(a) Customs Act (IV of 1969)‑‑‑

‑‑‑‑S.32‑‑‑Untrue statement, error etc‑‑‑Applicability of S.32‑‑‑Scope‑ Provision of S.32, Customs Act, 1969 relates to a situation where a person makes any statement or files any document which is false in any material particular by reason of which any duty or charge is not levied or is short levied or, is refunded‑‑‑Customs Authority is empowered to issue to the person concerned a notice to show cause as to why he should not pay the loss of revenue suffered by the Department and after giving him a hearing, beside any other action under law, may order for payment of the same, if a case is made out‑‑‑Entire provision of S.32, Customs Act, 1969 revolves around the central point of loss of revenue suffered by the Customs Department on account of conduct of may person‑‑‑If the Department has not suffered any loss on account of the conduct of the importer, the question of applicability of S.32 of the Customs Act, 1969 does not arise.

(b) Customs Act (IV of 1969)‑‑‑

‑‑‑‑Ss.16, 32 & 156(1), Cls.(9), (14)‑‑‑Imports and Exports (Control) Act (XXXIX of 1950), S.3(1)‑‑‑Negative List of the Import, Trade and Procedure Order, 2001‑2002‑‑‑Import of RBD Palm Oil‑‑‑Collector of Customs issued show‑cause notice to the importers, inter alia, under Ss.16 & 32, Customs Act, 1969 read with S.3(1) of the Imports and Exports (Control) Act, 1950 on the ground that imported RBD Palm Oil did not meet the prescribed PSI Standards for Palm Oil Edible Grade (for cooking purpose) and was not fit for human consumption and after giving an opportunity of hearing to the importers found them guilty of violation of Ss.16 & 32 of the Customs Act, 1969 prohibiting import of goods falling within the Negative List of the Import, Trade and Procedure Order, 2001‑2002 and ordered outright confiscation of all the consignments of RBD Palm Oil in terms of S.156(1), Cls (9) & (14) of the Customs Act, 1969 read with S.3(iii) of the Imports and Exports (Control) Act, 1950‑‑‑Validity‑‑‑Held, in view of the conflicting reports from the Customs House Laboratory, four of which were in favour of the importers and one against them and in the presence of the reports of PCSIR & HEJ Institute of Chemistry in favour of the Importers, they had imported RBD Palm Oil of edible grade‑‑‑When the import of RBD Palm Oil was permissible, contention that RBD Palm Oil in question which according to Customs Laboratory Report was not fit for human consumption fell within the description of Cl. H‑1 of the Banned Items described as "any edible oil product not fit for human consumption and could not be imported" was repelled‑‑‑When the import of RBD Palm Oil was allowable, its import could not be prohibited by a Notification by describing the same as a product not fit for human consumption which product after due process and treatment could be made fit for human consumption and which allegedly had always been, the, procedure followed in the past‑‑‑Clause H‑1 of the Banned Items, therefore, had to be read harmoniously so as to comply with the legal requirements of law and at the same time not to cause any impediment in the business activities and revival of the economy‑‑‑Importers, in view of apprehension expressed by the Department that the goods in present form were not fit for human consumption and ought not be released in the public interest, categorically assured that the imported RBD Palm Oil in question shall be sold after proper treatment/process and adding Vitamin A etc. to bring the same within the PSI standards‑‑‑High Court, in circumstances, allowed the appeal of importers in terms of seven conditions specified in the judgment.

(c) Interpretation of statutes‑

‑‑‑‑ Every provision of law must be construed in harmony with the other provisions of law so as to avoid any conflict.

(d) Customs Act (IV of 1969)‑‑

‑‑‑‑S.199‑‑‑West Pakistan Pure Food Ordinance (VII of 1960)‑‑‑Process to take samples of goods‑‑‑Scope‑‑‑Import of RBD Palm Oil‑‑‑Customs Officer is empowered to take samples of goods on the entry, clearance or at any time the goods are being passed though the customs area for examination or testing to ascertain the value thereof and in case of goods intended for consumption as food if he is authorised by a general or special order of the Provincial Government‑‑‑Where the department had failed to produce or refer to any general or special order authorizing the Department to take samples of RBD Palm Oil under the provisions of West Pakistan Pure Food Ordinance, 1960 or any other statute, provisions of S.199, Customs Act, 1969 would not in any way authorise the Customs Officer to confiscate the goods under the West Pakistan Pure Food Ordinance, 1960, if the sample did not meet the PSI Specification‑‑‑Principles.

Collector of Customs v. Batala Ghee Mills (Pvt.) Ltd. C. P. No.288‑K of 2000 fol.

