ENGLISH SWEETS (PVT.) LTD., KARACHI VS PAKISTAN through Secretary to the Government of Pakistan, Islamabad and 3 others, 2005 PTD-KARACHI-HIGH-COURT-SINDH 247 (2004)

(a) Customs Act (IV of 1969)---

----S.223---Officers of Customs to follow orders of the Central Board of Revenue---Scope---Natural justice, principles of---Applicability---No action detrimental to the interest of a person can be taken without hearing the affected parties---Section 223, Customs Act, 1969 does enable the Central Board of Revenue to issue orders and directions, which are required to be followed by officers of Customs, nevertheless S.223 makes an important exception by stipulating that no such instructions shall be given to interfere with the discretion of officers in exercise of their quasi-judicial function.

(b) Customs Act (IV of 1969)---

----S.25---Determination of Customs Value of goods---Valuation of imported goods in a particular consignment for the purpose of levy of Customs duty is ex facie a quasi-judicial function and the orders passed are subject to the incidence of appeal and revision.  

(c) Customs Act (IV of 1969)---

----Ss.193-A & 223---Appeal---While deciding an appeal the concerned officer acts in a quasi-judicial capacity and is not liable to follow directions under S.223, Customs Act, 1969.

M.A. Rehman v. Federation of Pakistan PLD 1988 SC 695 ref.

(d) Customs Act (IV of 1969)---

----Ss.223 & 25---Officers of Customs to follow directions of the Central Board of Revenue---Scope---Directions only of an administrative nature could be issued by the Board and not those incorporating statutory provisions for determining tax liability of the assessee.

Central Insurance v. Central Board of Revenue 1993 PTD 766 ref.

(e) Customs Act (IV of 1969)---

----Ss.223 & 25---Constitution of Pakistan (1973), Art. 199-- Constitutional petition---Officers of Customs to follow directions of the Central Board of Revenue---Scope---Classification of imported goods-- Once the orders in revision are found to have been passed after duly hearing the assessee and said officers having treated the opinion of the Central Board of Revenue as binding, the assessee's claim founded upon the principles of natural justice, would lose all its force---Where the imported paper could not be classified as adhesive as claimed by the assessee and was imported in strips of less than 15 cm width and was meant for wrapping sweets, the same clearly fell under Heading 4823.90---High Court, under its jurisdiction under Art.199 of the Constitution could not enter into an independent inquiry as to classification of goods or substitute its opinion for that of the competent authorities.

Collector Sahiwal v. Muhammad Akhtar 1971 SCMR 681; Government of Pakistan v. Indo Pakistan Corporation PLD 1979 SC 723 and Collector of Customs v. New Electronics PLD 1994 SC 363 ref.

I. H. Zaidi for Petitioner.

Shakeel Ahmad, Raja Muhammad Iqbal and S. Ziauddin Nasir, Standing Counsel for Respondents.

Date of hearing: 9th September, 2004.

JUDGMENT

SABIHUDDIN AHMED, J.-The petitioners in all these petitions are manufacturers of toffees and have been imported wrapping paper, which prior to 1988 was being charged with customs duty at the rate of Rs.80% ad valorem, after .the switch over to the international harmonized system (I.H.S.) in the schedule to the Customs Act a dispute arose as to the proper classification of such wrapping paper. The petitioners claim that they were liable to pay duty under Heading 4823.1900 (gummed or adhesive paper) at the rate of 80%, while the respondent/Customs authority contended that such paper fell under Heading 4823.90 described as follows:--

4823.90. Strips of paraffin-waxed paper of a width not exceeding 15 c.m., treated with sorbitol, with an appreciably narrower strip of aluminum foil fixed length wise to the centre of one side, put up in rolls for wrapping sweets."

2. With respect to consignments covered by C. Ps. NOS.D-3020 of 1992, 1533 2783 of 1993, the imported goods were provisionally assessed to duty at the rate, of 80% and the opinion as to proper classification was sought from the respondent No.2/Central Board of Revenue (CBR). Through a letter, dated 24-10-1989 the CBR after having obtained some exparte/advise took the view that the goods were classifiable under Heading 4823.9090 chargeable to duty at the rate of 125%. Accordingly show-cause notices were issued to the petitioners, who submitted their written replies, but the respondent No.4 assessed the goods to be liable to customs duty at the rate of 125% with proportionate amount of sales tax, Appeals and revision applications against such assessment also failed

3. The consignment in C.P. No.1940 of 1996 was apparently imported after the CBR advised had become available and therefore, the petitioners were required to pay customs duty at the rate of 125% with proportional amount of sales tax under compulsion. 'Nevertheless since the controversy was still live they applied for refund of duty in excess of 80% which was dismissed. Appeal and revision against the order-in -original also met the same fate. All the orders passed by the respondent No.1 in revisional jurisdiction have now been impugned in these petitions.

