P & G INTERNATIONAL, LAHORE VS ASSISTANT COLLECTOR OF CUSTOMS, (APPRAISEMENT GR-II), KARACHI
2010 P T D 870
[Karachi High Court]
Before Gulzar Ahmed and Irfan Saadat Khan, JJ
Messrs P & G INTERNATIONAL, LAHORE
Versus
ASSISTANT COLLECTOR OF CUSTOMS, (APPRAISEMENT GR-II), KARACHI and 3 others
Customs Reference Application No.100 of 2009, decided on 14/01/2010.
(a) Customs Act (IV of 1969)---
----S.196---High Court, jurisdiction of---Scope---No question of fact can be raised and decided by High Court in exercise of powers vested under S.196 of Customs Act, 1969.
Pakistan State Oil Co. Ltd. v. Collector of Customs, E&ST and others 2006 SCMR 425 rel.
(b) Administration of justice---
----Practice contravening law/rule---Effect---Practice cannot override a provision of law---If any practice is being carried out in contravention of law/rule, such practice has to be stopped.
(c) Customs Act (IV of 1969)---
----Ss.32 (3) & 196---Customs General Order 21 of 1973 and Customs General Order 21 of 1989---Sales Tax Act (VII of 1990), S.65---Short levy---Recovery---PCT heading---Determination---Goods imported were assessed under PCT heading 2823.0020 as it was declared to be Titanium Dioxide---Subsequently on post importation audit it was found that the consignments were classified under PCT heading 3206.1100 and notice for recovery of short levy was issued---Plea raised by importer was that department had erred in application of changed classification to its goods with retrospective effect---Validity---Department did not err in application of changed classification, as there was no imposition of new levy---All that was done was that on declaration of importer its goods were cleared under a wrong PCT heading and when such fact was discovered during post importation audit, a show cause notice under S.32(3) of Customs Act, 1969, was issued and escaped tax was recovered---Importer was only called upon to pay the difference of short levied duties/taxes etc.---High Court declined to interfere in the order passed by authorities---Reference was disposed of accordingly.
Messrs Nazir Ahmed v. Pakistan PLD 1970 SC 453; Messrs Radhka Corporation v. Collector of Customs 1989 SCMR 353; Collector v. Messrs S.M. Ahmad and Company 1999 SCMR 138; Messrs Shahnawaz Enterprises v. Collector 2005 PTD 1172; Collector v. Messrs New Electronics PLD 1994 SC. 363; Messrs Muzzamal Brothers v C.B.R., PLD 1997 Lah. 36; Ms. H. Sheikh Nooruddin and Sons Ltd. v. C.B.R., PLD 1989 Kah. 601; Messrs Happy Manufacturing's case 2003 PTD (Trib.) 293; Messrs Prime Ent. v. Collector K-678/2001; Messrs Super Asia Muhammad Din Sons case 2008 PTD 60; Messrs Tariq Irshad v. The State PLD 2006 Kar. 25; Messrs Atta Muhammad Qureshi v. Settlement Commissioner, PLD 1971 SC 61; Messrs Crescent Sugar Mills' case PLD 1982 Lah. 1; Messrs Mazari & Mazari Ltd. v. Pakistan 1971 SCMR 681; 1981 SCMR 101; PLD 1958 SC 104; Adamjee Jute Mills Ltd. v. The Province of East Pakistan PLD 1959 SC 2721; Gouranga Mohan Sikdar v. Controller Imports and Exports PLD 1970 SC 158; Mollah Ejahar Ali v. Government of East Pakistan PLD 1970 SC 173; Messrs Muhammad Ibrahim Khan v. Ministry of Labour 1984 SCMR 1014; 2005 PTD 480; 1999 SCMR 138; 2009 PTD 266; Messrs Waqas Enterprises v. Assistant Collector (Customs) and 2 others 2002 PTD 2977; 2005 PTD 2446; A-One Feeds v. Deputy Collector Adjudication-I 2008 PTD 1029 and Pakistan State Oil Co .Ltd. v. Collector of Customs E&ST and others 2006 SCMR 425 ref.
Zia-ul-Hassan for Applicant.
Raja Muhammad Iqbal for Respondent.