(e) Customs Act (IV of 1969)‑‑‑

‑‑‑‑S.32‑‑‑Negative List of the Import, Trade and Procedure Order, 2001‑2002, Cl. H‑1‑‑‑Import of RBD Palm Oil‑‑‑If any product which in its‑ imported or raw form is not fit for human consumption but can be made fit for human consumption after carrying out the due treatment/process in Pakistan, would not fall in the Negative List and would not be covered by S.32, Customs Act, 1969.

Sohail Muzaffar for Petitioners (in Sp. Customs Appeal No.78 of 2002 and others).

Mazhar, Imtiaz Lari for Petitioners (in Sp. Customs Appeal No. 153 of 2002 and others).

Raja Muhammad Iqbal alongwith Abdul Majeed, Principal Appraiser for Respondents.

Date of hearing: 17th October, 2002.

JUDGMENT

S. AHMED SARWANA, J.‑‑‑‑The above Appeals are being disposed of by this common order as the facts and points of law involved are common. The basic facts which are not disputed are as follows:‑‑‑

The, appellant in Special Customs Appeal No.78 of 2002 imported 297.000 MT of RBD Palm Oil which arrived at Karachi on M.T. STOLT SPRAY. Other appellants also imported various quantities of RBD Palm Oil by the same tanker, thus the total quantity which arrived in bulk by the aforesaid tanker was 4956.157 MT. The clearing agents of the appellants filed Into‑Bond Bill of Entry for warehousing their respective cargoes in their off‑short Oil Terminals. On arrival tanker samples of the goods were drawn for laboratory test/analysis by Custom House Laboratory and HEJ Research Institute of Chemistry, University of Karachi. According to the Customs Authorities, the Test Reports of both the laboratories showed that the imported goods did not meet the specifications of Palm Oil Edible Grade prescribed by Pakistan Standards Institution (PSI) rendering it unfit for human consumption and as such the inedible product fell under the Negative List of the Import, Trade and Procedure Order, 2001‑2002. Therefore, the Collector of Customs (Port Qasim) respondent No.1 issued a show‑cause notice, inter alia, under sections 16 and 32 of the Customs Act, 1969 read with section 3(i) of the Imports and Exports (Control) Act, 1950 and after giving an opportunity of hearing to the appellants found them guilty of violation of sections 16 and 32 of the Customs Act, 1969 and section 3 of the Imports and 'Exports (Control) Act, 1950 prohibiting import of goods falling within the Negative List of the Import, Trade and Procedure Order, 2001‑2002 and ordered outright confiscation of all the consignments of RBD Palm Oil in terms of Clauses (9) and (14) of section 156(1) of Customs Act, 1969 read with section 3(iii) of Imports and Exports (Control) Act, 1950. Being aggrieved by the aforesaid Order, the appellants filed appeals before the Customs, Excise and Sales Tax Appellate Tribunal, Karachi Bench which dismissed all the appeals by Order, dated 8‑5‑2002; hence this Special Customs appeals under section 196 of the Customs Act, 1969.

The appellants alongwith their appeals have filed, among others, laboratory Reports of Lotus Laboratory Services (M) SDN BHD of Malysia, Paramount Testing Laboratory Karachi and Pakistan Council of Scientific and Industrial Research Karachi (PCSIR) while the respondents have filed Reports of the Custom House Laboratory and HEJ Research Institute of Chemistry, University of Karachi.

Mr. Sohail Muzaffar, learned counsel for the appellants in Special Customs Appeal No.78 of 2002 and others appeals urged as follows:‑‑

(i) Section 32 of the Customs Act, 1969 does not apply to the present case as the appellants have not made any misdeclaration or a false statement in any material particular as a result of Which any duty or charge has not been levied or has been short levied. In short there has been no loss or evasion of any revenue by filing Bill of Entry for import of RBD Palm Oil by the appellants.

(ii) The alleged Laboratory 'Reports cannot be made the basis of action under section 32 of the Customs Act.

(iii) RBD Palm Oil is being imported in Pakistan in the present form for the last several years which after proper treatment in the factory is brought to the PSI Standards and thereafter sold in the market and consequently the appellants have not imported any banned item specified in the Negative List of Import, Trade and Procedure Order, 2001‑2002.

Mr. Mazhar Lari, learned counsel for the appellants in Special Customs Appeal No. 153 of 2002 and other appeals added that according to.. Customs House Laboratory Reports of the analysis of the goods, the values are within the limits of PSI Specifications No.1561/83 of RBD Palm Oil of edible grade and all proceedings by the Collector of Customs (respondent No. 1) are without jurisdiction, mala fide and of no legal effect.

