Post by TanjibulAlam on Aug 30, 2009 8:49:42 GMT 4
Encashment of bank guarantee without final assessment
High Court Division [Writ]
Mr. Justice Mirza Hussain Haider And
Mr. Justice Borhanuddin
Writ Petition No. 8180 of 2006
Nasir Glass Industriestttt..Petitioner
- Versus-
National Board of Revenue, and others
t. Respondents
Mr. Tanjib-ul-Alam, Advocate
t. For the Petitioner
Mr. Sayed Qumrul Hossain along with Ms. Kazi Zinat Haque, A.A.G.
t. For the Respondents
2009 Judgment: 12.01.2009
Constitution of Bangladesh, 1972-Article 102 read with Customs Act
Section 81
Whether the encashment of bank guarantee without final assessment in contrary to Section 81 of the Customs Act.
Section 81 (2) of the Customs Act categorically says that the final assessment is to be made within 150 working days from the date of release of the goods on the basis of provisional assessment and since more than 180 days have passed after provisional assessment made on 17.5.2005, the Customs Authority under no circumstances can ask for encashment of the bank guarantee. Thus, since the respondents failed to obtain an expert opinion and since the respondents failed to assess the goods finally within 150 working days from the date of provisional assessment the order for encashment of the bank guarantee by the impugned letter is illegal and without lawful authority.
[Para-10]
Judgment
Mr. Borhanuddin, .J ;- On an application under Article 102 of the Constitution of the People's Republic of Bangladesh, the petitioner obtained this Rule calling upon the respondents to show cause as to why the impugned office Memo bearing Nothi. No.1 (1) Shu: Nee & Baal99 (Part-) /603 dated 9.10.2005 (Annexure-A) and the letter bearing Nothi No. 990/AP/Section-8(A)/0405 dated 10.8.2006 (Annexure-A-I) seeking encashment of Bank Guarantee No. LG/ TBL/DMN/l8/2005 dated 14.5.2005 for an amount of Tk.I,88,44,726.00 and Bank Guarantee No.LG/TBL/DMN/l9/2005 dated 15.5.2005 for an amount of Tk.1,99,300.57 (Annexure-H and H-I) issued by the respondent No.5 and furnished by the petitioner should not be declared to have been issued without lawful authority and is of no legal effect and why they should not be directed to obtain expert opinion to release the Bank Guarantees dated 14.5.2005 and 15.5.2005 upon final assessment of the consignment imported under L.C. No.153905010059 dated 26.1.2005 issued by the Prime Bank Limited (Annexure-B) or such other or further order or orders passed as to this Court may seem fit and proper.
2. Short facts necessary for disposal of the Rule are that the petitioner is a Private Company Limited incorporated under the laws of Bangladesh and engaged in the business of manufacturing float glass. The petitioner Company is the largest float glass manufacturing unit in Bangladesh. The petitioner opened a letter of credit on 26.01.2005 for importing TIN INGOT for Float Glass Plant as part of Capital Machinery under H.S. Code No.8007 .00.20. After arrival of the goods, petitioner through his clearing agent submitted Bill of Entry bearing No.C-95218 dated 7.04.2005 declaring the description of the machinery component with a view to take delivery on payment of duties and taxes in accordance with the provisions of SRO 158- Law/2000/l839/shulka dated 8.6.2006. When the petitioner's clearing agent went to collect the Bill of Entry for payment of duties and taxes in accordance with law, the petitioner was astonished to learn that the respondents most arbitrarily and without any objective basis identified the imported machinery component as raw materials and imposed a higher rate of duty. Thereafter, petitioner submitted an application on 22.3.2005 before respondent No.1 explaining the nature of the machinery component and sought clearance of TIN INGOT as part of machinery under the provision of SRO 158 dated 8.6.2000. The respondent No.1 vide letter dated 5.4.2005 directed respondent No.3 to release the imported machinery component subject to obtaining opinion from expert committee consisting of representatives from BUET and the concerned Customs House. Thereafter the petitioner submitted an application on 2.5.2005 seeking a direction from respondent No.1 for release of the imported TIN INGOT upon furnishing an indemnity bond subject to obtain expert opinion from BUET. Thereafter, respondent Nos. l and 2 vide letter dated 5.5.2005 allowed the petitioner to release the imported TIN INGOT as part of capital machinery on condition that upon installation of all the machineries' spare parts, a field survey would be carried out and expert opinion would be obtained. On the basis of the field survey and the expert opinion, the Customs Authority will make final assessment under the provisions of law. Accordingly the petitioner furnished bank guarantees and respondent No.3 released the imported goods on the basis of provisional assessment. After the provisional assessment, the respondents did not take any step in accordance with memo dated 5.4.2005 and 5.5.2005. All of a sudden. the petitioner came to learn that respondent No.3 asked respondent No.5 to encash the bank guarantee furnished by the petitioner vide letter dated 10.8.2006 pursuant to memo dated 9.10.2005 issued by the respondent No.1 addressed to the respondent No.3. Against the said letter for encushment of Bank Guarantee pursuant to said office memo. the petitioner moved this Court and obtained the Rule.
