1989 PLP 1379 (MLD)

"Both counsel referred us to certain passages from the Income‑tax Manual, and claimed that they supported their respective contentions. I do not however think it necessary to discuss them, as the Manual merely contains departmental instructions for administering the Act, and is not an authoritative interpretation of the statute which is binding on Courts. Moreover these instructions in the present manual were first issued in 1922, only four years before the present dispute arose and they are certainly not in accord with the practice which had been followed for a long time by the income tax authorities themselves." The petitioners annexed 10 copies of invoices and Bills of Entry commencing from 8‑10‑1979 to 28‑7‑1981. S.No. Name of Consignee Name of the Exporter Bill of Entry No. Dated 1 Pak Burma Traders Renze Mencaraglia & Co. 2283 8-10-1979 2 M.J. Impex Cristallerie Venete 4279 15-5-1979 3 Pak Burma Traders Renze Mencaraglia & Co. 1946 29-4-1980 4 Pak Burma Traders Renze Mencaraglia & Co. 602 2-2-1981 5 Pak Burma Traders Renze Mencaraglia & Co. 9002 21-1-1981 6 Zeeshan Enterprise Cristallerie Venete 7543 16-4-1981 7 Pak Burma Traders Renze Mencaraglia & Co. 7594 18-5-1981 8 Pak Burma Traders Renze Mencaraglia & Co. 7593 18-5-1981 9 M J Impex Cristallerie Venete 10621 24-3-1891 10 M J Impex Cristallerie Venete 11188 28-7-1981 The respondent admitted in the counter‑affidavit that consignments from serial Nos. I to 10 relating to the year 1979 to July 1981 were released. The respondents submitted that the consignments were released through inadvertence under heading 7(1.19. The other plea raised in the counter‑affidavits is that there is no evidence to establish whether the earlier goods were indeed identical or somewhat different since these goods claimed td have been cleared in the post are not available for examination and comparison with the constant goods, no conclusion can be drawn on this behalf. The learned counsel for the petitioners has invited our attention for his proposition that a prior decision concerning the classification of goods for the purpose of taxation under the Act binds the department and the orders passed by the Customs authorities were apparently valid orders which they were competent to make. When as a result of that orders, the consignments were cleared under heading 70.19, it was not opened to the Customs authorities to ignore these orders either for 'the year in which the consignment were cleared or for any subsequent years, and to assess these consignments under heading 70.14. The learned counsel for the petitioner has submitted that the prig adjudication by the Customs authorities is a relevant material which ought to have been taken into consideration of the same vitiated the adjudication by the respondents. In the orders made by the respondents there is no reference whatsoever to the earlier decisions (in ten consignments) of the Customs authorities upholding the contention of the petitioners. These decisions being relevant factor in the determination of the same question at a subsequent period, the failure to take into consideration the earlier decisions has clearly vitiated the' orders made by the, respondents. When the orders held that "Beads and false`B pearls" imported by the petitioners are assessable under heading 70.14 the burden was on the department to show that decisions are erroneous teen the question was sought to be reopened. The show‑cause notices issued to the petitioners by the second respondent did not 'disclose the materials relied on by him for coming to adifferent conclusion, The orders of the second respondent do not give any reasons as to why "Beads and False Pearls" should be classified under Heading 70.14. The orders of the first respondent also do not give any reason as to why "Beads and False Pearls" should be classified as chandlier parts. The first respondent observed that "the release of few consignments of contravening goods as result of collusion or unholy alliance between an unscrupulous importer and Custom House official cannot be considered to have resulted in the establishment of a precedent or practice the, departure from which Would requite the approval of C.B.R. The very first release appears to be the result of mala ride Consideration and motives". 'The respondents without giving any reason whatsoever could not depart from the past practice. The decisions of the respondent arc largely based on the use of the "Beads and False Pearls" for the purpose of classification. It is quite obvious that the classification' made by the respondents, is not based ‑on the process of manufacture and the materials used for the manufacture of imitation glass stones. The decisions of the respondents are vitiated by the failure to take into consideration the prior decisions (Annexures H‑1 to 'H‑2 annexed to the petitions) and also for non‑consideration of the relevant material viz. the basis of classification according to the process of manufacture, the material used for manufacture etc. The contention of the learned counsel for the petitioners is that moulded glass stones arc covered in paragraph `C' under heading 70.19 of CCCN. The learned counsel for the respondents submitted that the goods are chandlier parts fall under heading 70.14. The question for our consideration is whether glass stones are comprehended within the expression `illuminating' glassware, signalling glassware and optical elements of glass, not optically worked nor of optical glass under heading 70.1.1 or within the expression" imitation precious and semi‑precious stone" of glass under heading 70.19 (C). Rule 1 of the Rules for the interpretation of the First Schedule of Pakistan Customs Tariff provides that for legal purpose, classification shall be determined according to the terms of headings and relative Section or Chapter Notes and, provided such headings or notes do not otherwise require, according to the provisional contained in the following Rules. By Rule .2(b) the classification of goods consisting of more than one material or substance shall be according to the principles contained in Rule

