Pakistan Customs Tariff

Complaint against non-refund of additional amount of duties and taxes collected by the Customs due to alleged arbitrary classification of a limousine-car under Pakistan Customs Tariff, heading 87.03 instead of 87.02

Jurisdiction of the Federal Tax Ombudsman to investigate said complaint

Scope

Contentions of the complainant were that he imported the limousine car in question and filed Goods Declaration at the dry port, where the Customs instead of accepting the declared classification under Pakistan Customs Tariff, heading 87.02 (chargeable to 20% duty), arbitrarily determined classification under heading 87.03, chargeable to 100% customs duty and 50% regulatory duty, and that the Customs disregarded an earlier ruling of the Classification Committee and the recommendation of the Federal Tax Ombudsman Secretariat in a previous complaint

Validity

Reading of Pakistan Customs Tariff heading 87.02 and 87.03 was indicative of lack of clarity in the two headings

Office of the Federal Tax Ombudsman had already directed the Federal Board of Revenue to remove the said confusion through addition of an appropriate amendment/explanation in the Pakistan Customs Tariff Code

Although the matter of classification fell under S.9(2)(b) of the Federal Tax Ombudsman Ordinance, 2000, but the issue with which the office of the Federal Tax Ombudsman was seized of was lack of clarity under classification headings 87.02 and 87.03, leading to avoidable confusion/litigation

Federal Tax Ombudsman recommended the Federal Board of Revenue to decide the matter of classification of the limousine car in question as per law, and to consider setting up a separate Classification Directorate, on the pattern of Valuation Directorate, to make the classification rulings more authoritative and binding for all Customs stations across the country or to alternatively entrust classification disputes to the Valuation Directorate.

Petition related to dispute as to quantum of Customs Duty and Sales Tax payable to terminal tractor to be used for movement of trailers in container terminal

Claim of petitioner was that imported goods were entitled to concessional rates of Customs Duty in terms of S.R.O. 28(I)/98 dated 17-1-1998 as such concession had already been provided to another importer; alternatively it was contended that imported goods were liable to be classified as prime movers under Chapter 84 of Pakistan Customs Tariff Rules, operating at relevant time

Respondents insisted on treating imported goods as vehicle under Chapter 87 of Pakistan Customs Tariff Rules and were prepared to release said goods only on payment of Duties and Taxes thereunder

No formal adjudication proceedings ever took place and no order determining quantum of duty paid was passed by Adjudicating Officer

­Party who was required to pay taxes needed to know the reason for the levy and avail Appellate and revisional remedies provided by law

High Court under Constitutional jurisdiction could not pronounce upon appropriate classification of imported goods

Case was remanded to Collector to decide same after hearing parties on all questions of facts and law.

Refusal to grant exemption by the Department on account of erroneous description of the imported item by C.B.R. functionaries

Department seeking clarification from the C.B.R. and obtained Bank guarantees from the imported meanwhile

Petitioner (importer) seeking the relief of declaration that the proposed action of the Department calling for the encashment of the Bank guarantees was illegal and restraining the Department from initiating proceedings for encashment of the Bank guarantees-Contention of the importer was that Department had refused to allow the concession to the importer for the reason that they wanted classification from C.B.R. if the description under the PTC Hdg. 4011.9910 word used was "stripped" or `striped'

Description by C.B.R. under the relevant PTC Hdg. admittedly used the word "stripped" and not "striped" but confusion had been confounded by the Second Secretary, C.B.R., because of an intentional incorrect spelling of the word in the Letter dated 15-3-1993

Validity

High Court deprecated such attitude on the part of Tax Official who were supposed to be assessee friendly and were not supposed to adopt such attitude which smack of arbitrariness, mala fide and resulting in causing harassment to the assessees

Citizens were entitled to better treatment at the hands of Tax Officials to promote the tax culture in the country

Goods imported by the importer conformed to the description made under PTC Hdg. No.4011-9910 as the same stood at the time of import and in accordance with the C.B.R. decision contained in the letter dated 15-3-1993 importers were thus entitled to the concession and were not liable to pay any customs duty, regulatory duty or sales tax, as it was a duty free import in the relevant period

Department, in circumstances, was directed to release the Bank guarantee furnished by the importer and issue necessary instruction to the functionaries to extend friendly attitude to assessees.