3. In the midst of hearing, the petitioner filed a supplementary-affidavit stating that subsequent to issuance of the Rule in the instant Writ Petition, the Department of Mechanical Engineering of the Bangladesh University of Engineering and Technology (BUET) furnished report in February, 2007 at the instance of the writ petitioner stating that the imported TIN INGOT is part of the capita] machinery of the petitioner's glass plant.
4. Mr. Sayed Qumrul Hossain, the Assistant Attorney-General, filed power on behalf of respondent No.3 i.e. the Commissioner of Customs, Customs House, Chittagong, and filed an affidavit-in-opposition stating inter alia, that the expert opinion is not mandatory because the petitioner failed to submit expert opinion within the stipulated time i.e. within 6 months and the final assessment by the Customs Authority is in accordance with law. The respondent No.3 further contended that the petitioner could avail alternative forum.
5. Mr. Tanzib-ul-Alam, the learned Advocate appearing on behalf of the petitioner submits that after releasing the goods upon furnishing the bank guarantee the respondent No.3 did not take any step to obtain expert opinion within 6 months as contemplated in memo dated 5.4.2005 and 5.5.2005 and the petitioner never received any notice of final assessment. He further submits that the issuance of the impugned memo and letter for encashment of the bank guarantees without any opinion from expert committee and without any prior notice of final assessment is without lawful authority and is of no legal effect. He further submits that the respondents are estopped from seeking encashment of the bank guarantees furnished by the petitioner under the promissory estoppel as the petitioner had furnished the bank guarantee, relying, on the promise that the respondents would encash the bank guarantee on the basis of expert opinion. He lastly, submits that the encashment of bank guarantee without final assessment is contrary to Section 81 of the Customs Act.
6. Relying on the Supplementary Affidavit, the learned Advocate for the petitioner submits that the report of an expert from BUET categorically stated that the imported TIN INGOT is part of the capital machinery of the petitioner's glass factory. This statement of the expert report is not controverted by the Customs Authority and as such, the Uncontroverted statement could be taken into consideration for disposal of the Rule.
7. On the other hand, the learned Assistant Attorney-General in support of his affidavit-in opposition submits that the petitioner failed to obtain expert opinion within the stipulated 6 months and as such, impugned memo and letter for encashing the bank guarantee are in accordance with law .
He further submits that there is alternative forum to redress the grievance of the petitioner but since he could not point out as to which alternative forum is open for the petitioner, he did not press this point.
8. Heard the learned Advocates and perused the writ petition, supplementary-affidavit along with all annexures appended thereto and affidavit-in-opposition.
