Customs Act (IV of 1969)‑‑‑

‑‑‑‑S.205‑‑‑Establishment of 'Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.9‑‑‑Amendment of documents‑‑ Application for amendment in bill of entry to classified goods, spindles and Bolsters under H.S. Code 8448.3900 instead of H.S. 8438.3300 on the basis of ruling of Supreme Court and High Court as customs duty was‑10% instead of 20 % on such goods‑‑‑Department contended that judgments related to the classification of Bolsters only whereas in the present case the goods were complete sets consisting of Spindles, Bolsters and knee brakes and complete set of Spindles with Bolsters were appropriately classifiable under heading 8448:3300 leviable to duty at 20%‑‑‑Application was rejected without hearing‑‑‑ Validity‑‑‑ Department had not submitted any previous classification ruling on the subject and the complainant had built his case on the order of the Supreme Court‑‑ Department's contention that the importer had not yet exhausted higher legal forums available under law was not borne out by the fact that even at the original stage an , ex parte decision was taken without affording him proper hearing the two applications submitted by his agent remained unanswered, and the complainant was faced with a fait accompli, the ruling of the apex Court notwithstanding‑‑‑Complainant did not receive any document against which he could file an appeal or on basis whereof he could approach the unexhausted legal forums‑‑‑Federal Tax Ombudsman recommended that the Member (Customs), Central Board of Revenue to examine the case, provide opportunity of hearing to the importer, and decide the classification under intimation to the importer within one month; (ii) ensure payment of consequential refund of duty and taxes, if any.

Gulshan Spinning Mills Limited v. Government of Pakistan 1992 CLC 1579 ref.

Afzal Awan and Saeed Mustafa Mirza, Law Officer for the Complainant.

Ashhad Jawwad, Deputy Collector of Customs (Appraisement) for Respondent.

FINDING/DECISION

The complaint relates to the refusal of the Customs Authorities to accede to the request of the complainant to allow, under section 205 of the Customs Act, amendment in the bill of entry to read classification of goods Spindles and Bolsters under H.S. Code 8448.3900 instead of H.S. 8438.3300 for implementation of the classification as determined in the judgment of the High Court, of Sindh upheld by the Supreme Court.

2. The complainant stated that he imported a consignment of Spindles and Bolsters from China, filed bill of entry for home consumption (Cash No.3588 dated 12‑12‑2001) and inadvertently claimed the assessment of goods under PCT heading 8448.3300. Later he learnt that the customs duty on Bolsters was 10 % instead of 20 % and the goods were classifiable under H.S. Code 8448.3900 on the basis of the ruling of the Supreme Court and High Court of Sindh in the case of Gulshan Spinning Mills Limited v. Government of Pakistan (1992 CLC 1579). When the bill of entry was referred to the Deputy Collector of Customs (Sheds), he too gave the opinion on the file that the goods were classifiable under H.S. Code 8448.3900 in the light of Supreme Court's decision and confirmed that the consignment contained Spindles and Bolsters. The Customs (Assessing) Authorities did not agree with this opinion and assessed duty and taxes adversely.

3. An application (dated 10‑11‑2001) under section 205 of the Customs Act, was submitted to the appropriate officer of the customs for the amendment of the bill of entry but the application was turned down. The refusal of the Customs Authorities to amend the classification of goods amounted to maladministration within the meaning of section 2(3) of the Establishment of office of Federal Tax Ombudsman Ordinance, 2000. The decision was contrary to law, rules and practice. The principle of law enunciated by Supreme Court and the High Court was (a) binding force on all citizens and defiance from its implementation was tantamount to maladministration. The complainant requested that the recommendation for the implementation of the judgment of the Supreme Court be issued and the refund of excess duty recovered by the Customs Authorities be ordered.

