ORDER WITH THE SIGNATURE OF THE JUDGE

For katcha peshi.

09.08.2012

Mr. Ghulam Ahmed Khan, advocate for the applicant.

Mr. Saadat Yar Khan, advocate for respondent No. 1.

Mr. Faisal Siddiqui, Amicus Curie.

Following two questions have been brought before us, through the present reference :-

1. Whether classification of an imported goods for levy of taxes under Harmonized Customs Tariff without application of laid down Rules for Interpretation of the Customs Tariff will have any legal validity and classification determined in absence of such Rules can be acted upon.

2. Whether any raw material useable for production of a particular product will not qualify to be meant for use in that particular industry.

Brief facts of the case are that the respondent No. 1 who is a trader imported certain consignment of flavours. According to the respondent the consignment falls under classification: 3302.9000 whereas the Customs claimed duty as per classification 3302.1010. The later classification, in addition to the Customs Duty provides for payment of 50% Central Excise Duty for import of flavours and concentrates for use in aerated beverages, whereas the earlier classification, which describes the material as “other” does not provide for payment of any Excise Duty. The consignment was in fact released on payment of Customs duty under classification 3302.1010 as the Customs Authorities insisted that the consignment in fact fell under classification 3302.1010 and not under classification 3303.9000 as was declared by respondent No. 1.

Mr. Ghulam Ahmed Khan, learned counsel for the applicant submits that as per record the imported flavours were in fact used by the beverage industry as it can be seen from the record that almost the whole of the consignment was sold to various beverage manufacturing / bottling units.

Mr. Saadat Yar Khan, learned counsel for respondent No. 1 submits that it is wholly unfair and unjustified to demand Excise Duty leviable under classification 3302.1010 from an importer who was / is merely a trader and at the time of the import had no idea as to who the prospective buyer would be and for what purpose the buyer will use the flavour and further that the importer, being a trader was not lawfully competent to charge any Excise Duty on behalf of the Customs or Government of Pakistan.

Mr. Faisal Siddiqui, Learned Amicus Curiae submits that the matter involves interpretation of two classifications. According to the learned Amicus, in terms of the classification 3302.1010 Excise Duty is payable in respect of flavours and concentrates which are for use in aerated beverages whereas classification: 3302.9000 does not prescribe any Excise Duty on flavours and concentrates which are not for use in aerated beverages . It is submitted that logical conclusion that can be drawn from reading the two classifications together would be that it is only in case of import of flavour which are imported for use of aerated beverages that Excise Duty is payable and further that no Excise Duty is payable in respect of flavour that are not imported for use in aerated beverages and since in the present case, the importer is neither a manufacturer nor an agent of any manufacturer and is merely a trader who sells flavour in open market without any idea as to who his customer would be. It shall, therefore, be absolutely unjust and unfair to levy Excise Duty on the consignment in question as is leviable on such consignment where the import is for use in aerated beverages. To the Court’s anxiety that in case, it is held that since the importer is not a manufacturer or bottlers of aerated beverages he is not liable to pay Excise Duty as prescribed by classification: 3302.1010; such interpretation may be mis-used to evade Excise Duty by the beverage industry by using a front-man for such import. Mr. Faisal Siddiqui submits that in order to avoid mis-use of the above interpretation an amendment in the classification can be proposed by this Court whereby a proviso can be added to the classification to the effect that in case the imported flavours are in fact not used in the manufacturing / bottling of aerated beverages and are used for some other preparation an authenticated certificate and some other material (s) as may be prescribed, be produced in support of the claim that the imported flavours have not been used in the manufacturing of aerated beverages but have been used for some other purpose, to seek refund of Excise Duty paid at the time of importation.

Since, as noted above, the respondent No. 1 is an importer and not a manufacturer or bottler of aerated beverages and has sold the imported flavours in question in the open market in the normal course of his business, as such , although as per customs, the record shows that most of the consignment was purchased by manufacturers/bottlers of aerated beverages, it cannot be said that the import of the flavours in question was in fact made for their use in manufacturing aerated beverages only and since neither has it been brought on record that respondent No. 1 caters only to the manufactures/bottlers of aerated beverages and/or that he had obtained advance booking for the imported consignment from such users and has also not been explained that the imported flavours were useable only in the manufacturing of aerated beverages nor has any material been placed before us to show that the imported consignment was / could have only been used in beverages. It would, therefore, be unfair and unjust to levy Central Excise Duty on the import in question more-so for the reason that respondent No. 1 had no authority to collect any Excise Duty on behalf of the Government of Pakistan.

We would, in the circumstances, dispose of the present reference by holding that the Central Excise Duty as prescribed in classification: 3302.1010 was/is not leviable in respect of the consignment in question and would therefore direct the Customs Authorities to refund the amount of Central Excuse Duty, if any paid by respondent No. 1 in respect of the said consignment.

The Revenue Authorities may however consider incorporating a proviso in the relevant provision and/or notification as discussed above.

We are thankful for the valuable assistance provided by Mr. Faisal Siddiqui, as Amicus Curiae, in this case.

J U D G E

DB.Mr.Justice Maqbool Baqar & Mr.Justice Nadeem Akhtar/09.8.2012\zahid