COLLECTOR OF CUSTOMS through Assistant Collector of Customs (Law), Karachi VS HAYAT SWEET INDUSTRIES, NASIMABAD, 2013 PTD-CUSTOMS-APPELLATE-TRIBUNAL-KARACHI 691 (2012)

Customs Act (IV of 1969)---

----S.19---S. R. O. 575(1)/2006 dated 5-6-2005---PT'C Heading 8438.6000---General power to exempt from customs duties---Agriculture machinery---Classification of PTC Heading---First Appellate Authority set aside the order-in-original and ordered for release of machinery imported under PCT Heading 8438.6000 on the ground that machinery fell under Cl. (13)(1) of Serial No.1 of the S.R.O. 575(1)/2006 dated 5-6-2006; that since the functions performed by the machinery imported were similar to the functions of machinery of PCT Heading 8438.6000 (Machinery for preparation of Fruits, Nuts or Vegetables), the same was correctly classifiable under such heading; and classification (PCT Heading 8438.8090) determined by the adjudicating officer was set aside---Revenue contended that importer's declaration was "Ethinic Snack Frying System "; that by nomenclature of declared description was not covered under PCT Heading 8436.6000; and that by considering the provisions of Rr. 3(3), 3(c) & 4 of the general rules for interpretation of harmonized system the imported Snack Frying System was correctly classifiable under PCT Heading 8438.8090---Validity---Catalogue of machinery showed that it was an all-in-one type of advance machine which performs multiple functions such as shelling (in case of nuts), peeling (in case of pulses), dough making, batter mixing, frying by means of beat wave frying system, seasoning, filling and packing of such agricultural products as peanuts, green peas, almonds, pulses---Products were agro-products and machinery imported was meant for performing various processes on them from production of namkeen snacks---Evidence on record categorically established that importer was in the business of production of namkeen food items and that 98% of such products were being exported---Machinery fell under Cl.(13)(1) of Serial No.1 of the S.R.O. 575(1)/2006 dated 5-6-2006 and the benefit of such notification was admissible to the same---Since functions performed by the machinery imported were similar to the functions of machinery of PCT Heading 8438.6000 (Machinery for preparation of Fruits, Nuts or Vegetables) through the change of PCT Headings and claim of the same thereon were of no use nor there was any violation committed by the importer nor made any ntisdeclaration at the time of claiming the exemption but the same was in accordance with law---No illegality or infirmity in the order passed by the First Appellate Authority having been found same was up-held by the Appellate Tribunal--Departmental appeal being devoid of merits was rejected.

Messrs P &G International Lahore v. Assistant Collector of Customs Appraisement, Gr-II, Karachi and 3 others 2010 PTD 870 ref.

Ghulam Yasin, Appraising Officer for Appellant.

Syed Irshad Ali, for Respondents.

Date of hearing: 15th June, 2012.

ORDER

MUHAMMAD NADEEM QURESHI, MEMBER (JUDICIAL-I).--The appellant filed the instant appeal before this Tribunal against the Order-in-Appeal No. 5615 of 2011 dated 22-6-2011 passed by Collector of Customs (Appeals), Karachi against Order-in-Original No.MCC/PaCCS/Gr-IV/Misc/1258/2011 dated 27-6-2011 whereby the learned Collector of Customs (Appeals) set aside the Order-in-Original/assessment order and ordered for release of the machinery imported in this case under PCT heading 8438.6000 by allowing benefit of Notification S.R.O. 575(I)/2006 dated 5-6-2006 and allowed the appeal of the appellant. The operate part of Order-in-Appeal is reproduced herein below:-

"I ant of the firm opinion that the impugned machinery falls under clause 13(1) of Serial No.1 of Notification S.R.O. 575(1)/2006 dated 5-6-2006 and the benefit of the afore-mentioned notification is admissible to the same. Since the functions, as mentioned above, performed by the machinery imported in this case are similar to the functions of machinery of PCT heading 8438.6000 ("Machinery for preparation of Fruits, Nuts or Vegetables"), I rule that the same is correctly classifiable under the aforementioned heading. Therefore, the classification (PCT 8438.8090) determined by the adjudicating officer is also set aside. The evidence presented by the appellant's representative also shows that previously exactly the same machinery had been imported by Messrs Ismail Industries, Karachi and the Model Customs Collectorate of Port Muhammad Bin Qasim had cleared the same under PCT heading 8438.6000 and had also allowed benefit of notification S.R.O. 575(1)/2006 dated 5-6-2006 vide GH No. HC-KPQI-0494 dated 16-7-2007 (Cash No. C-640 dated 23-7-2007)

