SAFE WAY through Proprietor VS DEPUTY COLLECTOR CUSTOMS, (APPRAISEMENT GROUP-I), LAHORE, 2009 PTD-LAHORE-HIGH-COURT-LAHORE 201 (2008)

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

----S. 32---Untrue statement, error etc.---If the element of mens rea was not apparent in the case, mentioning of different head, was not necessarily to cheat.

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

----S. 32---Untrue statement, error etc---Simple mentioning of a head when there were circumstances warranting different possibilities, would not amount to intentional or dishonest act.

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

---S. 32---Untrue statement, error-etc.---Classification of actual PCT---Case being that of one item, further investigation could be continued with its sample and seizure of the consignment was not justified.

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

----S. 32---Constitution of Pakistan (1973), Art.199---Constitutional petition---Untrue statement, error etc.----If the goods imported were appraised and assessed by the Customs authorities and duties/taxes were duly deposited, the Customs authorities were not entitled to retain them although the department was at liberty to take appropriate action in accordance with law if they had adequate material for initiation of proceedings under S.32, Customs Act, 1969.

Messrs Zeb Traders through Proprietor v. Federation of Pakistan 2004 PTD 369 fol.

Mian Abdul Ghaffar for Petitioner.

Ehsanullah Cheema, Advocate/Legal Advisor for Respondents.

ORDER

KHAWAJA FAROOQ SAEED, J.---The petitioner through this writ petition wants indulgence of this Court for release of consignment which is being seized by the Custom Authorities.

2. The brief facts leading to this writ petition are that the petitioner imported Multi-Vitamins in routine vide G.D., dated 15-7-2008 claiming classification under Heading 3004.9010. The Customs Authorities completed the assessment, valued the same and declared the consignment out of charge under section 83 of the Customs Act, 1969 on 18-7-2008, after receiving duty and taxes in cash. While the consignment was being released, respondents Nos. 1 and 2 stopped it and on a quarry by the petitioner informed that there assessment has wrongly been done as they are covered in PCT-Heading 2106.9090 which is in respect of food supplements. The petitioner, therefore, through this writ petition argues that identical goods were being regularly classified under PCT-Heading 3004.9010 and that the similar disputes regarding classification are pending before the Customs Excise and Sales Tax Federal Tribunal as well as before this Court. He claimed that the department itself has cleared such consignments earlier after due check-up and assessment. The seizer of the present consignment is illegal and unjustified. He made reference to Writ Petition No. 4901 of 2004 and Writ Petition No. 3772 of 2008, wherein in such and similar circumstances, this Court had directed to release consignments subject, however, to determine the PCT heading subsequently.

3. The learned Legal Advisor on the other hand, says that the amount declared by the petitioner is so ridiculous that the consignment could have been seized only for the said reason. He further objected to the release of the consignment by saying that once it is released, the same shall not be within the hands of the department, hence its actual determination shall be jeopardize. He produced a letter, dated 28-7-2008 issued by Mian Iftikhar Alam, Superintendent, Exam-I, which is based upon a sample test of the capsules imported by the present petitioner. The laboratory report as per the said letter says that the goods consist of vitamins and minerals encapsulated in 1000 mg brown colour soft shell capsules. The same therefore, are not to be classified as a medicine but a food supplement. The said notice speaks as follows:--

"Samples described as `Multi-Vitamin soft gel Capsules"; 1000 mg put for test along with copy of `Certificate of Analysis' from manufacturer. On chemical examination sample in the light of analysis certificate is found to consist of vitamins and minerals, encapsulated in a 1000 mg brown colour soft shell capsules"

Note.---As per above quoted reference, such multi vitamin and multi-mineral produces stand excluded from the ambit of `medicaments for therapeutic or prophylactic uses' of Heading 3003 7 3004' they appropriately classified as food supplement under heading 2106.9090 of P.C.T."

(2) Being a food supplement, the capsules are liable to be assessed under H.S. code 2106.9090 attracting Customs duty @ 35% and Sales Tax @ 16% instead of H.S. Code 3004.9010 attracting Customs duty @ 10% and exemption of Sales Tax. This mis declaration resulted into evasion of Government revenue, thus, the above said consignment is detained under section 2(kk) read with section 186 of the Customs Act, 1969 for further inquiry and investigation.

4. Be that as it may, the observation of the Superintendent as per the notice is that wrong mentioning of PCT is intentional and has ended in evasion of tax. So far as the classification of the actual PCT is concerned, this Court at this stage of proceedings has neither been asked nor is willing to determine the same. The circumstances of the case however, do not indicate that mentioning of a different head is necessarily to cheat as the element of mens rea is not apparent in this case. The petitioner mentioned the head of the item as per his understanding, which the appraising department also accepted. Besides in many other cases such items have been considered as medicine even at adjudication stage by the departmental officials themselves. Reference is placed on the case of Hayat Firms 16-T, Gulberg Lahore, Order Nos.71 and 72/02, dated 30-9-2002. It" is obviously not easy to determine that the mentioning of heading was with due and un-controvertible knowledge. The simple mentioning of a heading when there are circumstances warranting different possibilities would not amount to intentional or dishonest act. The appraisement by the department on the basis of the PCT Heading mentioned by the petitioner again support this argument. Since the classification of the heading is still a matter of doubt in respect of various such importers there is no reason for this Court to agree that there is an intentional evasion of tax to the said extent. The judgment of this Court in terms of Writ Petition No. 4901 of 2004 in fact has taken due notice of such and similar circumstances. The detention of the goods on the basis of subsequent information in terms of Lab test etc. by holding that the wrong mentioning of PCT heading was intentional is not a justified action. Since it is a case of one item and further investigation can be continued with its sample, this Court does not agree with the seizer of the said consignment.

5. Reliance of the learned counsel for the petitioner on a judgment of the Karachi High Court in re: `Messrs Zeb Traders through Proprietor v. Federation of Pakistan" (2004 PTD 369) is relevant. In identical situation their Lordships observed that if the goods imported were appraised and assessed by the customs authorities and duties/taxes were duly deposited, the Customs authorities were not entitled to retain them although they were at liberty to take appropriate action in accordance with the law if they had adequate material for initiation of proceedings under section 32 of the Customs Act, 1969.

6. Being in respectful agreement with the ratio settled in the aforesaid judgment. I will allow this petition and direct the revenue authorities to immediately clear/release the goods when this order is conveyed to them. However, it goes without saying that per ratio of the said judgment the revenue authorities will have the jurisdiction to proceed in accordance with the relevant provisions of the Customs Act, 1969, if they are in possession of sufficient material to justify such proceedings for which they may retain a sample of goods.

7. Disposed of accordingly.

M.B.A./S-153/LOrder accordingly.