ORDER SHEET

IN THE HIGH COURT OF SINDH AT KARACHI

PRESENT:

Mr. Justice Aqeel Ahmed Abbasi

Mr. Justice Mahmood A. Khan

C. P. No.D-4001 of 2018

Orange Motorcycle Company (Pvt.) Ltd……………………..…….Petitioner

Versus

Federation of Pakistan & 4 others……….……………………..Respondents

Petitioner : Through M/s. Muhammad Abbas, Farooq

Hashmat Abbasi and Barkat Ali Awan, Advocates.

Respondents

Nos.2 to 5 : Through Mr. Khalid Rajper, Advocate alongwith Appraising Officer Akram Ali.

Respondent No.1 : Through Mr. Muhammad Aminullah Siddiqui, Asst. Attorney General.

Dates of Hearing : 20.11.2019 & 04.12.2019

Date of Short Order : 04.12.2019

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J U D G M E N T

Aqeel Ahmed Abbasi, J : -- Briefly, the facts as stated in the memo of instant petition are that the petitioner’s company is an active taxpayer and importer of the motorcycles/three wheeler autoloaders in the name and style of “Orange Motorcycles Company (Pvt.) Limited”, which regularly imports motorcycles/three wheeler autoloader in an unassembled condition, which are then assembled in its workshop for commercial sale as built-up unit to be used as “three wheeler cargo autoloader”. In the normal course of business, petitioner purchased 90 units of three wheeler autoloaders from Wuxi Berang International Trading Co. Ltd. China. The goods packed in two containers in an unassembled condition were shipped from Port of Shanghai, which arrived at Port of Karachi on 05.03.2018. Petitioner filed Goods Declaration (GD) on 20.03.2018 under PCT Heading 8704.3150. The custom authorities did not agree with such declaration and assessed the goods under PCT Heading 8704.3190, which assessment was upheld by the Principal Appraiser. The goods were, however, not released by the customs authorities, whereas, on 12.05.2018 respondent No.3 issued a public notice, according to which, subject goods have been classified under PCT Heading 8704.3140. The petitioner approached the customs authorities for the release of the subject goods i.e. three wheeler cargo autoloader, which according to the petitioner, irrespective of the aforesaid classification by the customs authorities are freely importable under Para 4 of the Import Policy Order, 2016. However, the respondents did not allow release of the subject imported three wheeler cargo autoloader and directed the petitioner to submit registration certificate from Engineering Development Board (EDB) for clearance of the subject goods in terms of SRO 656(I)/2006 dated 22.06.2006. Petitioner objected to such demand by the customs authorities to produce clearance certificate from EDB as per aforesaid SRO while submitting that EDB registration is only required to avail concessionary rate of duty at the rate of 20% under the aforesaid SRO, whereas, petitioner is willing to pay higher rate of duty applicable in the case of the petitioner in accordance with law. However, respondents did not allow release of the subject three wheeler cargo autoloaders, and detained the same without issuing any show cause notice or confronting the petitioner with the alleged violation of the provisions of the Customs Act, 1969 read with Import Policy Order, 2016. Being aggrieved by such treatment of the customs authorities, petitioner has filed instant Constitutional Petition with a prayer to direct the respondents to process the Goods Declaration of the petitioner in accordance with law and to release the subject consignment, containing three wheeler cargo autoloader, and also to issue delay detention certificate.