ORDER
IRFAN SAADAT KHAN, J.---By this Special Customs Reference Application (R.A.), filed against the order of the learned Customs, Excise & Sales Tax Appellate Tribunal (STAT) dated 5-6-2009 in Custom Appeal No.K-57 of 2008, the following questions said to be arising from that order, have been proposed for the opinion of this Court:---
(I) Whether the Honourable Tribunal has failed to correctly appreciate the principle laid down by the Supreme Court of Pakistan in the case of Messrs Nazir Ahmed v Pakistan PLD 1970 SC 453 and in the case of Messrs Radaka Corporation v. Collector of Customs SCMR 1989 P.353, where it was held that where a departmental practice has followed a course in the implementation of the relevant rule whether right or wrong, will be extremely unfair to make a departure from it after a lapse of many years and thereby disturb rights that have been settled by a long and consistent practice?
(II) Whether in the facts and circumstance of the case the Honourable Tribunal has erred in law by not taking into consideration this vital aspect of the case that the application of the changed classification to the applicant's goods with retrospective effect was primarily wrong as the Central Board of Revenue itself had notified vide various CGOs that any change in the existing classification practice shall not be applied retrospectively?
(III) Whether in the facts and circumstances of the case the learned respondent erred in law by not taking into consideration this vital aspect of the case that in terms of section 65 of the Sales Tax Act, 1990 the tax not levied or short levied as a result of inadvertent practice, shall not be required to be paid by the applicant for the period prior to the discovery of such inadvertent practice?
(IV) Whether in the facts and circumstances of the case the demand of short recovery in terms of show-cause notice on the basis of which the impugned orders were passed by the respondents was not illegal, void ab initio and without lawful authority as the issue for the determination of classification of the goods in question which as yet has not been decided by the PCT classification committee and still pending for proper ruling/ decision?
(V) Whether in the facts and circumstances of the case the Order-in-Original passed by the respondent No. 1 was not barred by time of limitation in terms of section 179(3) of the Customs Act, 1969?
(VI) Whether in the facts and circumstances of the case the impugned orders passed by the respondents were not out of the purview of the Show Cause Notice and also in violation to ruling of Supreme Court of Pakistan in case of Collector v. Messrs Mahm Din, (sic) SCMR P.1840 or not?
(VII) Whether a vested right created by established practice of many years can be withdrawn abruptly deviating from established practice while ignoring the guiding principles as laid down vide CGO 21/73 and CGO 21/89 and ruling of Supreme Court of Pakistan given in identical cases of Messrs Nazir Ahmed v. Pakistan PLD 1970 SC 453, Messrs Manzoor Brothers 1995 SCMR 516 and Messrs Radaka Corporation v. Collector of Customs 1989 SCMR 353 is lawful or not?
(VIII) Whether any impugned order on the dispute of contents in subsequent to release/out of charge of the consignments from the customs premises while ignoring the bar under Section 29/ruling of Superior Courts given in identical cases of (1) Collector v Messrs S.M. Ahmad and Company, 1999 .SCMR 138, (2) Messrs Shahnawaz Enterprises v. Collector PTD 2005 P. 1172, (3) Collector v. Messrs New Electronics PLD 1994 SC. 363, (4) Messrs Muzzamal Brothers v C.B.R., PLD 1997 Lah. 36, (5) Messrs H. Sheikh Nooruddin and Sons Ltd. v. C.B.R., PLD 1989 Kah. 601, (6) Messrs Happy Manufacturing's case PTD 2003 (Trib.) 293, (7) Messrs Prime Ent. v. Collector K-678/2001, can be treated lawful or not?
(IX) Whether the respondents impugned order/notice passed in violation to spirit of section 179 of the Customs Act, 1969 can not be treated held as without lawful authority as held by the Superior Courts given in cases or not?
Messrs Super Asia Muhammad Din Sons' case 2008 PTD 60
Messrs Tariq Irshad v. The State PLD 2006 Kah. 25
Messrs Atta Muhammad Qureshi v. Settlement Commissioner PLD 1971 SC 61
(X) Whether the impugned order which has been passed after the lapse of 3 months from the date of hearing is in violation to ruling of Superior Courts given in identical case of Messrs Crescent Sugar Mills, PLD 1982 Lah. 1 relied on Supreme Court cases Messrs Mazari and Mazari Ltd., v. Pakistan 1971 SCMR 681, 1981 SCMR 101 and PLD 1958 SC 104 can be treated/called a proper order or not?
(XI) Whether the respondent as a Member Technical is appropriate officer to decide the case under section 194-C of the Customs Act 1969 or not?
(XII) Whether the impugned order of the respondents is also stereo type/non-speaking and devoid of reason same is not substantial in law as laid down by the Supreme Court given in identical cases or not?
