The Lahore High Court has held that motor spirit cargoes that reached Pakistan before SRO 806(I)/2022 are not liable to pay a 10 per cent regulatory duty. In dismissing two intra-court appeals by the Customs Collectorates in Lahore and Faisalabad, a division bench confirmed an earlier single-judge ruling in favour of Shell Pakistan Limited and directed Customs to release bank guarantees lodged against the disputed motor spirit cargo duty.
What the court decided
Justices Abid Aziz Sheikh and Munawar Iqbal Duggal upheld the April 27, 2023 judgment that had favoured the company. The bench’s order requires Customs authorities to free the bank guarantees Shell Pakistan furnished for the contested levy. The dispute turned on whether arrivals before the SRO could escape the 10 per cent charge once clearance and related steps took place later.
How SRO 806 framed the exemption
SRO 806 imposed a 10 per cent regulatory duty on motor spirit but carved out cargoes for which letters of credit had already been opened or which were still on the high seas. The notification stayed in force until June 30, 2022; after that, SRO 966(I)/2022 brought in a fresh levy. Counsel for Customs, Rana Muhammad Mehtab and Sultan Mehmood, argued that SRO 806 had expired before the cargoes were cleared, that no LCs had been opened, and that the Sindh High Court’s approach in Hascol Petroleum Limited v. Federation of Pakistan should apply.
Khwaja Aizaz Ahsan, for the company, said the notification offered two alternative exemption routes and that the cargoes met the second: they had not only entered Pakistani waters but had also berthed well before June 20, 2022. He said Customs had not challenged the berthing dates and that the Hascol matter rested on different facts.
Why the bench rejected Customs’ reading
The court treated the word “or” as disjunctive, so the two conditions were alternative grounds for exemption, not a single combined test. It said it would be unduly literal to spare a cargo still at sea on June 20, 2022 while denying the same relief to an identical cargo that had already berthed, which would punish earlier arrival. The bench distinguished the Hascol case and noted that the Supreme Court, in Euro Oil (Private) Limited v. Federation of Pakistan, had not affirmed the Sindh High Court judgment on the merits. The motor spirit cargo duty dispute in this matter therefore turned on arrival and berthing under SRO 806’s alternative exemption language, not on the Customs reading that treated expiry and the absence of LCs as decisive against Shell.
Timeline: what has happened so far
- Before June 20, 2022: Shell’s disputed motor spirit cargoes arrived and berthed in Pakistani waters, according to the company’s case; Customs did not dispute the berthing dates.
- June 30, 2022: SRO 806(I)/2022 ceased to remain in force; SRO 966(I)/2022 later imposed a fresh levy.
- April 27, 2023: A single LHC judge ruled in favour of Shell Pakistan Limited on the disputed regulatory duty.
- Division-bench stage: Customs Collectorates in Lahore and Faisalabad filed intra-court appeals; the division bench dismissed them and ordered release of the company’s bank guarantees.
Aasan alfaaz mein
Lahore High Court ne kaha hai ke jo petrol (motor spirit) ke cargo Pakistan SRO 806 se pehle aa chuke thay, un par 10 percent regulatory duty nahi banti. Ye faisla Shell Pakistan ke case mein Customs ke appeals kharij karte hue aaya. Court ne Customs ko company ki bank guarantees wapas karne ka hukum diya. Aam logon ke petrol pump ke rate is judgment mein seedha nahi bataye gaye; ye import duty ke dispute ka matter hai.
