Doubtful & Prohibited Commodities

(4- 8) Doubtful & Prohibited Commodities

Question:

What is the Shariah opinion regarding opening of credits to import cigarettes and " Khat plant"?

Answer:

Business transactions on cigarettes are based on Shari'ah opinions concerning cigarettes themselves. Fiqh opinions differed widely over smoking of cigarette since cigarettes have appeared to exist. Shariah opinions ranged between utter prohibition of smoking, abhorrence and permissibility. The most accepted opinion is the general abhorrence. Utter prohibition would be applicable to those whose health condition might be adversely affected by smoking by virtue of a medical report. This includes other damages such as jeopardizing a religious worshiping duty or hampering family obligations. The ruling in disputed matters is guidance and not rejection. Also, the fundamental righteous stand is avoiding the abhorrence unless its avoidance would result into loss of interests which are more important than the subject matter itself, as shown Business transactions on cigarettes are based on Shari'ah opinions concerning cigarettes themselves. Fiqh opinions differed widely over smoking of cigarette since cigarettes have appeared to exist. Shariah opinions ranged between utter prohibition of smoking, abhorrence and permissibility. The most accepted opinion is the general abhorrence. Utter prohibition would be applicable to those whose health condition might be adversely affected by smoking by virtue of a medical report. This includes other damages such as jeopardizing a religious worshiping duty or hampering family obligations. The ruling in disputed matters is guidance and not rejection. Also, the fundamental righteous stand is avoiding the abhorrence unless its avoidance would result into loss of interests which are more important than the subject matter itself, as shown

be dropped if the issue is utterly prohibited. With regard to" Khat plant", opinions of Muslim scholars had

inclined towards its total prohibition with the exception of few scholars from Yemen. Doctors on their side have listed this product as a narcotic. Its adverse effects are proved as its users were hampered from practicing their religious rituals and daily practices particularly after its initial stage. Here, the entailed damage overweighs the benefit required from the bank in favour of the company by importing it particularly that the difference over Khat inclined towards its total prohibition with the exception of few scholars from Yemen. Doctors on their side have listed this product as a narcotic. Its adverse effects are proved as its users were hampered from practicing their religious rituals and daily practices particularly after its initial stage. Here, the entailed damage overweighs the benefit required from the bank in favour of the company by importing it particularly that the difference over Khat

a general service not confined to dealing in "Gat". As such, in reply to the question, there would be no objection in opening a self credit facility to import cigarettes, without importing Khat plant, it is advisable to refrain from such dealing.

Source:

Dallah Al-Barakah Group, Development and research Department, "Religious Answers on Banking Applications", (First Part), fatwa No. (4).

(4-9) Hypothecation of Commodity Sold in Murabaha Mode Question:

Is it permissible for the Islamic bank to involve a commodity sold on Murabaha as a guarantee?

Answer:

Contract is always binding to the contracted parties. If the selling party puts a condition to withhold the commodity until the entire price is paid, it is thus a condition to be honored as a contractual obligation. However, the seller is entitled to withhold the commodity if its price is immediate, but If the payment is on credit, the seller should not withhold the price as he agreed to delay the price but he may mortgage the commodity on fiduciary basis a matter that should be stipulated in the contract until he is repaid the full amount to secure the bank's right as the fiduciary mortgage does not prohibit the owner to dispose of his property until the price is recovered thereby preserving the bank's right.

Source:

Fatwas of the Shari'ah board of Dubai Islamic Bank, Fatwa No. (22).

(4-10) Damages Resulting from Delay of goods Delivery Question:

You are aware that Murabaha transactions which require an opening of a documentary credit are settled after the goods arrival to Doha port as the client is required to come forward to receive the goods.

Since the bank does not possess any stores, it has been a common practice to receive the goods at the port. It is understood that demurrage and storage charges are levied by the port authorities on goods overstaying in the port premises.

Such practice usually harms us though we have no control to evade the damage particularly if the client delays settlement of his Murabaha transaction and reception of goods consignment.

We therefore propose that a provision be added to the Murabaha contract stating that the demurrage and storage charges should be the buyer's responsibility thereby urging him to receive the goods We therefore propose that a provision be added to the Murabaha contract stating that the demurrage and storage charges should be the buyer's responsibility thereby urging him to receive the goods

Is this practice in conformity with Shari'ah?

Answer

The board opines that Para No. 4, 5 and 7 of Murabaha contract contain a sufficient statement to prevent such harm. Therefore, it is not necessary to include the proposed addition, as Para No. 4 promulgates that delivery shall take place in the port of arrival and Para No. 5 stipulates the buyer undertaking to receive the goods upon arrival and hence would be held liable for delayed delivery and the consequential damages.

Source:

Fatwas of Shari'ah Board of Qatar Islamic Bank, Fatwa No. (32).

(4-11) Delay in Payment of goods Price to the first Seller Question:

A client of the bank desires to buy ready made building materials through opening of a documentary credit, is it permissible for this client (The purchase orderer) and also the consultant authorized by the bank to receive the goods in a good condition before the bank pays the goods value to the seller?

Answer:

It is permissible to defer payment of goods price to the first buyer until the last buyer receives the goods and acknowledges that he received it in a good condition provided that the first sale contract is concluded.

Source:

Fatwas of the Shari'ah Board of Qatar Islamic Bank, Fatwa No. (40).

(4-12) Establishment and Selling of a company on Murabaha basis Question

A customer offered to Al-Rajhi Company to establish a company to buy a number of oil fields and equipment for an amount of 16 million Dollars. It would pump into the company a cash flow amounting to 9 million Dollars. Later, the client would buy this company from Al-Rajhi Company on credit for an amount to be mutually agreed. The concept is that the client is in need of the company as above described since it possesses the assets and the liquidity necessary to develop the assets.

Is such contracting permissible?

Answer

This type of Murabaha falls in the category of Murabha transactions which the Shariah board requested the company to quit them and the company had duly complied with this request.

Source:

Collection of Fatwas of the Shari'ah board of Al-Rajhi Banking & Investment Company, Resolution No. (118).