4. The Department replied to the complaint that the judgment of the Honourable Supreme Court based on the judgment of the Honourable High Court was not applicable in this case because the facts mentioned in the judgment were different from the facts of this case. The judgment related to the classification of Bolsters only whereas in this case the goods were complete sets consisting of Spindles, Borsers and knee brakes. According to rule 2(a) of Rules of Interpretation of the Harmonized System, the goods i.e. complete. sets of Spindles with Bolsters were appropriately classifiable under heading 8448.3300 livable to duty at 20 %.

5. The Deputy Collector of Customs (Sheds) had only confirmed in his report that "the Bolster or spindle holder are to be covered under PCT heading 8448.3900" whereas "Spindle is specified under PCT heading 8448.3300". When the Clearing Agent requested for change of PCT heading in the light of the High Court judgment, the matter was examined and it was decided that the judgment was in respect of classification of Bolsters. The request of the importer was not based on fact/merit of the case, the amendment in the PCT classification from 8448:3300 Q 20% duty to PCT 8448.3900 for 10% Customs Duty was not permissible and the action taken by the Customs Department was within the ambit of law. Accordingly the bill of entry was processed @ 20% customs duty. The importer had not yet exhausted the higher legal forums for redressal of his grievances.

6. The Department's case is based on three arguments. Firstly, the Supreme Court's judgment was not applicable in this case as it referred to the classification of Bolsters only whereas the goods tender reference were complete sets consisting of Spindles with Bolsters and knee brake. Secondly, according to Rule 2(a) of interpretation, complete Spindles are appropriately classified under PCT heading 8448.3300 at 20% customs duty. Thirdly similar goods were processed/assessed under PCT heading 8448.3300 as also shown in three evidential bills of entry and confirmed in the Javaid Umar Enterprises letter dated 7‑12‑2001, copies enclosed with the reply.

7. During the hearing of the complainant, the learned Advocate representing the complainant invited reference to the decision of the High Court upheld by Supreme Court about classification of the Bolsters under 8448.3900 and stated that, with reference to the Rules of Interpretation, the interpretation favourable to the importer was to be accepted. He argued that the superior Courts had clearly held that Bolsters were covered by PCT 8448.3900. The importer's clearing agent had submitted two applications dated 10‑11‑2001 and 28‑11‑2001 requesting for amendment of the PCT heading in the bill of entry but the Customs Authorities assessed the goods on 29‑11‑2001 without accepting the request. He again referred to the examination report given by the Deputy Collector that PCT heading 8448.3300 covered only the parts specifically mentioned in this heading and all other parts were to be classified under 8448.3900.

8. The learned Advocate stated that Spindles and Bolsters were two independent parts of the spindle‑frame whether imported separately or together. If a spindle was damaged or became inoperative it would be changed without changing the bolster. He argued that the illegal practice of classifying Bolsters with the Spindles in .the previous imports should not overrule the law as interpreted by the highest judicial forum.

9. The complainant sent two applications to the Customs for amendment in the bill of entry but did not receive any reply. This was basically a classification problem and a ruling should have been issued after giving the importer the opportunity to represent his case. The department has not submitted any previous classification ruling on the subject and the complainant has built his case on the order of the Supreme Court. The Department's contention that the importer has not' yet exhausted higher legal forums available under law is not borne out by the fact that even at the original stage an ex parte decision was taken without affording him proper hearing, the two applications submitted by his agent remained unanswered, and the complainant was faced with a fait accompli, the ruling of the apex Court notwithstanding. He did not receive any document against which he could file an appeal or on basis whereof he could approach the so‑called unexhausted legal forums.

10. In view of the foregoing, it would be appropriate if the classification of Spindles and Bolsters was decided by the C.B.R. It is recommended that‑‑

(i) the Member ('Customs), C.B.R., examine the case, provide opportunity of hearing to the importer, and decide the classification under intimation to the importer within one month;

(ii) ensure payment of consequential refund of duty and taxes, if any; and

(iii) report compliance within forty‑five days.

C.M.A./M.A.K./406/FTOOrder accordingly.