IN THE SUPREME COURT OF PAKISTAN 
(APPELLATE JURISDICTION) 
 
 
PRESENT: MR. JUSTICE MIAN SAQIB NISAR 
 
 
MR. JUSTICE FAISAL ARAB 
 
 
MR. JUSTICE IJAZ UL AHSAN 
 
 
CIVIL APPEAL NO.450 OF 2010 
(Against the order dated 18.3.2010 of 
the High Court of Sindh at Karachi 
passed in C.P.No.D-777/2008) 
 
 
Collector of Customs Appraisement, Collectorate, Customs House, Karachi 
 
…Appellant(s) 
VERSUS 
M/s Gul Rehman, Proprietor M/s G. Kin Enterprises, Ghazali Street, Nasir 
Road, Sialkot 
 
…Respondent(s) 
 
For the appellant(s): 
Raja Muhammad Iqbal, ASC 
 
 
For the respondent(s): 
Mr. Azhar Maqbool Shah, ASC 
Mr. Ahsan Hameed Lilla, ASC 
 
 
Date of hearing: 
25.11.2016 
… 
ORDER 
 
 
MIAN SAQIB NISAR, J.- This appeal with the leave of the 
Court turns on whether the respondent is entitled to the refund of customs 
duty paid (along with the penalty), when, as per the case of the appellant the 
respondent was required to prove that the incidence of customs duty had 
not been passed onto the consumer in terms of the provisions of Section 
19A of the Customs Act, 1969 (the Act), which it failed to do. 
2. 
 
The facts are that the respondent is an importer of fabrics and 
it made a declaration in the bill of entry that the imported goods were 
covered by heading 5407.5200, attracting 14% customs duty. The 
department controverted this declaration and claimed that instead the 
correct PTC heading would be 5903.1000, on which 25% customs duty was 
payable. Pursuant to a show-cause notice, an order-in-original dated 
3.7.2006 was passed in which the latter heading was held to be applicable 
Civil Appeal No.450 of 2010 
-: 2 :-
and the imported consignments were confiscated, an additional penalty was 
imposed and the respondent was given the option under Section 181 of the 
Act to redeem the confiscated goods on payment of a fine. In order to get 
the consignments released the respondent made the requisite payments but 
simultaneously assailed the order-in-original before the Collector of 
Customs, Sales Tax & Federal Excise (Appeal) [Collector (Appeals)] who, vide 
order dated 8.12.2006, accepted the plea of the respondent and determined 
that the appropriate heading was indeed 5407.5200 and there was no mis-
declaration by the respondent. The department has admitted before us 
today that they did not challenge this order and thus for all intents and 
purposes it attained finality. Be that as it may, on account of the favourable 
order of the Collector (Appeals) the respondent sought refund of the amount 
paid by it on the basis of the order-in-original dated 3.7.2006. The 
department declined to refund the said amount. Instead, vide another 
order-in-original dated 5.3.2008 the department held that as the incidence 
of the duty had been passed onto the consumer by the respondent 
therefore it was not entitled to any refund in terms of Section 33 and 19A of 
the Act. This order was successfully assailed by the respondents through a 
constitutional petition filed before the learned High Court of Sindh, 
resulting in the impugned judgment. Leave in this case was granted vide 
order dated 30.6.2010, however it is important to note that in the same 
order an admission on behalf of the learned counsel for the appellant was 
recorded in the following terms:- 
 
“Raja Muhammad Iqbal, learned ASC for the petitioner 
contends that the petitioner department has no cavil to the 
classification of PTC heading made by appellate court of 
Collector of Customs in its order dated 8.12.2006.” 
Civil Appeal No.450 of 2010 
-: 3 :-
The only plea taken at the time of granting leave and which prevailed with 
this Court was whether the amount paid by the respondent could be 
refunded according to the mandatory provisions of Section 19A of the Act 
when the incidence of the duty had been passed onto the end consumer.  
3. 
 
Learned counsel for the appellant, referring to Section 33 of the 
Act, argued that the proviso contained therein is clear, which states that, 
“Provided that no refund shall be allowed under this section if the sanctioning authority is 
satisfied that incidence of customs duty and other levies has been passed on to the buyer or 
consumer”. In this context he stated that according to Section 19A of the Act, 
it was for the importer to prove that the incidence of duty had not been 
passed onto the consumer, thus, by virtue of this strict liability, the burden 
was on the respondent to prove the same, in the absence of which it would 
be presumed that the incidence of duty had been passed onto the 
consumer. Hence refund was impermissible under the law. 
4. 
 
Heard. We find that Section 33 of the Act has to be read as a 
whole in order to appreciate the letter and spirit of its proviso. The said 
section reads as under:- 
 
“33. 
Refund to be claimed within one year.-(1) No refund 
of any customs-duties or charges claimed to have been paid or 
over-paid through inadvertence, error or misconstruction 
shall be allowed, unless such claim is made within one year of 
the date of payment: 
 
 
Provided that no refund shall be allowed under this 
section if the sanctioning authority is satisfied that incidence 
of customs duty and other levies has been passed on to the 
buyer or consumer. 
 