2. Learned counsel for the petitioner has submitted that the petitioner has imported three wheeler cargo autoloader, which according to him, are freely importable and do not fall within the prohibitory/restrictive category, whereas, the said three wheeler cargo autoloader have been declared under PCT Heading 8404.3150 at the rate of 50% customs duty, however, respondents have classified said three wheeler cargo autoloader under PCT Heading 8404.3190, which attracts the customs duty at the rate of 60%. Per learned counsel, petitioner expressed its willingness to secure the disputed amount of duty and taxes for the purpose of provisional release of the subject vehicles, however, the respondents instead of allowing provisional release to the petitioner as per their assessment, in the garb of a Public Notice No.02/2018-MCC(E), dated 12.05.2018 issued by the Classification Committee of the Customs Department, changed their opinion with regard to classification of the subject three wheeler vehicle, and treated the same as classifiable under PCT Heading 8704.3140, which attracts the duty at the rate of 20%. However, another condition has been imposed by the respondents, requiring the petitioner to produce certificate of registration from Engineering Development Board (EDB) in terms of SRO 656(I)/2006, dated 22.06.2006, which according to the learned counsel, is not applicable in the case of the petitioner. According to the learned counsel, such SRO is applicable only in respect of the importer-cum-assembler or manufacturer, who intends to get the benefit of a concessionary rate of the customs duty at the rate of 20%, whereas, according to learned counsel, petitioner does not fall within the aforesaid category, as the petitioner does not intend to get the benefit of the concessionary rate of the customs duty at the rate of 20%, on the contrary, is willing to pay the customs duty at the normal rate of 50% of customs duty in accordance with law. It has been further contended by the learned counsel for petitioner that import of similar three wheeler cargo autoloader has been allowed to the petitioner as well as to other importers under PCT Heading 8704.3150, however, the respondents with malafide intention, are not allowing such release while discriminating the petitioner, without any lawful excuse. It has been prayed that respondents may be directed to process the Goods Declaration of the petitioner in accordance with law and to assess its customs duty without further delay by issuing delay detention certificate to the petitioner.

3. Conversely, learned counsel for the respondents has opposed the contention of the learned counsel for the petitioner and submitted that the goods imported by the petitioner do not fall within the category of freely importable goods, as according to learned counsel, in terms of Para 5(B)(i) read with Sr. No. 19 of Table-II of Appendix-B, commercial import of dis-mantled vehicles is subject to certain restrictions, according to which, component for assembly, manufacturing of motorcars, other motor vehicles, trucks, busses and motorcycles are importable only by the assemblers registered with the Engineering Development Board of Ministry of Industries & Production [EDB]. It has been contended by the learned counsel for the respondents that the three wheeler cargo autoloaders imported by the petitioner, are not complete built-up unit, rather it is in the dis-mantled condition, consisting parts of components, therefore, the proper classification of the imported three wheeler cargo autoloader would not fall under PCT Heading 8704.3140, whereas, in terms of SRO 656(I)/2006 dated 22.06.2006, petitioner is required to be registered with the EDB and has to produce a certificate of registration to this effect. It has been further contended by the learned counsel for the respondents that in order to resolve the dispute regarding classification of three wheeler cargo autoloader, matter was referred to the Classification Committee, which has concluded that three wheeler cargo autoloader in dis-mantled/unassembled condition or three wheeler cargo autoloader in CKD/SKD condition, is appropriately classifiable under PCT Heading 8704.3140 in terms of general rules of interpretation. According to learned counsel, petitioner is required to fulfill the mandatory conditions as prescribed in terms of SRO 625(I)/2006 dated 22.06.2006 and to show that an importer is an assembler or manufacturer having suitable in-house facility, and to produce Registration Certificate from EDB. It has been prayed that instant petition may be dismissed in limini alongwith listed application.

4. We have heard the learned counsel for the parties, perused the record and have also examined the relevant PCT Headings and the provision of Import Policy Order, 2016 with their assistance. From perusal of the Goods Declaration filed by the petitioner, it appears that in the Column of Description petitioner has mentioned “Complete Built-up three wheeler cargo autoloader 150 cc in un-assembled condition MMG Year 2018” and has also given the description of engine number, chassis number etc. The imported three wheeler cargo autoloader has been declared under HS Code 8704.3150 at the rate of US $ 350.00 per unit price. However, the Customs Authorities assessed the subject imported three wheeler cargo autoloader under HS Code 8704.3190 at the rate of US $ 450.00 per unit price, however, did not dispute the description of the subject imported three wheeler cargo autoloader alongwith the Goods Declaration filed by the petitioner. In support of the subject imported three wheeler cargo autoloader, petitioner has also attached the commercial invoice, packing list and original bill of lading, which are found inconformity to the price as given in the Goods Declaration. It has been further observed that the Customs Authorities after making assessment in the aforesaid terms, did not issue any Show Cause Notice to the petitioner, nor confronted the petitioner with the purported Public Notice No. 2/2018-MCC(E) dated 12.05.2018, according to which, the subject goods i.e. the components for manufacture of three wheeler cargo autoloader in dis-mantled/unassembled condition or three wheeler cargo autoloader in CKD/SKD condition is appropriately classifiable under PCT Heading 8704.3140 of the Pakistan Customs Tariff in terms of General Rules of Interpretation-I and 3(a).

