1986 PLP 170 (CLC)

ABDUR REHMAN, J.‑‑These petitions under Article 9 of the P.C. 0., 1981 have been filed by Sanaullah Woollen Mills Limited challenging the validity of certain orders passed by the various authorities of Customs Department listed as respondents.

2. The petitioners' case is that they are Importers etc. of wool tops, which they import for manufacturing their woollen products. Prior to 1979 ad valorem customs duty was charged on wool tops imported in Pakistan. In 1979 the method of taxation was changed from valuation basis to weight basis and duty of 85.25 per kilogram was imposed on wool tops. The wool tops are hygroscopic goods. There is a natural tendency in this fibre of absorbing moisture from air. Its capacity to absorb moisture is upto 20%. Hence in order to ascertain the true weight of the consignment discount of the moisture, absorbed by it is allowed. Hence its standard net weight is considered to be its oven‑dry weight. Hence like other importers the petitioners also declared the oven‑dry weight of the consignment in dispute of the wool tops imported by them after June, 1979 as its net weight. On the basis of this weight the Customs Department levied the Customs duty. This practice of treating oven‑dry weight of hygroscopic goods as their net weight was being followed by the Customs Department since 1929, as was also provided in para 18(f) of the Appraiser's Manual. Consequently, the consignment in dispute was cleared by the Customs authorities and duty was assessed on its oven‑dry weight by accepting it as its net weight, which was paid by the petitioners. This oven‑dry weight was calculated after deducting from its actual weight the percentage of moisture that the consignment would have normally absorbed. However, subsequently a show cause notice was received by the petitioners from customs authorities demanding the payment of the difference between the actual customs duty leviable on the same and the short duty which the petitioners had paid. It was pointed out that the duty was leviable on the actual weight of the consignment and not on the oven‑dry weight of the consignment. The petitioners made a representation to the customs authorities against this show cause notice. Their argument was that they were liable to pay duty only on the wool tops and not on the moisture, absorbed by it. The matter was referred to Central Board of Revenue and it was declared that the customs authorities were entitled to charge the duty on actual weight of the consignment. They could change the practice of charging duty on oven‑dry weight of the consignment. By their subsequent orders the customs authorities also directed Deputy Commissioner West to recover the difference in the duty as an arrears of Land Revenue. Hence finding no adequate and alternate remedy the petitioners have come to this Court.

3. A counter affidavit is filed by the respondents in which they have vehemently denied that there was such practice of treating oven‑dry weight of any hygroscopic good as its net weight. It was submitted that the term "Oven‑Dry‑Weight" has been introduced mala fidely for the first time by the petitioners in order to defeat the change in assessment of duty from ad valorem basis to weight basis. This was done in collusion with the suppliers who were compensated by enhancement of rates. In the beginning some consignment were provisionally cleared and the oven‑dry weight declared by the petitioners was provisionally accepted. as its net weight but when the matter was examined and the mischievous device was intercepted, show‑cause notices were issued and difference of duty was worked out and the petitioners were called to pay same. It was again and again denied that any change in the past practice was made or that there was ever any such practice. It has been pointed out that all the orders of the respondents are legal, valid and justified.

5. We have heard Mr. Ahsan Zahir Rizvi Advocate of the petitioners at length. We have also heard Mr. Wajihuddin Ahmad Advocate for the respondents. It was pointed out by Mr. Rizvi the wool tops were a hygroscopic fibre. In this connection he has relied upon a passage at page 662 of Encyclopaedia Britannica Vol.. III where it is mentioned that woollen fibre is more hygroscopic in nature than any other natural fibre. It regains moisture varying from 12$ to 19$ depending on condition. This phenomena has not been disputed. The case of the petitioners was mainly based at para. 18(f) of the Appraisal Manual which reads as under:‑ "18(f) Hygroscopic goods.‑‑ In the case of chemicals and similar goods which are liable to absorb moisture, the invoice cannot give the time of importation with certainty. If such goods are tariff rated on a weight basis they are legally assessable on their weight at the time of importation but they should as a matter of concession to the trade be assessed on bona fide invoice standard weight when it is satisfactorily shown that the goods are dealt with as far as wholesale trade is concerned on the basis of such standard weights and not on actual weights. To check the veracity of the invoice in these cases, an occasional test‑weighment of a few packages should be ordered by the Principal Appraiser of the Group concerned. Such a weighment should be ordered at least once of year."

6. He submitted that the Appraiser's Manual has recognised the fact that there were certain goods which absorbed moisture and that importers were entitled to concession of the moisture that has been absorbed and such goods should be assessed on bona fide invoice standard weight and not on the actual weight. We have given our thoughtful consideration to this contention. We do not find ourselves in agreement with the petitioners. Para. 18(f) of the Appraiser's Manual does not show that net weight of such goods was not its actual weight but it was its oven‑dry weight. All that it provides is that weight of such goods should be assessed on bona fide standard weight when it is satisfactorily shown that those goods are dealt with as far as the wholesale trade is concerned on the basis of such standard weight and not on the basis of their actual weight. The petitioners were unable to show either to the customs authorities or to us that wool tops were dealt with as far as the wholesale trade was concerned either in Pakistan, or in Australia, from where it was imported, on the basis of such standard weight and not on the basis of actual weight.