?2. Being aggrieved and dis-satisfied with the impugned order-in?appeal the department (hereinafter referred to as the "appellant") filed the instant appeal before this forum on the following grounds:

(i) That the importer's declaration was "Ethinic Snack Flying System" therefore, by the nomenclature of declared description is not covered under PCT heading 8436.6000. Therefore, considering the provisions of Rules 3(a), 3(c) and 4 of the General Rules for interpretation of the Harmonized system (G.I.R.) the imported Snack Frying System is correctly classifiable under PCT heading 8438.8090.

(ii) That the learned Collector of Customs (Appeals) set aside the Assessment Order and passed by the Deputy Collector (PaCCS, Gr-IV) merely on the grounds that similar kind of goods were earlier cleared by the Port Muhammad Bin Qasint Collectorate. It is respectfully submitted that it is a cardinal principle of law that two wrongs can not make one right. Further it is settled law that a wrong practice cannot over ride the law and in the light of number of judgments including the honourable Lahore High Court's reported judgment in the case of Messrs P & G International, Lahore v. Assistant Collector of Customs. Appraisement, Gr-I1, Karachi and 3 others (2010 PTD 870), wherein it has been held that an unlawful practice can not over ride the law, the learned Collector of Customs (Appeals)'s order is not sustainable under the law. The learned Collector ('Appeals)'s totally incorrect in view of the importers declared description, functions highlighted in the catalogue and also considering the General Rules of Interpretation (G.I.R.). Lastly the appellant prayed for set aside the impugned Order?in-Appeal.

?3. Brief facts of the case are that the appellant electronically filed Goods Declaration (GD) bearing CRN 1-HC-1855536-140611 for import of Ethnic Snack Frying System and claimed benefit of exemption from customs duty and sales tax in terms of clause 13(1) of S. No.1 of notification S.R.O. 575(I)/2006 dated 5-6-2006. During the processing of the GD, it was found that benefit of the above mentioned notification was not available to the machinery imported in this case. The reviews filed by the appellant before the Collectorate's hierarchy failed and the proceedings culminated in issuance of the impugned order.

4. I have heard the arguments of departmental representative and learned counsel for the appellant.

5. The respondent controverted the grounds of the appellant and re-iterated his arguments as under:--

(i) That it was a special incentive of the Government of Pakistan to groom and elevate such agro based industries vide S.R.O. 575(1)/2006 serial No. 1(1) sub-serial No. 13 under zero rate of duty and taxes, therefore, the appellant imported a complete automatic Ethnic Snack processing System from Australia.

(iii) That the respondent had also obtained a desired certificate from the ministry of Food Agriculture and live Stock Islamabad, which is mandatory to claim vide Certificate No. F?I-16/2005-SAE (WM) dated 27-12-2010 confirming stance for the i)nporting of agro based machinery.

(iv) That on arrival of machinery, the respondent filed GD in CARE claiming benefits under S.R.O. 575(1)/2006 Serial No. 1 sub-serial No.13 under zero rate of duty and taxes. The respondent submitted an exemption certificate issued by the Commissioner of Income Tax for claiming zero with-holding Income Tax and Minfal Certificate

(v) That the goods were sent to examination through the MSA wharf. The examination staff confirmed the declaration and submitted H.S Code.

(vi) The DC had accepted the given declaration including declared Customs Tariff heading 8436.6000 as was stated Machinery for the preparation of fruits, nuts or vegetables but disagreed with the claim of exemption as according to his opinion this machinery may perform multiple processing of food hence the benefit of exemption of CD was denied.

(vii) The detailed catalogue illustrating the whole process of flow and description from the initial processing of raw material to final finished product duly packed was presented. It includes shelling in case of nuts and peeling for pulses (In extruder, dough making, hatter mixing, frying through heat wave frying system, seasoning and finally filling and packing)

(viii)That it is also categorically stated that the machinery in question is best suitable for pulses, peas of different types and nuts for different species, including almond, bazel nuts and peanuts. All these are simply our agro based products and if we minutely read the items under the title of "Machinery for the Preparation of Fruits, Nuts or Vegetables" starting from (A) Peeling ntachitles, leg., to (H) Machines for cutting or salting cabbage sauerkraut, all these agro based mechanism are tax free and our machine is all in one capable of doing these functions, which is desired. It does not make any difference whether we purchase all these tools separately or we purchase a single all in one advauueed machine: These all meant for agro based industry and are iax free.