9. It is evident from the annexures that the petitioner furnished Bank Guarantees on condition that a field survey would be carried out after installation of the imported goods and an expert opinion by the expert committee consisting of representatives from BUET and respective Customs House will be obtained by the Commissioner of Customs and on the basis of the said expert opinion the bark guarantees will be dealt with in accordance with law, On perusal of the Annexure-F, it appears that the said memo in Clause-2 imposed a condition in the following manner:
(ii ) Avg`vbxK…Z hš¿vsk I Ab¨vb¨ gvjvgvj Lvjv‡mi 06 gv‡mi g‡a¨ h_vh_fv‡e ¯’'v‡b ¯’'vwcZ n‡q‡Q wKbv Ges hš¿vs‡ki cwigvb g~j hš¿cvwZi 10% g~j¨ mxgvi g‡a¨ i‡q‡Q Kxbv †m wel‡q evsjv‡`k cÖ‡KŠkj wek¦we`¨vjq (BUET) Ges mswkøó ïé feb Gi cÖwZwbwai mg¤^‡q MwVZ KwgwUi we‡klÁ gZvgZ (Capital Machinery I Space ) Gi c"_K ZvwjKvmn mswkøó Kwgkbvi Ae Kvógm msMÖn Ki‡eb|Ó
So, from a reading of the aforesaid clause it appears that the committee of experts was supposed to be constituted consisting of representatives from BUET and concerned Customs House who would give opinion within 6 months and the said opinion was supposed to be collected by the concerned Commissioner of Customs. But in the present case, it appears that the Customs Authority failed to obtain any expert opinion within the stipulated time rather on 9.10.2005 the Board ignoring the conditions of the memos dated 05.04.2005 and 05.05.2005 respectively (Annexures-F and G-l to the writ petition) directed the Commissioner of Customs, Customs House, Chittagong to make final assessments. Pursuant to that order after passage of I (one) year i.e. 10.08.2006, the Commissioner of Customs, Customs House, Chittagong directed to the Banker of the petitioner to encash the bank guarantee without making any final assessment on the basis of their decision dated 05. 04.2005 Annexure-F and dated 05.05.2005 Annexure-G-I, which is totally beyond the scope of law as provided under Section 81 of the Customs Act, and also in violation of the aforesaid two memos issued by respondents.
10. Since the Customs Authority was duty bound under memos dated 5.4.2005 and 5.5.2005 to obtain an expert opinion from a committee consisting of representatives from BUET and concerned Customs House and the Commissioner of Customs did not take any step to that effect and Since they have failed to assess the goods finally under Section 81(2) of the Customs Act, we are of the view that the impugned orders dated 09.10.2005 and 10.8.2006 Annexure-A and Annexure-A-I have been issued without any lawful authority and as such, direction for encashment of the Bank guarantee is illegal. Section 81 (2) of the Customs Act categorically says that the final assessment is to be made within 150 working days from the date of release of the goods on the basis of provisional assessment and since more than 180 days have passed after provisional assessment made on 17.5.2005, the Customs Authority under no circumstances can ask for encashment of the bank guarantee. Thus, since the respondents failed to obtain an expert opinion and since the respondents failed to assess the goods finally within 150 working days from the date of provisional assessment the order for encashment of the bank guarantee by the impugned letter is illegal and without lawful authority.
11. On perusal of the Supplementary Affidavit, it appears that an expert from the Department of Mechanical Engineering of BUET visited the factory of the petitioner and opined that the tin ingot imported by the petitioner is being used in the factory as a part of capital machinery of the petitioner's glass plant. Though the report has been obtained at the instance of the petitioner but the respondents did not raise any objection nor made any statement in the Affidavit-in opposition controverting the report.
Thus, we find merit in the Rule. Accordingly, the Rule is made absolute. The impugned office (memo bearing Nothi No. NI) Shu: Nee & Baa/99(Part-1)/603 dated 9.10.2005 and letter bearing Nothi No.9901 AP/Section-8(A)/04-05 dated 10.8.2006 Annexure-A and A-(1) respectively are declared to have been issued without lawful authority and of no legal effect.
12. Since by now 2(two) years have already passed after issuance of the Rule and since there is no scope at this stage for making any final assessment under section 81(2) of the Customs Act and since an expert opinion has already been obtained, we refrain from making any comment relating to second part of the Rule.
13. Under such circumstances, the respondents are directed to release the bank guarantee No. LG/TBL/DMN/18/2005 dated 14.5.2005 for an amount of Tk. l,88,44,726.00 and Bank Guarantee No.LG/TBL/DMNI19/2005 dated 15.5.2005 far in amount of Tk.1,99,300.57 (Annexure-H and H-l) issued by the respondent No.5 and furnished by the petitioner, within 30(thirty) days from the date of receipt of this order.