3. Rule 3, on its own terms, is applicable only when goods are prima facie classifiable under two or more Headings. Under Clause (a) of Rule 3, Heading which provides the most specific description shall be preferred to Headings providing a more general description. Under Clause (b) of Rule 3, Mixtures and Composite goods which consist of different materials or are made up of different components and which can not be classified by reference to Clause (a) shall be classified as if they consisted of the material or component which gives the goods their essential character, in so far as this criterian is applicable. Under Clause (c) of Rule 3 when goods cannot be classified by reference to 3 (a) or 3 (b), they shall be classified under the heading which occurs latest among those which equally merit consideration. We will immediately proceed to consider the impact of these rules on the case in hand but before doing so, it must be mentioned and appreciated‑that the sole ground on which the petitioners claim Payment of duty under Heading 7,0.19 is that the goods imported are moulded glass. The contention of the learned counsel for the respondents is that the imported goods are Chandlier parts and classifiable under Heading 70.14. Turning to the Rule 1 of the Pakistan Customs Tariff in so far as relevant classification has to be determined according to` the terms of the Headings, and, provided such Headings do not otherwise require, classification has to be determined according to the provisions of the rules following Rule

1. Heading No. 70.14 consists of two items which have been mentioned in the earlier part of this judgment. Rule 1 provides that classification has to be determined according to description of the article in the Heading and if the Heading or a note does not otherwise require according to the provisions of the other Rules and notes. Rules 1 to 4 become relevant or deciding the question whether goods fall within Heading 70.14 or Heading 70.19. Rule 2 has no application Clause (a) and (b) of Rule 3 have no application. Clause (c) of Rule 3 is applicable. Applying the principle contained to Clause (c) of Rule 3 imitation glass stones is a specific classification and chandlier parts is a general classification and the prevails over the letter. 'We may usefully turn to the note `C' to Section XIII (Explanatory Notes to the Brussels Nomenclature Volume 2 page reads as under:‑ "(C). Imitation precious stones (including imitation semi‑precious stones) should ‑not be confused with the synthetic or reconstructed precious stones of heading 70.13 (Sec corresponding Explanatory Note) These imitation stones are made of special glass (e.g. strass) with a high retractive index which may be colourless or coloured directly with metallic oxides. Imitation 'stones are, generally obtained by cutting fragments of the required size front the glass black; these fragments are then arranged on a piece of sheet metal covered with tripoli and placed in a small oven in which edges are rounded off. The stones can then be cut (in the shape of diamonds, rose‑cut diamonds, etc.)or engraved imitation cameous and itaglios. These stones can also be obtained by direct moulding (e. g. in .the case of stones of a definite shape fur trankets): The underside of such stones is often covered with reflecting metallic paint (gemtinish)." The stones are includible in the expression imitation precious stones the petitioner's case would fall under Heading 70.19. Accordingly they would be entitled to assessment under Heading 70.19. The learned counsel for the respondents has submitted that the goods fall under classification 70.14 or 70.19 is a question of fact and this Court cannot go into it. On the other hand Mr. Raja Haq Nawaz has submitted that an assessment without the application of an identifiable test is nothing but perverse and arbitrary. He submits that in the present case there was no identifiable‑test before the Customs authorities by which the goods could be held to be Chandlier parts. The earlier decisions Annexures H‑1 to H-19 relied upon by the petitioners do come to their aid in these cases since there is no identifiable standard or test to determine clearly which product can be moulded glass and not Chandlier parts. We are of the view that it is primarily for the Customs authorities to determine the head or entry in the Tariff' Schedule under which, a particular commodity fails but if in doing so, these authorities adopt a construction which no g reasonable person can adopt, that is to say, if the construction is perverse, then it is a case in which the Courts is competent to interfere. The Customs Department cannot depart from the existing practice without reference to the Central Board of Revenue. ‑It is an admitted position that Customs General Order No. 31/83 dated 28‑12‑1983 was issued by the Central Board of Revenue wherein the Board has classified the goods under Heading 70.14 P.C.T. The consignments in these petitions were arrived to Pakistan prior to this Customs General Order. We are of the. view that the past practice is applicable to the consignments as these consignments‑were arrived much prior to[, 28‑12‑1983. In all fairness, we must refer to the arguments advanced by the counsel, for the respondents. Relying on his turn, wherein mainly it was contended that I the consignments arc not "Reads and False Pearls" at all. We are afraid to accept this contention. The impugned orders do not refer to any such material being H used by the Customs authorities in deciding this particular aspect, except with a cryptic observation that in the trade parlance they arc not used as such. There was no further material which seems to have been ex rained by the Customs authorities. The "Beads and False Pearls" fall under the heading 70.19 of Pakistan Customs Tariff. The orders of the respondents involving heading No. 70.14 are I wrong and illegal and therefore they are set aside. In the result, we set aside the impugned orders of the respondents and declare that the "Beads and False Pearls" arc moulded stones within the meaning of Heading 70.19. In the result the Constitution Petitions succeed and arc allowed. The impugned orders are hereby quashed. We, however, make no order as to costs. M.Y.H./G‑110/K Petitions allowed.