Civil Appeal No.450 of 2010 
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(2) 
In the case of provisional payments made under 
section 81, the said period of one year shall be reckoned from 
the date of the adjustment of duty after its final assessment. 
 
(3) 
In the case where the refund has become due in 
consequence of any decision or judgment by any appropriate 
officer of Customs of the Board or the Appellate Tribunal or 
the Court, the said period of one year shall be reckoned from 
the date of such decision or judgment, as the case may be.”  
 
5. 
 
Thus it is clear from the language of Section 33(1) that refund 
in terms thereof is to be allowed only where/if customs duty has been paid 
as a result of some inadvertence, error or misconstruction, which is not the 
position in the present matter. Right from the beginning the respondent has 
agitated that the declaration made by it under PTC heading 5407.5200 was 
correct. There was no inadvertence, error or misconstruction involved in 
such declaration whereas it has been the stance of the department that this 
heading was incorrectly attributed to the goods. This issue was conclusively 
resolved by the Collector (Appeals) vide its order dated 8.12.2006 in favour 
of the respondent, which, as mentioned earlier, has attained finality.  
6. 
 
Before proceeding further, we find it pertinent to discuss the 
purpose and scope of a proviso; in relation to the arguments submitted 
before us in respect of the proviso to Section 33(1) of the Act. Generally a 
proviso is an exception to or qualifies the main provision of law to which it 
is attached.1 Its purpose is to qualify or modify the scope or ambit of the 
matter dealt with in the main provision, and its effect is restricted to the 
particular situation specified in the proviso itself.2 Further, it is a settled 
                                       
1 Per Anwar Zaheer Jamali, J in Dr. Muhammad Anwar Kurd and 2 others Vs. The State through Regional 
Accountability Bureau, Quetta (2011 SCMR 1560). 
2 Interpretation of Statutes (11th Ed.), N. S. Bindra. 
Civil Appeal No.450 of 2010 
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canon of interpretation that a proviso is to be strictly construed3 and that it 
applies only to the particular provision to which it is appended4. Whilst 
holding that a proviso is limited to the provision which immediately 
precedes it, Shafiur Rahman, J, in a four member judgment of this Court 
reported as K.E.S.C. Progressive Workers’ Union through its Chairman 
and others Vs. K.E.S.C. Labour Union through its General Secretary 
and others (1991 SCMR 888) cited with approval, inter alia, the following 
principles:- 
 
“(i) 
Wilberforce on Statute Law, page 303: 
"A proviso is of great importance when the Court has to 
consider what cases come within the enacting part of a 
section and it is always to be construed with reference to 
the preceding parts of the clause to which it is appended." 
 
(ii) 
Maxwell on the Interpretation of Statutes. Twelfth 
Edition by P. St. J. Langan, page 189: 
"It will, however, generally be found that inconsistencies 
can be avoided by applying the general rule that the words 
of a proviso are not to be taken "absolutely in their strict 
literal sense," but that a proviso is "of necessity ...limited 
in its operation to the ambit of the section which it 
qualifies". 
 
(v) 
The Construction of Statutes by Earl T. Crawford, 
page 605: 
"As a general rule, however, the operation of a proviso 
should be confined to that clause or portion of the statute 
which directly precedes it in the statute".” 
(Emphasis supplied) 
 
                                       
3 Sh. Liaquat Hussain and others Vs. Federation of Pakistan through Ministry of Law, Justice and 
Parliamentary Affairs, Islamabad and others (PLD 1999 SC 504). 
4 Per Hamoodur Rahman, J in Pramatha Nath Chowdhury and 17 others Vs. (1) Kamir Mondal, (2) Ismail 
Mondal, (3) Baju Mondal alias Hagura Mondal and (4) Dukha Mondal (PLD 1965 SC 434). 
Civil Appeal No.450 of 2010 
-: 6 :-
Therefore the proviso to Section 33 has to be confined to the particular sub-
section to which it is attached, i.e. sub-section (1), and if the case does not 
fall within the purview of such sub-section in that the customs duty was 
not paid as a result of inadvertence, error or misconstruction then 
obviously the proviso would not be relevant. Before a proviso can have any 
application, the section itself must apply. A holistic reading of Section 33 of 
the Act, particularly the provisions of sub-section (3), clarifies that where a 
refund becomes due as a result of any decision or judgment passed by a 
customs officer, Appellate Tribunal etc., the proviso to sub-section (1) 
would not be applicable because no such proviso is attached to sub-section 
(3), meaning thereby that the refund has to be made notwithstanding the 
fact that the incidence of customs duty had been passed onto the customer 
and therefore Section 19A of the Act would not be attracted. Resultantly we 
do not find any merit in this appeal which is accordingly dismissed. 
 
 
 
 
 
JUDGE 
 
 
 
 
JUDGE 
 
 
 
 
JUDGE 
Bench-I 
Islamabad, the 
25th November, 2016 
Approved For Reporting 
Ghulam Raza/*