NATIONAL FOOD LIMITED vs COLLECTOR OF CUSTOMS MODEL CUSTOMS COLLECTORATE OF PPRAISEMENT-WEST Ss

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NATIONAL FOOD LIMITED VS COLLECTOR OF CUSTOMS MODEL CUSTOMS COLLECTORATE OF PPRAISEMENT-WEST Ss. 19 & 80---Sales Tax Act (VII of 1990), S. 13 & Sixth Sched. Serial No. 19---Special Economic Zones Act (XX of 2012), S. 37---Exemption from payment of customs duties and sales tax on import of capital goods---Entitlement---'Capital goods', definition of---Prefabricated building structures fall within definition of 'capital goods' and same qualify for exemption---Facts in brevity were that the petitioner while establishing a new food manufacturing plant in the special economic zone (SEZ), imported prefabricated building structures and overhead cranes, claiming exemption from customs duties and sales tax under S. 37 of the Special Economic Zones Act, 2012, read with SRO 41(I)/2009 and Chapter 9917(2) of the Customs Tariff as "Capital Goods"---Customs authorities denied the exemption through an assessment order, which decision was upheld by both the collector (appeals) and the customs appellate tribunal---Petitioner argued that prefabricated buildings qualified as capital goods under the Customs Act, 1969 and existing SROs, relying on the case reported as (2011 PTD 569), where similar exemptions were upheld---Pivotal point for consideration by the High Court was as to "Whether the prefabricated building structures imported by the petitioner for setting up a manufacturing facility in a notified Special Economic Zone (SEZ) qualified as "capital goods" and were therefore entitled to exemption from customs duties and sales tax under S. 37 of the SEZ Act, 2012, read with SRO 41(I)/2009 and Chapter 9917(2) of the Customs Tariff, notwithstanding a contrary interpretation by the Federal Board of Revenue?" ---Held: Insofar as the definition of "Capital Goods" was concerned, it had been interpreted expansively to hold that prefabricated buildings and sheds, so imported, fell within the definition of either machinery, plant, equipment, apparatus or capital goods; and therefore, qualified for exemption under SRO 575(I)/2006---Once it had been held categorically by a Division Bench of the High Court that prefabricated buildings and sheds fell within the definition of plant, equipment, machinery and capital goods, then how could the department or for that matter the Tribunal disagree with such view merely for change in the SRO or classification of goods under some special Chapter (9917) of the Customs Tariff or under the 5th Schedule to the Customs Act---Till such time the definition remained the same, the dicta laid down in the case reported as (2011 PTD 569) was to remain applicable and any deviation thereof, in fact, was contemptuous on the part of the department---Accordingly, this aspect of the matter stood answered and the finding of the Tribunal in this context was not in accordance with the law---Similarly, Tribunal's observations while dealing with Serial No. 19 of the 6th Schedule of the Sales Tax Act, 1990 in respect of exemption of sales tax that the applicant was not a zone developer, but had set-up its industrial unit in special economic zone, hence not entitled for any exemption, was incorrect and without proper appreciation of law and facts---The said provision was pari materia to what had been provided under Special Classification Chapter 9917(2) and therefore, the applicant was not only entitled for exemption of duties on the goods in question being Capital Goods under Chapter 9917(2) read with the Preamble of Part-I of the Fifth Schedule to the Customs Act, 1969; but so also from Sales Tax against Serial No.19 of the Sixth Schedule to the Sales Tax Act, 1990---It was of paramount importance to note that an exemption was also provided under S. 37 of the Special Economic Zones Act, 2012 read with SRO 41(I)/2009 dated 19.01.2009 which was available for establishing projects in SEZ's---Such exemption was provided in terms of S. 19 of the Customs Act, 1969 read with S. 13 of the Sales Tax Act, 1990 on the import of capital equipment (i.e. plant, machinery, equipment and accessories), whereas, in the said notification, it was only machinery, which had been defined and it was silent about as to what was plant, equipment and accessories---In the considered view of the High Court the claim of the applicant for exemption under SRO 41(I)/2009 was also valid by treating the goods in question as capital equipment as provided in the said SRO---The Tribunal's rejection in providing exemption to the petitioner was based on FBR's opinion that prefabricated buildings were not "plant, machinery or equipment---The Tribunal had erred in this regard by placing reliance on the directions of FBR and its interpretation in respect of capital goods viz a viz exemption claimed by the applicant---Reference application was allowed, in circumstances.

NATIONAL FOOD LIMITED vs COLLECTOR OF CUSTOMS MODEL CUSTOMS COLLECTORATE OF PPRAISEMENT-WEST Ss — 2025 PTD 1391 KARACHI-HIGH-COURT-SINDH

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