Adamjee Jute Mills Ltd. v. The Province of East Pakistan PLD 1959 SC 2721,
Gouranga Mohan Sikdar v. Controller Imports and Exports PLD 1970 SC 158,
Mollah Ejahar Ali v. Government of East Pakistan PLD 1970 SC 173,
Messrs Muhammad Ibrahim Khan v. Ministry of Labour SCMR 1984 P. 1014
Whether in the facts and circumstances of the case the Order passed by the learned Tribunal is maintainable in slaw?
2. Learned counsel for the applicant Mr. Ziaul Hasan, Advocate, submitted that the subject consignments were imported between August, 2005 and January 2006 and were assessed and cleared under PCT heading 2823.0020. However, during the post importation scrutiny it transpired that the correct classification in respect of the subject consignments is PCT heading 3206.1100. He contended that PCT heading could not be applied retrospectively. Moreover, according to the learned counsel, the Customs authorities have cleared the same goods of other importers under the same PCT heading 2823.0020, Hence, in his view, the action of the Customs authorities is not only against the past practice but also a discrimination against the applicant. According to the learned counsel, the applicant previously also imported the same goods but no adverse inference was drawn by the Customs authorities. Finally he submitted that a question of law cannot be determined by a Member Technical. The learned counsel relied on the following cases:---
(1) 2005 PTD 480, (2) 1999 SCMR 138 and (3) 2009 PTD 266.
3. On the other hand, Mr. Raja Muhammad Iqbal, learned counsel for the Department, submitted that the question whether the subject consignments fall under which PCT heading is not a question of law but a question of fact and the learned Member Technical was fully competent to decide the same. He relied on the cases of 2002 PTD 2977 and 2005 PTD 2446. He submitted that the World Customs Organization Brussels as amended from time to time should be considered authentic forum of interpretation. He submits that no question of law arises out of the order of the Tribunal and, therefore, this RA is not competent. Finally he submitted that this application is misconceived and is liable to be dismissed in limine.
4. We have heard the learned counsel and have gone through the record of the case, as well as the case-law cited before us.
5. Briefly stated the facts of the case are that the applicant company had imported five consignments of "Titanium Dioxide" under PCT heading 2823.0020 during the period between August, 2005 and January, 2006 chargeable to duty at the rate of 5% free of sales tax and income tax at the rate of 1% and the same were assessed and cleared accordingly. On post importation audit it was found that the consignments were classifiable under PCT heading 3206.1100 and were chargeable to duty at the rate of 5%, sales tax at the rate of 15% and income tax at the rate 6% and additional sales tax at the rate of 10%. Accordingly, a show cause notice dated 20-7-2006 was issued by the Customs authorities for short recovery of Rs.26,98,817. The applicant replied to the show cause notice and denied the allegations made therein. The Deputy Collector, Collectorate of Customs (Appraisement), vide his order-in-original dated 9-7-2007 held that the demand raised for recovery of Rs.26,98,817 was just and proper. The applicant assailed this order before the Collectorate of Customs, Sales Tax and Federal Excise (Appeals) who vide its order dated 5-12-2007 dismissed the same. The applicant against the above order approached the Customs, Excise and Sales Tax Appellate Tribunal but met the same fate. Hence this R.A.
6. Before proceeding any further it would be advantageous to quote the following relevant paragraphs from the order-in-original:--
"(5) I have gone through the written and verbal submission(s) of the importers and read the case record carefully. In terms of Note 1 to chapter 28 of the Pakistan Customs Tariff, chapter 28 deals with the separate chemically defined compounds whether or not containing impurities. At page. 299 of the Explanatory Notes to the Harmonized System it has been specifically mentioned that titanium oxide is classifiable under PCT heading 28.23 but when mixed with barium or calcium sulphate or other substances or surface treated it fall[s] under PCT heading 32.06.
(6) The Manufacturer's literature for "Kronos 2310" reveals that titanium dioxide contents in the product are 92.5% and surface treatment has been done with aluminum, silicon, zirconium compounds. Therefore, the goods by virtue of Note 1 to Chapter 29 of the Pakistan Customs Tariff and aforesaid Explanatory Notes to the Harmonized System are correctly classifiable under PCT heading 32.06 [more precisely under PCT heading 3206.1000 as product contains more than 80% titanium dioxide content i.e. (92.5%).] Further, Customs Laboratory has tested Kronos 2310 grade titanium dioxide in the past vide test report No.Imp/2391 dated 22-10-2005 and vide test report No.Imp/4829 dated 7-3-2006 reported as under:---
"The sample on test is found to be consisted essentially of titanium dioxide (more than 80%) surface treated with alumina. It is in the form of white powder."
