2002 PLP 2085 (PTD)

2. The Additional Collector, however, approved the recommenda tion of the examining officials that the goods be treated as Legging. The cases remained dormant and the complainant and the consultant sent representations dated 15‑5‑2000, 14‑6‑2000 and 26‑8‑2000 to the Customs Authorities, the Chairman, C.B.R. and the Ministry of Commerce. The claims then received attention and the Assistant Collector gave the opinion on 11‑9‑2000 that the goods were Trousers and not Legging, there was no dispute about shorts, the rebate claim be processed in the category of Garments, under Schedule I of the Notification S.R.O. 172(I)/99, dated 22‑8‑1999 the proposal was approved by the Additional Collector.

3. On the basis of this approval the Assistant Collector sanctioned claims within his jurisdiction and the remaining claims were put up to the Additional Collector. Another officer had been posted in this place who sent for another sample and kept the claims pending for three months. The complainant submitted a representation to the Chief Executive with copies to other authorities which angered the Additional Collector who, with the support of the Collector, pressured his subordinates to process the claims in the category of Hosiery Articles instead of the declared category of Garments (Trousers and Shorts). Cheques for reduced amounts were issued and the Assistant Collector was ordered to issue demand for the higher amount paid by him which was paid by the exporter.

4. The complainant waited for one year but did not get any reply to the letters he had sent to the higher authorities. He had submitted original documents with the rebate claims and did not retain their copies. He could not file supplementary claims for the amounts deducted by the Customs and, therefore he submitted the petition to the Federal Tax Ombudsman.

5. The complainant requested that the Collector of Customs be directed to supply the documents requested by him vide letter, dated 18‑9‑2001, treat the objections of the Customs Officers as irrelevant and invalid, and pay the deducted amounts to the petitioner.

6. In his reply to the complaint, the Collector of Customs (Exports) stated that the goods exported by the complainant were Legging qualifying for duty drawback under S.R.O. 172(1)/99, dated 22‑8‑1999 as one of the Hosiery Articles and not as Garments. The description of goods as a Hosiery Article was ascertained factually and justifiably. The opinion of the Assistant Collector, accepted by the Additional Collector, was checked by the new Additional Collector to satisfy himself with the merits of the case. The deductions from the rebate claims were based on the fact that the goods qualified for duty drawback @ 4.80% of the F.O.B. value and not @ 7.70% as incorrectly claimed by the exporter. The complainant had received four cheques, dated 27‑10‑2000 and 17‑2‑2001 and raised no objection about the rate till 18‑9‑2001 when he requested for various documents.

7. Under the scheme of classification of textile articles for repayment of duty drawback under S.R.O. 172(1)/99, now replaced by S.R.O. 412(1)/2001, the rates increased with the increase of imported raw material inputs. Woven, processed and printed garments were entitled to repayment a 7.70% of F.O.B. value and the repayment for Hosiery Articles was restricted to 4.80% Even if the goods were called Trousers, they would still not qualify as Garments. The representative samples of the exported goods were physically examined and the report was self‑explanatory needing no second opinion to conclude that for repayment of duty drawback, the goods fell in the category of Hosiery Articles under Schedule IV of S.R.O. 172(1)/99. The goods exported by the complainant wire ascertained as Legging i.e. a Hosiery Article.

8. During the hearing of the complaint, the Attorney of the complainant stated that under C.B.R. letter. dated 29th September 1991. Trousers were included in the list of Garments eligible for rebate under S. R.O. 1174(I)/90. He also invited attention to the Explanatory Notes of the Brussels Nomenclature under which the definitions of Trousers and Shorts have been given. He reiterated the complaint that the rebate claim was filed under Schedule I, Item 5 of S.R.O.172(I)/99 but the Customs categorized the goods under Schedule V, C.B.R. and the Customs Department have circulated no list of Hosiery Articles. However, C.B.R. have included Knitted Trousers and Shorts in the category of Garments.

9. Department's representative stated that the basic difference of opinion arose from the fact that the complainant claimed that the exported goods should be classified in Schedule I of S.R.O. 172(I)/99 whereas Customs Department maintained that these items should be categorized under Schedule IV of the S.R.O. He stated that according to exporter should have filed supplementary claims for the deducted amounts. The Customs Authorities would examine the case and, if the deduction had been made on account of some error or misunderstanding, the balance would be sanctioned and paid. Otherwise proper show‑cause notice would be issued and after reply to the notice and hearing, adjudication order would be passed by the officer of the competent jurisdiction against which appeal would lie with the C.B.R. The complainant's Attorney responded that since the full amount of rebate had not been paid, it was obvious that the Customs Authorities did not agree with his declaration and the decision against him was a foregone conclusion. The complainant had been denied the opportunity of hearings and presenting his case in the first instance.

10. The respondent has not given any reason or explanation for not responding to the letters of the complainant, keeping the claims pending and delaying their disposal, and not allowing him the opportunity to submit evidence and justification for duty drawback on the exported goods in the category of Garments. He seems justified in his views that the submission of supplementary claims would be a futile exercise. Clearly this is a classification problem, which could have been decided if the authorities had acted in an impartial and pragmatic manner. It is recommended that C.B.R.‑‑‑ (i) constitute a committee under the Collector of Customs (Appraisement) with the representatives of the Export Collectorate and the Knitwear Association as members to examine the samples, afford opportunity of hearing to the Complainant/Attorney, and decide the classification within one month; (ii) direct the Collector of Customs (Exports) to finalize the disposal of the duty drawback claims on the basis of the committee's ruling within forty‑five days; and (iii) report compliance within two months. C.M.A./M.A.K./288/FTO Order accordingly.