In reply, Raja Muhammad Iqbal, learned counsel for the respondents, submitted as follows:‑‑‑

(i) According to the Report of the Customs Laboratory the imported RBD Palm Oil does not meet the prescribed PSI Standards for Palm Oil Edible Grade (for cooking purpose) as the FFA (Free Fatty Acid) is higher than the allowed limits; it is, therefore, not fit for human consumption and by virtue of Clause H‑1 inserted in the Negative List by Notification No. S.R.O. 27(I)/2001, dated 11‑1‑2001 any edible product not fit for human consumption' falls within the Banned Items and cannot be imported in Pakistan and, as such, the appellants clearly violated the provisions of section 32 of Customs Act read with the provisions of the Imports and Exports (Control) Act, 1950.

(ii) Because the RBD Palm Oil does not meet the PSI Standards, the appellants can be proceeded against for knowingly making a false statement and punished therefore under section 32 of the Customs Act.

We have heard the arguments of Mr. Sohail Muzaffar and Mr. Mazhar Lari in support of the appeal and Mr. Raja Muhammad Iqbal, learned counsel for the respondents in opposition thereof.

It is an admitted position that various laboratories, both outside and in Pakistan, have given their reports on the nature and specification of the RBD Palm Oil imported by the appellants. For the purpose of this appeal, we will confine ourselves to the reports given by the official Pakistan Laboratories only. According to the Custom House Laboratory Test Report Nos.352 of 2001, dated 27‑8‑2001 (Annexure VII of the Parawise Comments) filed by respondent No.1 the FFA (as oleic) content is 0.74% which is higher than the permissible limit of 0.25% PSI Standard and opined that the results "do not confirm the PSI specification of edible grade in respect of content of free fatty acid". The copy of Report of HEJ Research Institute of Chemistry obtained by respondent No. 1 (Annexure VIII of the Parawise Comments), after pointing out FFA (as palmitic acid) content as 0.64% states as follows:‑‑‑

"On the basis of above parameters the sample is declared as R.B.D. Palm Oil. The FFA is higher than allowed limits of 0.25 %. However, it can easily be refined to make it fit for human consumption."

The copy of PCSIR Report (Annexure A‑8 to the Appeal) submitted by the appellants after stating the FFA (% as O.A) at 0,143 concludes as follows:‑‑‑

"From the above results and according to the PSI Specifications, the provided sample of RBD Palm Oil is fit for human consumption."

There are three sets of reports before this Court, one from Customs House Laboratory, the second from PCSIR which works under the administration of the Government of Pakistan manned by qualified persons for research in various fields in science and the third from HEJ Research Institute of Chemistry, Karachi University where qualified Ph. D. Professors work under the supervision of Dr. Attaur Rehman whose expertise in the field of Chemistry is acknowledged by the world. The first report has been given by the Customs House Laboratory, which is a part of the Customs Department of respondent No. 1, who is a contesting party in the proceedings. The possibility of bias in this report in favour of the Customs Department cannot be ruled out. For the aforesaid reason and for reasons to be discussed hereafter, we are inclined to prefer the reports of PCSIR and HEJ Research of Institute of Chemistry both of which are independent institutions and have no personal interest in the matter.

Now section 32 of Customs Act, 1969 reads as follows:

"32. Untrue statement, error, etc.‑‑‑(1) If any person, in connection with any matter of customs,‑‑‑

(a) makes or signs or causes to be made or signed, or delivers or causes to be delivered to an officer of customs any declaration, notice, certificate or other document whatsoever, or

(b) makes any statement in answer to any question put to him by an officer of customs which he is required by or under this Act to answer.

Knowing or having reason to believe that such document or statement is false in any material particular, he shall be guilty of an offence under this section.

(2) Where, by reason of any such document or statement as aforesaid or by reason of some collusion, any duty or charge has not been levied or has been short‑levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within five years of the relevant date, requiring him to show‑cause why he should not pay the amount specified in the notice.

(3) Where, by reason of any inadvertence, error or misconstruction, any duty or charge has not been levied or has been short‑levied or has been erroneously refunded, the person liable to pay any amount on that account shall be served with a notice within three years of the relevant date requiring him to show‑cause why he should not pay the amount specified in the notice.

(3A) Notwithstanding anything contained in subsection (3), where any duty or charge has not been levied or has been fort‑levied or has been erroneously refunded and this is discovered as a result of an audit or examination of an importer's accounts or by any means other than an examination of the documents provided by the importer at the time the goods were imported, the person liable to pay any amount on that account shall be served with a notice within three years of the relevant date requiring him to show cause why he should not pay the amount specified in the notice.