There will be no order as to costs.
High Court Division [Writ]
Mr. Justice Mirza Hussain Haider And
Mr. Justice Borhanuddin
Writ Petition No. 8180 of 2006
Nasir Glass Industriestttt..Petitioner
- Versus-
National Board of Revenue, and others
t. Respondents
Mr. Tanjib-ul-Alam, Advocate
t. For the Petitioner
Mr. Sayed Qumrul Hossain along with Ms. Kazi Zinat Haque, A.A.G.
t. For the Respondents
2009 Judgment: 12.01.2009
Constitution of Bangladesh, 1972-Article 102 read with Customs Act
Section 81
Whether the encashment of bank guarantee without final assessment in contrary to Section 81 of the Customs Act.
Section 81 (2) of the Customs Act categorically says that the final assessment is to be made within 150 working days from the date of release of the goods on the basis of provisional assessment and since more than 180 days have passed after provisional assessment made on 17.5.2005, the Customs Authority under no circumstances can ask for encashment of the bank guarantee. Thus, since the respondents failed to obtain an expert opinion and since the respondents failed to assess the goods finally within 150 working days from the date of provisional assessment the order for encashment of the bank guarantee by the impugned letter is illegal and without lawful authority.
[Para-10]
Judgment
Mr. Borhanuddin, .J ;- On an application under Article 102 of the Constitution of the People's Republic of Bangladesh, the petitioner obtained this Rule calling upon the respondents to show cause as to why the impugned office Memo bearing Nothi. No.1 (1) Shu: Nee & Baal99 (Part-) /603 dated 9.10.2005 (Annexure-A) and the letter bearing Nothi No. 990/AP/Section-8(A)/0405 dated 10.8.2006 (Annexure-A-I) seeking encashment of Bank Guarantee No. LG/ TBL/DMN/l8/2005 dated 14.5.2005 for an amount of Tk.I,88,44,726.00 and Bank Guarantee No.LG/TBL/DMN/l9/2005 dated 15.5.2005 for an amount of Tk.1,99,300.57 (Annexure-H and H-I) issued by the respondent No.5 and furnished by the petitioner should not be declared to have been issued without lawful authority and is of no legal effect and why they should not be directed to obtain expert opinion to release the Bank Guarantees dated 14.5.2005 and 15.5.2005 upon final assessment of the consignment imported under L.C. No.153905010059 dated 26.1.2005 issued by the Prime Bank Limited (Annexure-B) or such other or further order or orders passed as to this Court may seem fit and proper.
2. Short facts necessary for disposal of the Rule are that the petitioner is a Private Company Limited incorporated under the laws of Bangladesh and engaged in the business of manufacturing float glass. The petitioner Company is the largest float glass manufacturing unit in Bangladesh. The petitioner opened a letter of credit on 26.01.2005 for importing TIN INGOT for Float Glass Plant as part of Capital Machinery under H.S. Code No.8007 .00.20. After arrival of the goods, petitioner through his clearing agent submitted Bill of Entry bearing No.C-95218 dated 7.04.2005 declaring the description of the machinery component with a view to take delivery on payment of duties and taxes in accordance with the provisions of SRO 158- Law/2000/l839/shulka dated 8.6.2006. When the petitioner's clearing agent went to collect the Bill of Entry for payment of duties and taxes in accordance with law, the petitioner was astonished to learn that the respondents most arbitrarily and without any objective basis identified the imported machinery component as raw materials and imposed a higher rate of duty. Thereafter, petitioner submitted an application on 22.3.2005 before respondent No.1 explaining the nature of the machinery component and sought clearance of TIN INGOT as part of machinery under the provision of SRO 158 dated 8.6.2000. The respondent No.1 vide letter dated 5.4.2005 directed respondent No.3 to release the imported machinery component subject to obtaining opinion from expert committee consisting of representatives from BUET and the concerned Customs House. Thereafter the petitioner submitted an application on 2.5.2005 seeking a direction from respondent No.1 for release of the imported TIN INGOT upon furnishing an indemnity bond subject to obtain expert opinion from BUET. Thereafter, respondent Nos. l and 2 vide letter dated 5.5.2005 allowed the petitioner to release the imported TIN INGOT as part of capital machinery on condition that upon installation of all the machineries' spare parts, a field survey would be carried out and expert opinion would be obtained. On the basis of the field survey and the expert opinion, the Customs Authority will make final assessment under the provisions of law. Accordingly the petitioner furnished bank guarantees and respondent No.3 released the imported goods on the basis of provisional assessment. After the provisional assessment, the respondents did not take any step in accordance with memo dated 5.4.2005 and 5.5.2005. All of a sudden. the petitioner came to learn that respondent No.3 asked respondent No.5 to encash the bank guarantee furnished by the petitioner vide letter dated 10.8.2006 pursuant to memo dated 9.10.2005 issued by the respondent No.1 addressed to the respondent No.3. Against the said letter for encushment of Bank Guarantee pursuant to said office memo. the petitioner moved this Court and obtained the Rule.