4. Mr. I.H. Zaidi, learned counsel for the petitioners appearing in all the petitions mainly urged that adverse orders were passed against the petitioners 'without affording them a proper opportunity of being heard. Indeed this argument is not available in respect of the orders passed by the respondents Nos. 1 and 3 where the record shows that in each case the petitioner heard through counsel, both in appellate and revisional proceedings. As regards the orders passed by respondent No.4 it is no doubt correct that orders-in-original impugned in C.P. No.3020 of 1992 and C.P., No. 1940 of 1996 were passed in the absence of the petitioners. However, the orders indicate that notices of hearing were given but the petitioners failed to appear and this has riot been disputed in any affidavit filed. If the petitioners failed to avail an opportunity of hearing they could blame nobody but themselves.

5. Mr. Zaidi further argued that the impugned orders were passed primarily on the basis of classification of goods made by the respondent No.2 (C.B.R.) and the petitioners were never heard before the Board. Indeed it has not been disputed that no hearing was' granted by the CBR and even otherwise it is well-known that the C.B.R. does not normally hear importers or the potential importers before issuing directions under section 223 of the Customs Act.

6. What needs to be considered however, is whether such hearing was necessary under the law? No doubt the well-settled principles of natural justice require that no action detrimental to the interest of a person can be taken without hearing the affected parties. Section 223 of the Customs act does enable the CBR to issue orders and directions, which are, required to be followed by officers of Customs. Nevertheless it makes an important exception by stipulating that no such instructions shall be given to interfere with the discretion of officers in exercise of their quasi-judicial function.

7. Indeed valuation of imported goods in a particular consignment for the purpose of levy of customs duty is ex facie a quasi-judicial function and the orders passed are subject to the incidence of appeal and revision. In M.A. Rehman v. Federation of Pakistan PLD 1988 SC 695, it was held, while deciding an appeal the concerned officer acts in quasi judicial capacity and is not liable to follow directions under section 223 of the Customs Act. In Central Insurance v. Central Board of Revenue 1993 PTD 766, the Supreme Court while interpreting section 8 of the Income Tax Ordinance, 1979 (which is similar to section 223 of the Customs Act) held that only directions of an administrative nature could be issued by the CBR and not those incorporating statutory provisions for determining tax liability of assessee.

8. From the above it is clear that the CBR was not required to hear the petitioner, though the alternate contention raised in the petition, but surprisingly not seriously pressed before us, that the respondents Nos. 1, 3 and 4 were required to apply their minds independently instead- of following directions of the respondents appear to be far more formidable. In this context we have carefully gone through the orders passed in all these petitions. Indeed it does appear that while passing original and appellate orders the respondents Nos. 3 and 4 were substantially influenced by the directions of the CBR and considered them to have a binding effect. Nevertheless in C.Ps. No D-3020/92, 1533/93 and 2783/93 make no reference to such directions and clearly indicate that they were passed upon an independent application of mind by the concerned officer, hearing the revision application. In C. P. No. 1940 of 1996 the specific orders were required to be passed on independent application of mind and not on account of any direction of the CBR was duly considered and it was observed that the Tribunal follow it in fact applied their independent mind. In Collector Sahiwal v. Muhammad Akhtar 1971 SCMR 681 and Government of Pakistan v. Indo Pakistan Corporation PLD 1979 SC 723 the Honourable Supreme Court has clearly drawn a distinction between cases, where orders have been passed in violation of mandatory provisions of law regarding notice before passing an order and those where such notice is claimed on the principle of natural justice. It has been held that whereas in the first category of cases the order passed is void ab initio, in those falling in the second category, the defect would be deemed to be rectified if proper hearing is accorded at the appellate or revisional stage and no prejudice is shown to have been caused.

9. In view of the above therefore, once the orders in revision are found to have been passed after duly hearing the petitioners and they being treating the opinion of the respondent No.2 as binding, the petitioners claim founded upon the principle of natural justice looses all its force. On merits the respondent No. 1 has observed that once the paper in question could not be classified as adhesive, was imported in strips of less than 15 c.m. width and was meant for wrapping sweets Heading 4823.90 was clearly applicable in any event as held by the Honourable Supreme Court, inter alia, in Collector of Customs v. New Electronics PLD 1994 SC 363, this Court cannot enter into an independent inquiry as to classification of goods or substitute its opinion for that of the competent authorities.

These are our reasons for dismissing the above petitions by short order, dated 9-9-2004.

M.B.A./E-8/KPetitions dismissed.