Customs Authorities refused to refund the custom duty paid on the re-exported defective consignments and Bank guarantees had also not been refunded and returned by the Customs Authorities being import of such goods on other port and due to non-furnishing of consumption certificate of such goods

Validity

Customs Authorities had accepted the position that the imported goods would be re-exported with the approval of the Central Board of Revenue and Ministry of Commerce

Complainants had submitted an Indemnity Bond that they shall import the same material of the same grade at the same port i.e. Port Muhammad Bin Qasim within 180 days from the date of re-export

Customs Authorities maintained that they should have imported replacement consignment free of duty under S.R.O. 540(I)/98 from the same port whereas the complainants imported the goods from Karachi Port and either did not claim or were not allowed exemption by the Appraisement Collectorate

Complainants had not explained the circumstances under which they did not comply with the undertaking of importing replacement consignment from Port Muhammad Bin Qasim

Fact remained that the imported goods were re-exported and replacement goods were also imported in the country through another Customs station

Since the exemption from duty was not availed on import of replacement consignment, the duty charged and Bank guarantee ought to have been refunded and released

No justification was available with the Customs Authorities to require the importer to furnish consumption certificate of goods, whose re-export they themselves allowed, for release of Bank guarantee

Complainants were entitled to duty drawback under S.35 of the Customs Act; 1969 in circumstances

Federal Tax Ombudsman recommended that Central Board of Revenue shall direct the Collector, Customs Port Muhammad Bin Qasim to repay seven eighth of the duty as drawback under S.35 of the Customs Act, 1969 and to release the Bank guarantee within 30 days.

Contents of Pakistan Customs Tariff, Sched., Item No.84.28 were made liable to 85 per cent. ad valorem customs duty and 10 per cent. sales tax

Effect

Amendment in Pakistan Customs Tariff, Item No.84.28 of Finance Ordinance, 1983, could not be applied retrospectively and would not cover cases, in which bills of entry were filed in 1982 under S. 30(a), Customs Act, 1969 or before coming into force of amendment made by Finance Ordinance, 1983

Dispute having arisen between importers and Customs Authorities as to whether specified goods were liable to customs duty or not, those goods had to be warehoused as per importers' claim

Authority pursuant to bill of entry issuing show-cause notice to petitioner contending therein that he had violated terms of licence and instead of importing "copra" he had imported "desiccated coconut" which was prohibited item

Petitioner was fined and consignment was made subject to duty under Hdg. 08.01 in Chap. 8, Pakistan Customs Tariff, 1974

Validity

Expression "copra"

Connotation

Distinction between "copra" and "desiccated coconut"

Word "copra" and "desiccated coconut" applied to different goods when those were imported

"Desiccated coconut" could not be equated with "copra"

"Copra" being commercial derivative of coconut, could not be confounded with "desiccated coconut" which was not used for commercial purposes

Central Board of Revenue vide its decision dated 8-7-1974 had correctly decided that product known as "copra" was subject to duty under Hdg. 12.01 of Chap. 12 of P.C.T. (Pakistan Customs Tariff) and that "desiccated coconut" was subject to duty under Hdg. 08.01 of Chap. 8 of Pakistan Customs Tariff

Decision of Central Board of Revenue was eminently correct, just and strictly in line with tenor of the headings of Pakistan Customs Tariff

Product in question, imported by petitioner being liable to duty, he was not found entitled to relief claimed.

[Words and phrases].