(ix) One very important factor, also brought to the notice of the Honourable DC was that the same processing line from the same supplier source had been imported and was released by MCC Collectorate of Port Qasim by assessing under the same declared head 8343-6000 and benefit of S.R.O. i.e. 575(1)/2006 vide GD Machine Not for Home Consumption HC-KPQI-0494 dated 16-7-2007 GD Cash No. C-645 dated 23-7-2007 was given.

(x) That instead of awarding the specified PCT head 8438-600 read as Machinery for the preparation of fruits, nuts or vegetables, the honourable DC assessed the same under HS Code 8438-8090 which reads as "others" hence, the same does not cover the claim of S.R.O., therefore, exemption was simply denied without any cogent reason.

(xi) That it is admitted law, wherein the only circumstances, where the goods are to be classified in the later heads, if it were not covered or specified in preceding headings of the tariff under rule 3(c) of the general rules for the interpretation of Harmonized system as the fourth Edition-2007 WCO Brussels, speaks.

(xii) That in the instance case an appropriate HS code 8438-6000 if therefore, cannot justify how and whether to assess our machine in HS Code 8438-8090 which reads as "other". The sustainable contention made on the basis of the exemption certificate issued by the ministry of food and agriculture, was declined like a monarch. In the circumstances who would have to import for the well being of the sake.

(xiii)We pray your kind self to please devolve into the platter that may enable you to realize that our import is specific in nature for innovating and modernizing of our manufacturing facility to meet the international health standards which require a hand free processing system and benefit claims under S.R.O. 575(1)/2006 is therefore duly admissible.

6. It is important to note here that the controversy allegedly raised by the appellant with regard to the PCT Code pertains to 8438-6000 which was declared by the respondent to claim the exemption through S.R.O. 575(1)/2006 which was not accepted by the appellant and raised the objections that no exemption would be allowed against the machinery imported by the respondent.

7. If this aspect of assessing authorities could be taken as right observation then question arises that what would be the consequences if the S.R.O. 575(1)/2006 dated 5-6-2006 and table attached along with the 'HS Code bearing Nos. 8438.6000 and 8438.8090 both listed as zero rated duty. According to that factual position the observations made by the learned Collector of Customs (Appeals) at the time of passing of order are well within the criteria of legal obligations.

8. In the line of above observation I have thoroughly gone through the case record including the literature/catalogue of the machinery imported in this case and have given due consideration to the arguments advanced before me.

9. The catalogue of the machinery clearly shows that it is an all-in?one type of advance machine which performs multiple functions such as shelling (in case of nuts), in case of peeling (in case of pulses), dough making, batter mixing, frying by means of heat wave frying system, seasoning, filling and packing of such agricultural products as peanuts, green peas, almonds, pulses etc. There is no doubt that the products mentioned above are agro products and the machinery imported in this case is meant for performing various processes on them for production of namkeen snakes. The evidence on record also categorically establishes that the appellant is in the business of production of namkeen snakes and that 98% of such products are being exported by him. In view of the' above position stated above, I am of the firm opinion that the impugned machinery falls under clauses 13(1) of Serial No. 1 of Notification S.R.O. 575(I) of 2006 dated 5-6-2006 and the benefit of the aforementioned notification is admissible to the same.

10. Since the functions, as mentioned above, performed by the machinery imported in this case are similar to the functions of machinery of PCT heading 8438.6000 ("Machinery for preparation of Fruits, Nuts or Vegetables") through the change of PCT headings and claim of the same thereon under the above referred circumstances are of no use nor there is any violation committed by the respondent nor made any mis? declaration at the time of claiming the exemption but the same was in accordance with law as such the reference made by the learned Collector of Customs (Appeals) with regard to the import of Messrs Ismail Industries, Karachi and the benefit claimed under S.R.O. 575(I)/2006 dated 5-6-2006 vide GD No. HC-KPQI-0494 dated 16-7-2007 (Cash No.C-640 dated 23-7-2007) is the admissible evidence to understand and clarify the subject controversy.

11. For the reasons stated above, I could not find any illegality or infirmity in the order passed by Collector of Customs (Appeals) and up-held the same, the appeal being devoid of meritSrejected accordingly.

CMA/15/Tax(Trib.)????????????????????????????????????????????????????????????????????????????? Appeal rejected.