5. During the course of hearing, learned counsel for the parties were directed to place on record the photographs of the imported three wheeler cargo autoloader, showing the packing and container, in which, the same have been imported as well as the components found in such packing/container. Learned counsel for the petitioner have placed on record such photographs, which reflect that in one packing/container, complete built-up unit of three wheeler cargo autoloader named as “Orange Motorcycles” have been imported by the petitioner, in dis-mantled and unassembled condition, however, prima facie, does not require any process of manufacturing. On the contrary, the dis-mantled components of the three wheeler cargo autoloader only require a simple process of joining/attaching the major components of body and engine, without involving the process of manufacturing or assembling. Learned counsel for the respondents was confronted to assist this Court as to whether each packing/container in which the three wheeler cargo autoloader has been imported as a complete built-up unit, would require any process of manufacturing or assembling of the components, in response to such query of the Court, learned counsel for the respondents could not submit any reasonable response, however, stated that since three wheeler cargo autoloader has not been imported as one Complete Built-up Unit, therefore, it requires to undergo the process of assembling for which, the petitioner has to produce certificate of registration from EDB. Learned counsel for the respondents was also confronted to assist this Court as to whether the similar consignments of the petitioner, as well as the other commercial importers, have been duly assessed under PCT Heading 8704.3150 or 8704.3140, in response to such query, learned counsel for the respondents has candidly stated that prior to Public Notice No.2/2018 dated 12.05.2018, three wheeler cargo autoloaders were assessed under PCT Heading 8704.3150, however, after the report of Examination Committee, the same are liable to be assessed under PCT Heading 8704.3140.

6. It is pertinent to note that petitioner was never associated in the proceedings undertaken by the Classification Committee, comprising of the Officers of the Customs Department, nor any opinion has been sought from any independent forum, on the contrary, a different view has been taken by the Classification Committee in deviation of past practice and the assessment made by the Customs Authorities in respect of identical three wheeler cargo autoloader. Such treatment by the Customs Authorities to the imported consignment of the petitioner, after assessment of the GD, without issuing any Show Cause Notice or confronting the petitioner with the proposed classification of the petitioner’s consignment, is not only contrary to law, but also violates of principle of natural justice and fair trial as guaranteed under Article 10 of the Constitution of the Islamic Republic of Pakistan, 1973.

7. It may be observed that past practice of the department for classification of imported consignment under a particular H.S.Code, unless contrary to law, if deviated, then it shifts the burden upon the department to justify the proposed treatment and also to give valid reasons for determination of higher value of the imported goods while discriminating such importer. In the instant case, respondents have miserably failed to show any valid reason for deviating from past practice of assessing of the three wheeler cargo autoloader under PCT Heading 8740.3150, and to assess the same under PCT Heading 8740.3140. It is surprising to note that the proposed treatment by the Customs Authorities would attract application of lesser amount of duty at the rate of 20% instead of the amount of duty paid by the petitioner at the rate of 50%, or the amount of duty assessed by the Customs Authorities in the case of the petitioner on G.D. filed by petitioner i.e. at the rate of 60%, and would eventually cause loss of revenue to the exchequer.

8. In view of hereinabove facts and circumstances of the instant case, we are of the considered opinion that respondents have failed to make out a case for re-assessing the imported three wheeler cargo autoloader by the petitioner under HS Code 8704.3140 as against the declared HS Code 8704.3150, attracting the levy of 50% of customs duty, or under HS Code 8704.3190, attracting the levy of 60% of the customs duty. Accordingly, vide our short order dated 05.03.2019, instant petition was allowed in the following terms:-

“ For the reasons to the recorded later on, instant petition is allowed. Respondents are directed to release the consignment of the petitioner, subject to petitioner’s depositing the assessed duty and taxes as per GD available at pages 27-29, before the concerned Collectorate, within 15 days from the date of short order. The request of petitioner for issuance of delay of detention certificate shall also be considered in accordance with law.”

The above are the reasons of such short order.

J U D G E

Farhan-PS/Nadeem