3. In the midst of hearing, the petitioner filed a supplementary-affidavit stating that subsequent to issuance of the Rule in the instant Writ Petition, the Department of Mechanical Engineering of the Bangladesh University of Engineering and Technology (BUET) furnished report in February, 2007 at the instance of the writ petitioner stating that the imported TIN INGOT is part of the capita] machinery of the petitioner's glass plant.
4. Mr. Sayed Qumrul Hossain, the Assistant Attorney-General, filed power on behalf of respondent No.3 i.e. the Commissioner of Customs, Customs House, Chittagong, and filed an affidavit-in-opposition stating inter alia, that the expert opinion is not mandatory because the petitioner failed to submit expert opinion within the stipulated time i.e. within 6 months and the final assessment by the Customs Authority is in accordance with law. The respondent No.3 further contended that the petitioner could avail alternative forum.
5. Mr. Tanzib-ul-Alam, the learned Advocate appearing on behalf of the petitioner submits that after releasing the goods upon furnishing the bank guarantee the respondent No.3 did not take any step to obtain expert opinion within 6 months as contemplated in memo dated 5.4.2005 and 5.5.2005 and the petitioner never received any notice of final assessment. He further submits that the issuance of the impugned memo and letter for encashment of the bank guarantees without any opinion from expert committee and without any prior notice of final assessment is without lawful authority and is of no legal effect. He further submits that the respondents are estopped from seeking encashment of the bank guarantees furnished by the petitioner under the promissory estoppel as the petitioner had furnished the bank guarantee, relying, on the promise that the respondents would encash the bank guarantee on the basis of expert opinion. He lastly, submits that the encashment of bank guarantee without final assessment is contrary to Section 81 of the Customs Act.
6. Relying on the Supplementary Affidavit, the learned Advocate for the petitioner submits that the report of an expert from BUET categorically stated that the imported TIN INGOT is part of the capital machinery of the petitioner's glass factory. This statement of the expert report is not controverted by the Customs Authority and as such, the Uncontroverted statement could be taken into consideration for disposal of the Rule.
7. On the other hand, the learned Assistant Attorney-General in support of his affidavit-in opposition submits that the petitioner failed to obtain expert opinion within the stipulated 6 months and as such, impugned memo and letter for encashing the bank guarantee are in accordance with law .
He further submits that there is alternative forum to redress the grievance of the petitioner but since he could not point out as to which alternative forum is open for the petitioner, he did not press this point.
8. Heard the learned Advocates and perused the writ petition, supplementary-affidavit along with all annexures appended thereto and affidavit-in-opposition.