(4) The appropriate officer, after considering the representation, if any, of such person as is referred to in subsection (2) or subsection (3) shall determine the amount of duty payable by him which shall in no case exceed the amount specified in the notice, and such person shall pay the amount so determined.

A bare reading of the section clearly indicates that it relates to a situation where a person makes any statement or files any document which is false in any material particular by reason of which any duty or charge is not levied or is short levied or is refunded. In such event, the Customs Authority is empowered to issue to the person concerned a notice to show‑cause why he should not pay the loss of revenue suffered by the Department and after giving him a hearing, beside any other action under law, order payment of the same, if a case is made out. The entire provision revolves around the central point of loss of revenue suffered by the Customs Department on account of the conduct of any person. Mr. Iqbal has not urged that the Department has suffered any loss on account of the conduct of the appellants. The question of applicability of section 32 in the present circumstances apparently does not arise.

The contention of Mr. Iqbal, learned counsel for respondent No. 1, that on the basis of the Custom House Laboratory Report the appellants have imported "edible product not fit for human consumption' which is a banned item, is not tenable. According to PCSIR Report the goods are fit for human consumption while according to the HEJ Research Laboratory Report, it requires to be refined to make it fit for human consumption. In addition, Mr. Mazhar Lari has produced copies of three Custom House Laboratory reports, dated 13‑8‑2001, 20‑8‑2001 and 1‑9‑2001 according to which the results of the analysis are "within the limits of PSI Specification No.1561/83 of RBD Palm Oil of edible grade". He also pointed out that the Custom House Laboratory Report, dated 1‑9‑2001 (Annexure V of the Parawise Comments filed by respondent No.1) the FFA (as oleic) is 0.09% and according to the opinion expressed therein "the results are within the limits of PSI Specification No.1561 of RBD Palm Oil of edible grade". These reports were not denied or refuted by Mr. Iqbal. In view of the conflicting reports from the Custom House Laboratory, four of which are in favour of the appellants and one against the appellants and in the presence of the reports of PCSIR and HEJ Institute of Chemistry in favour of the appellants, we are inclined to hold that appellants have imported RBD Palm Oil of edible grade.

Further, it is admitted by all parties that import of RBD Palm Oil is permitted. Therefore, the argument of Mr. Iqbal that the RBD Palm Oil m question which' according to Customs Laboratory Report (Annexure VII) is not fit for human consumption falls within the description of Clause H‑1 of the Banned Items described as "any edible oil product not fit for human consumption' and cannot be imported does not hold ground. It is an established principle of interpretation that every provision of law must be construed in harmony with the other provisions of law so as to avoid any conflict. If the law makers have allowed import of RBD Palm Oil, its import cannot be prohibited by a Notification by describing it as a product not fit for human consumption which product after due process and treatment can be made fit for human consumption and which allegedly has always been the procedure followed in the past. If the interpretation of Mr. Iqbal that only that RBD Palm Oil can be imported in Pakistan which meets the PSI Standards is accepted, it would adversely affect the industrial activity and the economy of the country. In such event only the fully refined and marketable palm oil which meets the PSI Standard would be importable. This would incise the cost of import thereby adding to the foreign exchange burden of the country, closing down of the local refining factories and increasing un employment of workers. Clause H‑1, therefore, has to be read harmoniously so as to comply with the legal requirements of law and at the same time not to cause any impediment in the business activities and revival of the economy. The interpretation advanced is not in consonance with the principles of construction of statutes, is unreasonable and impractical and is accordingly rejected.

Mr. Iqbal also contended that respondent No.1 is authorized under section 199 of the Customs Act, 1969 to take samples of goods for examination or testing and if after examination and testing he finds that the goods are not in accordance with the declaration under section 32, he is competent to take action against the declarant for violation of sections 16 and 32 of the Customs Act and section 3 of the imports and Exports (Control) Act, 1950 and confiscate the goods, if deemed fit as provided by section 156 of the Customs Act, 1969. Section 199 Customs Act, 1969 reads as follows:

199. Power to take samples of goods.‑‑‑(1) The appropriate Officer may, on the entry or clearance of any goods or at any time while such goods are being passed through the customs area, take samples of such goods in the presence of the owner thereof or his agent, for examination or testing or for ascertaining the value thereof or for any other necessary purpose.

(2)....

(3) In the case of goods which consist of drugs or articles intended for consumption as food, and in respect of which the taking of samples for the purposes of this subsection may have been authorized by a general or special order of the Provincial Government, the appropriate officer may also in like circumstances take samples thereof for submission to, and examination by, such officer of Government or of a local authority as may be specified in such order.