(8) As regards "Tiona 595 grade" and "Tiona 568 grade" of titanium dioxide, the manufacturer's literature described that the titanium dioxide contents were 95 %&93% respectively...thus, both the grade of titanium dioxide are classifiable under PCT heading 3206.1100 being treated titanium dioxide and not under PCT heading 2823.0020."
7. Although as many as XIII questions have been referred through the instant R.A. but nowhere the above finding has been challenged.
8. In view of the above it is evident that the finding given in the Order in Original is based on two facts: (i) the manufacturer's literature slates that the imported goods contained more than 80% titanium dioxide and, (ii) that previously the same goods were tested and were found to be containing more than 80% titanium dioxide. Even if the reports of tests earlier conducted by the Customs authorities are disregarded, the Manufacturer's literature is a very authentic source to classify the goods. Although contents of such literature can be challenged by the customs authorities and such challenge can succeed on the basis of test conducted by the Customs Laboratory or any other Laboratory of repute but it is not open to the applicant to contest a statement made by the manufacturer regarding the goods made by it and imported by the applicant as it would tantamount to proving his own statement wrong and would be hit by the maxim that no one can be allowed to approbate and reprobate in the same breath.
9. The learned Appellate Tribunal while dismissing the appeal of the applicant held as under:--
"the appellant (applicant) have not come up with strong and convincing evidence to effectively assail their basis of classification of the goods made under PCT heading 3206.1100. This was the core and critical issue in the case for which strong and solid arguments were needed. The other peripheral issues carry less significance. All the relevant and important points were also examined at the original and appellate stages. No legal infirmity or factual impropriety is found in the impugned orders."
10. As observed above, the primal controversy in this case revolves around the applicability of the PCT heading i.e. whether the imported consignments fall under PCT heading 2823.0020 or under PCT heading 3206.1100. Such controversy was raised in the case of Messrs Waqas Enterprises v. Assistant Collector (Customs) and 2 others 2002 PTD 2977 wherein it was held that such a question is a question of fact which cannot be subject-matter of an appeal to this Court. Similarly in the case of A-One Feeds v. Deputy Collector, Adjudication-I (2008 PTD 1029), a Division Bench of this Court held that the question whether the subject goods falls within which particular PCT heading is a question of fact and cannot be determined at this stage. It is well settled principle of law that no question of fact can be raised and decided by this Court under exercise of powers vested in it under section 196 of the Customs Act, 1969. Reliance in this regard is placed on the case Pakistan State Oil Co. Ltd. v. Collector of Customs, E&ST and others (2006 SCMR 425).
11. It was argued that a deviation from the past practice has been' made by the Department which is not permissible. However, it is evident from the record of the case that though it has been argued that in the past consignments of Titanium Dioxide have been released under PCT 2823.0020 but no documentary evidence has been placed on record to substantiate this argument. Therefore, no finding can be given on this point. Even otherwise practice cannot override a provision of law. If any practice was being carried out in contravention of a law/rule the practice has to be stopped.
12. We also do not find any merit in the submissions made by the learned counsel for the applicant that in the instant case the Member Technical has decided a question of law. The Member Technical, in our opinion, had decided the case on the basis of appreciation of facts only and the learned counsel has not been able to convince us that any matter of law was adjudicated by the Member Technical. Hence, we are of the considered opinion, that the present case does not fall within the ambit of the judgment in the case of Muzammil Ahmed's case (2009 PTD 266) quoted supra.
13. It was also argued that the Department had erred in application of the changed classification to the applicant's goods with retrospective effect. However, this is not so as there was no imposition of new levy. All that was done in the present case was that on the declaration of the applicant its goods were cleared under a wrong PCT heading and when this fact was discovered during the post importation audit, a show cause notice under section 32(3) of the Customs Act was issued and escaped tax was recovered and the applicant was only called upon to pay the difference of the short levied duties/taxes etc.
14. In view of the above discussion, we would answer the questions as under:--
| I, II & III | In negative |
| IV-VI | No arguments were raised at the time of hearing hence are left unanswered. |
| VII | As discussed in para No.11. Answered accordingly. |
| VIII | The question, as discussed above, is not relevant as no new duty was imposed with retrospective effect rather correct PCT heading was applied. Answered accordingly. |
| IX & X | No arguments were raised at the time of hearing hence are left unanswered. |
| XI | As discussed in para 12 above. Answered accordingly. |
| XII | Being academic in nature, hence left unanswered. |
| XIII | In the affirmative. |
15. The above are the detailed reasons for our short order dated 22-12-2009. The listed application is also disposed of.
M.H./P-3/KOrder accordingly.