1989 PLP 3644 (MLD)

SAEEDUZZAMAN SIDDIQUI, J.--The above mentioned petitions are filed by the two different importers to challenge the classification of Infant Baby Food "Cerelac" by respondent under Heading No.19.02 of the Pakistan Customs Tariff which was imported by the petitioners during the year 1982-83. The case of the petitioners in the above cases in that "Cerelac" Baby Food imported by them falls under PCT Heading No.21.07 in petition No.223/83 the petitioners imported Cerelac Baby Food of the value of US $ 1,82,

677. This consignment arrived at Karachi in or about February 1982 and a bill of entry for home consumption for clearance of the above consignment was filed on 25-2-1983 under IGM No.514/83. The Asstt. Collector of Customs, classified the Cerelac Baby Food, as falling under Heading No.19.02 of the PCT and demanded Customs duty and sales tax accordingly. However, the Dy. Collector of Customs, in view of the past practice allowed the clearance of the goods under Heading No.21.07 which is free of customs duty and sales tax: It is stated in paragraph 6 of the petition that when the release of the goods was sought by petitioners the respondent No.2 objected to the clearance of the Cerelac Baby Food under Heading No.21.07 on the basis of ruling given by respondent No.1 on 13-3-1983. Accordingly a sum of Rs.24,71,527 being the amount of 70% of the customs duty and 20% sales tax was demanded from the petitioners. It is alleged in the petition that a representation made by the petitioners .against the above demand of customs duty and sales tax, to respondent No.], was not disposed of and consequently the petitioners filed the present petition in this Court challenging the classification of the goods under PCT Heading No.19.02. The petitioners in other petition (D-517/83) similarly imported Cerelac Baby Food of the C & F value of Rs.24,75,

987. A bill of entry in respect of this consignment was submitted to the Customs Authorities on arrival of the goods on 25th May, 1983. The bill of entry shows that the letter of credit in this case was opened on 15-3-1983 while bill of lading in respect of the goods was issued on 15-5-1983. In this case also the Customs Authorities demanded customs duty and sales tax on the basis of classification of Cerelac Baby Food under PCT-Heading No.19.02. Mr. Mushtaq Memon, learned counsel for the petitioners in the above petitions firstly contended that the Cerelac Baby Food imported by the petitioners for the last 6/7 years was always treated by the Customs Authorities as falling under PCT Heading No.21.07 and as such in view of this past practice followed by the Department the consignment in question could not be denied clearance under that heading and therefore their classification under Heading No.19.02 of the PCT was illegal and without jurisdiction. It is also contended by the learned counsel for the petitioners that the ruling No.1 of 1983 given by respondent No.1 on 13-3-1983 was contrary to the instruction of the Central Board of Revenue in this regard and therefore, could not prevail and in any case this ruling having been given by respondent No.1 subsequent to the import of the above consignment could not be made applicable to these two consignments which should have been allowed clearance on the basis of the past practice of the Department. In support of the second contention that ruling No.1 of 1983 dated 13-3-1983 given by respondent No.1` was contrary to the instructions of the Central Board of Revenue learned counsel has relied on the General Instructions in this regard issued by the Central Board of Revenue, dated 26th May, 1973 and C.B.R. Instructions No.4/74 which are riled as Annexures H & I to the petitions. We however, do not find it necessary to decide the validity of ruling No.l/83, dated 13-3-1983 given by respondent No.1 in this case as we feel that these cases can be disposed of on the basis of the other point canvassed before us by the learned counsel for the petitioners. The petitioners in their petitions have specifically alleged that for 6/7 years before arrival of the disputed consignments the Customs Authorities allowed clearance of Cerelac Baby Food under PCT Heading No.21.07 and in. this regard they have relied on the two orders passed in appeal dated 1-8-1977 and 9-3-1978. They have also relied on another order dated 3-8-1982 passed by the Deputy Collector of Customs in the case of petitioners in petition No.223/83. These assertions made by the petitioners in their petitions and the orders referred therein have not been denied by the respondents in their counter affidavits which they have filed in these cases. In fact in paragraph 6 of their counter affidavit which the respondents have filed in the above cases, they have stated as follows:- "

6. That in reply to para 2, the petitioners' contention that the change in the classification of the said goods is unjustified, is denied. Infant food is normally classified by the Customs Authorities under two different headings of the Pakistan Customs Tariff, viz. 19.02 and 21.07 depending on its constituent ingredients. The said infant food cerelac, was formerly cleared under PCT Heading 21.07 free of customs duty and sales tax. But in July, 1983 it has been decided that cerelac brand infant food, like other identical products e.g. Heinz Milupa etc. should be classified under PCT heading 10.02, chargeable to customs duty at the rate of 70% and sales tax of 20%. In an effort to reverse this classification the petitioner relied upon Customs Cooperative Council, Brussels, ruling No.14, But this ruling has been wrongly interpreted by the petitioners, because the said item Cerelac, is not milk based, as claimed by the petitioners, but is, a food preparation with a basis of flour and starch of cereal. Accordingly, Cerelac brand baby food like other such products, is classified under PCT Heading 19.02." From the above admission of respondent it is abundantly clear that prior to July, 1983 "Cerelac" Baby food imported by the various importers was allowed to be cleared under PCT Heading No.21.07 free of Customs Duty and sales Tax until July, 1983. It is further admitted by respondents that in July, 1983 it was decided that the Cerelac Brand infants food like other products should be classified under P T C Heading No.19.02 and customs duty at the rate of 70% and sales tax at the rate of 20% should be charged thereon. In these circumstances, it is sufficiently established that there was a consistent past practice on the part of respondents to allow clearance of Cerelac baby food imported by various importers by classifying it under PCT Heading No.21.07 and as such the two consignments imported by these petitioners which were admittedly imported before July, 1983 could not be dented clearance under PCT Heading No.21.07. Accordingly the demand of customs duty and sales tax by respondents after classifying the goods under PCT Heading No.19.02 was not justified and contrary to the consistent past practice followed by the Department in this regard. We accordingly declare that the demand of customs duty at the rate of 70% and sales tax at the rate of 20% on the aforesaid consignments imported by the respondents on the basis of classification of Cerelac Baby Food under Heading No.19.02 was illegal and of no legal effect and that the petitioners are not liable to pay the same. We also declare that in view of the past practice followed by the Department consistently in allowing clearance of Cerelac Baby Food under Heading No.21.07 the two consignment should be treated as covered under Heading No.21.07. There will be no order as to costs. We are informed that the petitioners have furnished bank guarantees to the satisfaction of the Respondent No.1 for obtaining release of the consignments during pendency of these petition. These bank guarantees will remain operative for a period of two months from today to enable the respondents, if they so desired, to file appeal before the Supreme Court of Pakistan. However, if the respondents failed to file appeal within the aforesaid period or failed to obtain appropriate orders in this regard from the Supreme Court, the bank guarantees furnished by the petitioners shall stand discharged on expiry of two months period from today. H.B.T./M-802/K ?Petition allowed.