KARACHI: The Sindh High Court (SHC) on Monday restrained the custom authorities from taking any action against Pakistan Suzuki Motor Company Limited in pursuance of a demand notice for payment of liabilities of Rs 150 millions till further orders.
This restraining order came on special customs reference filed by PSMCL through which it challenged the verdict of Custom Appellate Tribunal that dismissed its appeal against the order of Collector of Customs, Sales Tax and Federal Excise (Appeals).
The appellant’s counsel submitted that the revenue receipt auditors had conducted an audit in year 2001 and alleged that the appellant company short paid royalties amounting to Rs 120 million. It was alleged that the cost of royalty was not included in the C&F value of CKD Kit imported by it during the period from July 1997 to February 1999.
He stated that according to clause 2(d) of Section 25 of the Custom Act 1969, royalty payment without which goods cannot be legitimately imported, sold and used in Pakistan are to be included in value for import purpose. Pakistan Suzuki pays royalty on those components which are developed in Pakistan and they are not imported from Suzuki Motor Corporation, Japan. Therefore there is no point in paying royalty amount.
It was stated on September 16, 2006 and December 05, 2006 demand-cum-show cause notice was issued to the appellant for payment of the amount. Subsequently, the appellant’s counsel appeared before the custom authorities and defended its case. But an order was issued without taking into consideration its point of view.
Demand-cum-notice was issued after lapse of more than three years of imported goods which is clearly beyond period of limitation and aimed as afterthought extortion.
It was stated that the company presented its case before the Collector of Customs, Sales Tax and Federal Excise (Appeals) but it dismissed the appellant’s case.
He told the judges that afterwards when the company approached the tribunal it also dismissed its appeal on the ground that the appeal was filed without authorization of the executive officer or directors of the company. However, he added, it was filed with approval of the competent authority.
He argued that the since the matter was not decided by the tribunal on merits and pending disposal in the court, therefore, demand notice was illegal. Moreover, he added that the amount demanded through notice is not in consonance with the alleged liabilities to the appellant.
The hearing of case was put off till August 18.