7. It was next contended by Mr. Ahsan Zahir Rizvi, that the customs authorities had cleared their numerous consignments on oven‑dry weight basis, after June, 1979, the list of which they have filed with the petitions. Hence it has become an established practice to do so and if they wanted to change this practice they have to obtain orders from Central Board of Revenue. He relied upon 1985 C L C 1757 (Kar.) where another D . B. of this High Court consisting of our learned brother Ajmal Mian, J., sitting with our learned brother Syed Haider Ali Pirzada, J., held, that where a particular construction was placed by the department on a provision of enactment and acted upon it for a consider able long time or it consistently followed a practice without any break for considerable period it could not depart from such construction or practice in absence of new development in form of clarification by legislature or by framing of new rules or issuance of binding instructions by competent authority.

8. This ruling does not apply to the facts of the present case. Even in this ruling the words "considerable long time" and "without any interruption for considerable long period" have been used. These few cases of clearance of the goods of the petitioners on provisional basis only for a small period of hardly one year cannot by any stretch of argument be treated as an established practice. Reference in this connection may be made to the famous case of Dada Soap Factory reported in P L D 1984 Kar. 302 which was also decided by the same D.B. it has been clearly held therein that in order to press into service the departmental practice of putting a particular construction on a provision of law so as to bind the department with that practice, it is necessary to show that for a long period of time the construction sought to be pressed into service was placed by department itself consistently and generally or uniformly acquiesced in. In the case under ruling the chemicals were being imported from various countries and were being allegedly assessed by the customs authorities under P.C.T. heading 29.03 from December, 1975 to 7‑8‑1978. It was observed that from the fact that the petition was filed, in which a long affidavit justifying the application of P.C.T. heading 29.03 was given and there after petitions were filed in subsequent 5 years and that the matter was referred to Brussels in 1979 prima facie reflect adversely on the alleged consistent practice.

9. We are, therefore, of the clear view that the petitioners have failed to show any established practice being followed by the Customs authority.

10. We would also like to point out that the notings of various officers of the Customs authority produced by the petitioners as Annexure "G" at pages 61 to 83 (Constitutional Petition No. 468 of 1985) contained in the last but one Note a passage which reads as follows: ‑ "Custom House has accepted the oven‑dry‑weight for duty assessment and this establishes the practice Please continue prevalent practice and put up detailed reference for Board." The petitioners' counsel tried to make much capital out of this note and contended that it was admitted by the department that it was an established practice. This does not appear to be correct. It will be useful to reproduce another officer's. note which is at page 79 to make it clear that the department never considered this as an established practice but was on the contrary of the view that it was a fraud which has been committed upon them:‑ "It will be observed from the invoice placed in the linked file that the consignments of these goods used to be imported at prices paid for the conditioned weight that is net weight and regain. The goods used to be assessed accordingly on the conditioned weight. The term 'Oven‑Dry' weight has been invented only after the introduction of specific rate of duty. Another important point which merits consideration is the unit price. The conditioned weight was charged at U.S. C 500/4575 per Kg. But with the introduction of 'Oven Dry' weight the price shot up and recorded a rise of upto 800 C. The exporters were at no ‑loss in invoicing the goods at 'Oven‑Dry' weight because they were reasonably paid for. They already received the price for the difference in weight. It is the Pakistan Government who turns out to be the ultimate loser."

11. It may be pointed that the Collector of Customs appeals (Appraisement) has in his order copy of which is Annexure "K" clearly held that the petitioners had not furnished any documentary evidence to specify the past practice. Hence he has given a finding in the negative regarding the existence of such a practice. This finding has been upheld by the Central Board of Revenue in their order Annexure 'A'. Hence the concurrent findings of fact of the two authorities should not be disbelieved particularly when there is no material before us to show that these findings were manifestly wrong and unjustified.

12. As a result of the above discussion we have come to the conclusion that the so‑called oven‑dry weight of wool tops is not its bona fide invoice standard weight nor the wool tops are dealt with as far as wholesale trade was concerned on the basis of such weight. We have also come to the conclusion that there was no established practice with the Customs Department to treat the Oven‑Dry Weight of wool tops or any other Hygroscopic goods, as their net weight and assess customs duty on its basis. We are, therefore, of the clear view that the petitioners have failed to establish their cases. Hence we cannot give any relief to the petitioners and dismiss the Writ Petitions with no order as to costs. M . Y . H . Petitions dismissed