Appellants'claim was based on assertion that diaries manufactured by them did not fall under Hdg. 48.18, Pakistan Customs Tariff but were covered by the description "printed books" -listed under Hdg. 49.01 and thus exempt from levy of sales tax

Validity

Leave to appeal was granted to consider whether or not diaries were exempt from sales tax and the Central Board of Revenue Circular No.9 (15) St/56 dated 25-7-1956, granting exemption to printing jobs such as forms, calendars, diaries, posters, invitation and visiting cards etc. could be applied to Chap. 49, Pakistan Customs Tariff, which covered the products of printing industry, and according to appellants, by necessary implication included diaries within the ambit thereof:

Heading 48.18, 49.01 & Chapter 49??Rules for Interpretation of First Schedule in Pakistan Customs Tariff, R.3 (a)??Diaries??Meaning?Books containing printed account of travellers, scientists, social figures, etc., from diaries maintained by them would not fall within the category of "diaries" as mentioned in PCT heading 48.18??Word "Diaries" as used in PCT heading 48.18 being in plural, covers all sorts of diaries, not only little books with blank or ruled pages with modicum of printing thereon but also calendar diaries containing dates and months of a particular year, with a wealth of other information, both educative and informative, provided that they contain blank pages or spaces wherein events, transactions, engagements, etc. could be recorded??Chapter 49 by necessary implication completely excludes diaries?? Printed books falling under PCT heading 49.01 cannot, therefore, be treated as covering "diaries".

Books containing printed account of travelers, scientists, social Figures, etc., from diaries maintained by them would not fall within the category of "diaries" as mentioned in P.C.T. heading .18.18

Word "Diaries" as used in P.C.T. Hdg. 48.18 being in plural, covers all sorts of diaries, not only little hooks with blank or ruled pages with 'modicum of printing thereon but also calendar diaries containing dates and months of a particular year, with a wealth of other information, both educative and informative, provided that they contain blank pages or spaces wherein events, transactions, engagements, etc, could be recorded

Chapter 49 by necessary implication completely excludes diaries

Printed books falling under P.C.T. Hdg. 49.01 cannot, therefore, be treated as covering "diaries."

Engines which do not fall under any sub-head from 84.6A to 84.6E would be classified under residuary sub-head 84.6F-

Petitioner imported consignment of small glass stones against import licence which was valid for import of synthetic stones including glass stones falling under Hdg. Nos.70.19 II & 71.03 only-Petitioner, on arrival of goods filed Bill of Entry for clearance of goods for house consumption and described goods as falling under Hdg. No.70.19

Customs Authorities not agreeing with said classification, treated goods under Hdg. 70.14 and confiscated consignment on ground of alleged contravention of provisions of Customs Act and allowed its release on payment of redemption fine and penalty

Material placed on record as well as orders passed by Customs Authorities made it clear that prior to import of consignment in dispute, Customs Authorities had allowed clearance of similar goods treating them under Hdg. No.70.19

Held, goods imported by petitioner should also have been classified under Hdg. No.70.19 on basis of consistent past practice followed by Customs Authorities in this regard and release of consignment should have been ordered

Order of Customs Authorities imposing penalty and fine on petitioner was declared to be without lawful authority and of no legal effect.

Petitioner a registered importer was granted import licence of various values for importing Beads and False Pearls listed under Sr.No. 80 of Free List, Part A, Section 1

Customs Authorities, after submission of bill of entry found that goods _were Pendant classes in transparent white colour meant for chandlier import whereof was banned

Importer stated that identical glass stones of identical article were cleared in other cases

Importer, in reply to show cause notice, stated that according to past practice his goods were classified under Pakistan Customs Tariff, Hdg. 70.19 and were duly covered under the Import licence

Customs Department reached conclusion ,that goods imported were more appropriately classifiable as glass stones given a diamond cut and having two holes, one at' each end and this diamond cut and holes were exclusively meant for use to chandlier and that reference to past practice was of no consequence as goods covered under Bill of Entry did not show that glass stones were of diamond cut and hence irrelevant

Goods were ordered to be confiscated as according to department such goods were covered under Hdg.70.14 and not under Hdg.70.19- Record showed that show-cause notice issued by Department did not disclose material relied upon for coming to the conclusion