From the reading of the above section it is clear that the Customs Officer is empowered to take samples of goods on the entry, clearance or at any time the goods are being passed through the customs area for examination or testing to ascertain the value thereof and in case of goods intended for consumption as food if he is authorized by a general or special order of the Provincial Government. Mr. Iqbal did not produce or refer to any general or special order authorizing respondent No. 1 to take sample of RBD Palm Oil under the provisions of Pure Food Ordinance, 1960 or any other statute. In our opinion the provision does not in any way authorize the Customs Officer to confiscate the goods under the Pure Food Ordinance, 1960 if the sample does not meet the PSI specifications. In this respect we are fortified in our view by a judgment of the Honourable Supreme Court of Pakistan in C.P. 146.288‑K of 2000, Collector of Customs. v. Batala Ghee Mills (Pvt.) Ltd., wherein the learned counsel in its Order, dated 9‑2‑2001 while discussing the powers of the Customs Authority to confiscate the goods under section 199 of the Customs Act observed as follows:‑‑‑

"4. We have hear the learned counsel and have gone through the provisions of section 199 of the Customs Act, perusal whereof indicates that Customs Authorities are empowered to determine after taking the samples of the imported goods whether declaration has been made correctly or otherwise and if they come to the conclusion that the misdeclaration has been made, then they can initiate proceedings against the importers under the provisions of the Customs Act. As far as the question whether the goods imported are fit for the human consumption is concerned, it does not fall within the domain of the Customs Authorities and if there is evidence on record that the commodity/goods imported is being sold in the market, which is not fit for this purpose, in such situation matter will be referred to the authorities having jurisdiction under the relevant law Pure Food Ordinance, 1960, etc. To take cognizance of the offence and decide the case accordingly. But as far as functionaries of the Customs Department are concerned, they have nothing to do so far as the violation of other law is concerned."

Though the above observations of the Honourable Supreme Court were made prior to the insertion of Clause H‑1 in the Negative List, the principle still holds good and if any product which in its imported or raw form is not fit for human consumption but can be made fit for human consumption after carrying out the due treatment/process in Pakistan, in our considered view, would not fall in the Negative List as explained above and would also not be covered by section 32 of the Customs Act, 1969.

In reply to the apprehensions expressed by Mr. Iqbal that the goods in the present form are not fit for human consumption and ought not to be released in the public interest, the learned counsel for the appellants have categorically assured that the imported RBD Palm Oil in question shall be sold after proper treatment/process and adding Vitamin A etc. to bring it within the PSI standards.

In view of the above discussion and the assurance given by the appellants, the appeal is allowed with costs in the following terms:

(i) In view of the two reports of independent laboratories i.e. PCSIR and HEJ Institute of Chemistry, it is held that the appellants have imported RBD Palm Oil and have not made any misdeclaration or a false statement in any material particular and cannot be said to have violated the provisions of section 32 of the Customs Act, 1969.

(ii) RBD Palm Oil imported by the appellants being capable of human consumption after undergoing refinement process does not fall within Clause H‑1 of the Negative List of the Import, Trade and Procedure Order, 2001‑2002.

(iii) The order of respondent No.1 confiscating the goods is declared to be without jurisdiction and of no legal effect and respondent No.1 is directed to release the same on payment of customs duty and other charges subject to the terms and conditions stated herein,

(iv) The appellants shall file written undertaking before respondent No. 1 to the effect that they shall not sell the imported RBD Palm Oil in question without removing the impurities and bringing the goods within .the specification of Palm Oil edible grade (for cooking purpose) in accordance with Pakistan Standard 1561: 1983.

(v) The appellants shall not sell or otherwise dispose, of the RBD Palm Oil in question without processing and refining the same to bring it within the specification for Palm Oil Edible Grade (for cooking purpose) Pakistan Standard 1561:1983. For this purpose they shall get a sample of the final refined product analyzed by PCSIR or HEJ Laboratory and produce the Analysis Report before the Authorities under the Pure Food Ordinance; 1960 who shall issue a written clearance certificate for sale/disposal of the refined product, if it meets the PSI standard.

(vi) Respondent No.1 shall immediately inform all the concerned authorities working under the Federal and Provincial Governments in general and the authority under the Pure Food Ordinance, 1960 in particular to ensure that RBD Palm Oil imported by the appellants herein meets the PSI Standards before it is distributed for sale in the market.

(vii) The authorities of the Food Department shall ensure that before the oil is packed in tins/cans/bottles/packages for the purpose of sale, all impurities are removed, FFA is reduced to meet the PSI Standards and it is fit for human consumption.

M.A./A‑292/K Order accordingly.