credit, and (iv) that procedure for regulating transit of goods through Pakistan to foreign parties can only be prescribed by framing rules under S . 129 read with 5.219 of Customs Act, 1969, and therefore, instructions relied upon do not have statutory force.

Zahiruddin Khan, Advocate Supreme Court with Muzaffar Hassan, Advocate‑on‑Record for Petitioners.

Fakhruddin G. Ebrahim, Senior Advocate Supreme Court, with M. Shabbir Ghaury, Advocate‑on‑Record for the Respondents.

Date of hearing: 29th May, 1985.

As the petitions detailed in the heading are directed against one and the same judgment of the Sind High Court, we propose to dispose of these two petitions by this common order.

2. Messrs Zamir Limited is a company incorporated under the law of Afghanistan based in Kabul and is engaged in import and export business. They imported a consignment ‑of 489 cartons of Polyester Textured Yarn valued at Rs.6,38,440 per Ss. Lilac Ace and filed a Bill of Entry on 7th April, 1983, alongwith the Afghan Invoice, Exporters Invoice, Bill of Lading, Original Jawaznama from a Bank in Afghanistan in order to show that the Invoice was transferred abroad through banking channels in Afghanistan. However the Customs Authorities refused to transport the goods to Afghanistan, as required by the transit trade agreement between the two countries concluded on 2nd March, 1965, unless Letter of Credit covering import of these goods was produced by the said company (hereinafter referred to as the Importer). The refusal of the Customs Authorities subject to the aforesaid conditions was duly endorsed on the Bill of Entry submitted by the Importer.

3, The Importer being aggrieved challenged the action of the Customs Authorities in a constitutional petition before the High Court of Sind. The contention of the Importer before the High Court was that the Government of Pakistan had no lawful authority to require the Importer to produce a Letter of Credit or to refuse transport intransit to Afghanistan the consignment of the Importer or to detain the goods for non‑production of the Letter of Credit under the Customs Act, 1969, or under any other law for the time being in force in Pakistan. It was submitted that the consignment under import was already paid for directly to the Exporters and, therefore, it was impossible for the Importer to produce the Letter of Credit. Grievance was also made about the mounting demurrage charges accumulating on account of the illegal action of the Government functionaries.

4. On behalf of the Government it was explained that the Commercial importers in Afghanistan are issued Jawaznama by the Government of Afghanistan and Letter of Credit by the Bank in Afghanistan. It was pointed out that Standing Order No. 22 of 1960, outlined the Customs procedure and documentation only for the transit, of the bona fide goods through Pakistan. The assertion on behalf of the Government was that in order to be entitled to the clearance of goods for transit, the Importer was under an obligation to complete the prescribed Bill of Entry which contains a column relating to Letters of Credit and its particulars. On behalf of the Government the reliance was placed on Circular No.l/83, dated 13th January, 1983, under the signature of the Assistant Collector of Customs, Afghan Transit, to the effect that original Jawaznama alongwith Letter of Credit must be produced for Afghan Transit goods with effect from the date of the Circular. Reference was also made to another letter, dated 21st September, 1982, from the Secretary (Customs) to the Collector of Customs (Preventive) Customs House, Karachi, regarding the misuse of transit facilities, stating that the Central Board of Revenue had issued the following instructions with immediate effect:‑

(i) That the facility of transit under the Pak‑Afghan Transit Trade Agreement should be made available only to those importers /owners of goods in Afghanistan who or whose agents present a valid authorisation from the Afghan Government i.e. 'Jawaznama', which is equivalent to import licence/import permit indicating the permission to cover the import of the goods arriving at the point of entry in Pakistan; and

(ii) That the evidence of establishment of a Letter of Credit for the import of these goods through some bank in Afghanistan should be provided by the importer or his agent to cover the import of goods."

On the basis of the aforesaid instructions it was contended that the Importer was under legal obligation to produce the Letters of Credit before being entitled to transfer facility. On the other hand the Importer challenged the vires of these instructions and contended that they had no statutory force under the Customs Act, 1969, or under any other law for the time being in force in Pakistan. The High Court held that according to the Standing Order of 1960. there was no embargo on the Customs Authorities to examine the Letter of Credit and the Customs Authorities were sufficiently empowered to do so under section 26 of the Customs Act. In this view of the matter, the learned Judge of the High Court declined to hold the action of the authorities requiring the Importer to produce the Letters of Credit, to be without lawful authority However, notwithstanding the said result of the constitutional petition the learned Judge of High Court expressed an opinion that the importer was not responsible for demurrage charges as they in good faith believed that the goods were liable to be released for transit as a matter of course without showing the Letters of Credit. Therefore, the learned Judge directed the Customs Authorities to issue necessary delay/detention certificate to the importer so that the Karachi Port Trust Authorities may not charge the demurrage.

5. Civil Petition for Leave to Appeal No. 66‑K of 1984, has therefore, been filed by the Trustees of the Port of Karachi against the direction so issued by the learned Judges of the High Court for issue of delay certificate. Civil Petition for Leave to Appeal No 97‑K of 1984 has been filed by Messrs Zamir Limited, the said importer against the main decision of the High Court that the action of the concerned authorities demanding the production of the Letters of Credit was justified.

6. It has been urged on behalf of the Karachi Port Trust Authorities that in terms of rule 98 of the Karachi Port Trust Manual no delay certificate can be issued in case an importer causes delays in assessment on account of non‑production of documents required to be produced with the Bill of entry and in this case according to the learned counsel the Letters of Credit is a document required to be produced alongwith the Bill of entry as held by the High Court it is argued that under the circumstances the direction of the High Court for issue of delay certificate is contrary to the statutory rules.

7. In support of the petition filed by the importer the following points have been raised:‑

(i) That respondents Nos. 1 and 2 had no authority to make the impugned orders either under the Customs Act, 1969 or under any other law for the time being in force in Pakistan.

(ii) That the impugned action of the said respondents is in violation and infringement of the terms of bilateral agreement between the two countries in regard to transit facilities:

(iii) That the importer had a right to the transit of his goods through Pakistan without being required to produce Jawaznama or Letter of Credit; and

(iv) That the procedure for regulating transit of goods through Pakistan to foreign parties can only be prescribed by framing rules under section 129 read with section 219 of the Customs Act, 1969, and, therefore, the instruction relied upon do not have statutory force,"

After hearing the learned counsel for the petitioners in the two petitions, we feel that the points raised are of general importance and need examination. Leave is accordingly granted in both petitions The petitioner in Civil Petition No. 97 8184 shall furnish security in the sum of Rs.2,500. The appeals arisir4g out of these two petitions shall be heard together.

M.I. Leave granted

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