9. It is evident from the annexures that the petitioner furnished Bank Guarantees on condition that a field survey would be carried out after installation of the imported goods and an expert opinion by the expert committee consisting of representatives from BUET and respective Customs House will be obtained by the Commissioner of Customs and on the basis of the said expert opinion the bark guarantees will be dealt with in accordance with law, On perusal of the Annexure-F, it appears that the said memo in Clause-2 imposed a condition in the following manner:
(ii ) Avg`vbxK…Z hš¿vsk I Ab¨vb¨ gvjvgvj Lvjv‡mi 06 gv‡mi g‡a¨ h_vh_fv‡e ¯’'v‡b ¯’'vwcZ n‡q‡Q wKbv Ges hš¿vs‡ki cwigvb g~j hš¿cvwZi 10% g~j¨ mxgvi g‡a¨ i‡q‡Q Kxbv †m wel‡q evsjv‡`k cÖ‡KŠkj wek¦we`¨vjq (BUET) Ges mswkøó ïé feb Gi cÖwZwbwai mg¤^‡q MwVZ KwgwUi we‡klÁ gZvgZ (Capital Machinery I Space ) Gi c"_K ZvwjKvmn mswkøó Kwgkbvi Ae Kvógm msMÖn Ki‡eb|Ó
So, from a reading of the aforesaid clause it appears that the committee of experts was supposed to be constituted consisting of representatives from BUET and concerned Customs House who would give opinion within 6 months and the said opinion was supposed to be collected by the concerned Commissioner of Customs. But in the present case, it appears that the Customs Authority failed to obtain any expert opinion within the stipulated time rather on 9.10.2005 the Board ignoring the conditions of the memos dated 05.04.2005 and 05.05.2005 respectively (Annexures-F and G-l to the writ petition) directed the Commissioner of Customs, Customs House, Chittagong to make final assessments. Pursuant to that order after passage of I (one) year i.e. 10.08.2006, the Commissioner of Customs, Customs House, Chittagong directed to the Banker of the petitioner to encash the bank guarantee without making any final assessment on the basis of their decision dated 05. 04.2005 Annexure-F and dated 05.05.2005 Annexure-G-I, which is totally beyond the scope of law as provided under Section 81 of the Customs Act, and also in violation of the aforesaid two memos issued by respondents.
10. Since the Customs Authority was duty bound under memos dated 5.4.2005 and 5.5.2005 to obtain an expert opinion from a committee consisting of representatives from BUET and concerned Customs House and the Commissioner of Customs did not take any step to that effect and Since they have failed to assess the goods finally under Section 81(2) of the Customs Act, we are of the view that the impugned orders dated 09.10.2005 and 10.8.2006 Annexure-A and Annexure-A-I have been issued without any lawful authority and as such, direction for encashment of the Bank guarantee is illegal. Section 81 (2) of the Customs Act categorically says that the final assessment is to be made within 150 working days from the date of release of the goods on the basis of provisional assessment and since more than 180 days have passed after provisional assessment made on 17.5.2005, the Customs Authority under no circumstances can ask for encashment of the bank guarantee. Thus, since the respondents failed to obtain an expert opinion and since the respondents failed to assess the goods finally within 150 working days from the date of provisional assessment the order for encashment of the bank guarantee by the impugned letter is illegal and without lawful authority.
11. On perusal of the Supplementary Affidavit, it appears that an expert from the Department of Mechanical Engineering of BUET visited the factory of the petitioner and opined that the tin ingot imported by the petitioner is being used in the factory as a part of capital machinery of the petitioner's glass plant. Though the report has been obtained at the instance of the petitioner but the respondents did not raise any objection nor made any statement in the Affidavit-in opposition controverting the report.
Thus, we find merit in the Rule. Accordingly, the Rule is made absolute. The impugned office (memo bearing Nothi No. NI) Shu: Nee & Baa/99(Part-1)/603 dated 9.10.2005 and letter bearing Nothi No.9901 AP/Section-8(A)/04-05 dated 10.8.2006 Annexure-A and A-(1) respectively are declared to have been issued without lawful authority and of no legal effect.
12. Since by now 2(two) years have already passed after issuance of the Rule and since there is no scope at this stage for making any final assessment under section 81(2) of the Customs Act and since an expert opinion has already been obtained, we refrain from making any comment relating to second part of the Rule.
13. Under such circumstances, the respondents are directed to release the bank guarantee No. LG/TBL/DMN/18/2005 dated 14.5.2005 for an amount of Tk. l,88,44,726.00 and Bank Guarantee No.LG/TBL/DMNI19/2005 dated 15.5.2005 far in amount of Tk.1,99,300.57 (Annexure-H and H-l) issued by the respondent No.5 and furnished by the petitioner, within 30(thirty) days from the date of receipt of this order.
There will be no order as to costs.