Classification made by Department was not based on process of manufacture arid materials used for manufacture of imitation glass stones

Decision of Department was vitiated by its failure to take into consideration prior decisions annexed to petitions and also for non-consideration of relevant material

Since stones could be included in expression imitation precious stones, importer's case would fall under Hdg. 70.19 and he was entitled to be assessed under Hdg. 70.19

Customs Department departed from existing practice which it could not do without reference to Central Board of Revenue

Impugned orders did not refer to any such material being used by Customs Authorities in deciding the particular aspect

Order of department holding that goods fell under Rdg. 70.14 was set aside , in circumstances.

Drug "Fucidin Leo Intertullo gauze", registered as a 'drug' being not exempt, held, was liable for the customs duty and sales tax under Heading 30.04 of Sched. 1 of Customs Act, 1969.

Both the dictionary meaning of the word "scrap iron" and that understood in trade usage, indicate wider meaning of word "scrap" as both re-roll-able and re-meltable as implying its reprocessing

Such "Scrap iron" could not be levied to Octroi at rate of Re. 1.25 but at rate of Rs.0.12 per maund as scrap iron is separately classified for Octroi.

Commodity imported as chemically pure glucose qualifies under Pakistan Customs Tariff heading 17.02-A for duty.

Customs authorities creating demand against petitioner on charge of short levy of sales tax without hearing him in violation of S. 32, Customs Act, 1969 and threatening action under S. 202 of Act-Held Proper hearing was not granted to petitioner by Custom authorities not" points raised- by him in his letter were considered by them

Impugned order of department, therefore, set aside in circumstances.

Items Nos. 84.38 (c) & 84.38 (d)-Levy of custom duty on spindle holder (bolster unit)-Spindle holder (bolster Unit) used in machine frame as a support for spindle to hold it from falling and to ease pressure on it-Use of bolster as such, held; cannot be treated as part of spindle falling under heading 84.34(c) for purposes of levy of custom duty of 50% ad valorem plus 10%-Spindle-holder falls under heading 84.38 (d) on which custom duty is payable at 20% ad valorem.

Reduction in fine by authority, held, just a matter of indulgence and discretion and did not show that classification of goods as claimed was correct.

Heading 84.38 (C) and Import Policy Order, 1973, heading 84.38 It, Sched. I. T. C.-Textile spindle, a device used in textile mills for spinning yarn-Word "spindle"-Definition.-[Words and phrases].

Art. 199 and Pak1stan Customs Tariff-Writ jurisdiction-Question of fact-Whether stuff imported falls under heading 39.01(a) or 39.01(c) of Pak1stan Customs Tariff-Can be verified correctly after examining same chemically-Petitioner not preserving any sample of stuff-Question involved one of fact-Held, not possible at writ stage and in such jurisdiction to go into such question of fact.-[Question of facts.].

Items 83.09 & 61.09 read with Rules for Interpretation of First Schedule, Import Customs Tariff, r. 3 read with Brussels Nomenclature-Explanatory Notes on heading 83.09-Duty leviable on made up ends Made up ends-Do not fall under r. 3(a), their description being neither specific nor general-Essential character of goods under r. 3(b) appearing to be of a hook covered by item 83.09, such goods, held, could be assessed under heading 83.09 and not under heading 61.09.-[Rules for Interpretation of First Schedule, Import Customs Tariff]

Headings 17.02 & 17.02B-Glucose-Custom duty, levy of-Heading 17.02 classifies chemically pure glucose independently as a substance different from sugars including liquid glucose (otherwise known as commercial glucose)-Petitioners importing liquid glucose in form of viscuous liquid for commercial use and Chemical Examiner's test confirming commodity as commercial glucose composed of dextrose, maltose and dextrine and not finding it chemically pure glucose (dextrose)-Liquid glucose, held, falls under heading 17.02B and rightly charged to import duty @ 62½ % ad valorem.