The Supreme Court has held that the scheme of Customs Act, 1969 does not envisage any role of the Central Board of Revenue (CBR), now FBR, in resolving any dispute relating to the classification of goods.
It was stated by three-judge bench, headed by Justice Maqbool Baqir.
The bench had heard the collector of customs, Islamabad, appeals against the Islamabad High Court (IHC) verdict 9 March 2016.
The M/s Askari Cement (Pvt) Ltd and M/s Bestway Cement Co (respondents) imported refractory bricks of various classifications, which they declared falling under PCT headings 6902-1090 and 6902.2090, chargeable to customs duty at the rate of 10 percent ad-valorem.
The PCT headings relate to refractory bricks, which are capable of resisting temperature at or above 1,600 degrees C.
The petitioner/department sought expert opinion from three entities, namely, M/s Facto Cement Limited, M/s Heavy Mechanical Complex, Taxila (HMC) and Pakistan Council of Scientific and Industrial Research (PCSIR), and interpreted to classify the bricks under PCT heading 6902.1010, chargeable to duties at 30 percent, instead of 10 percent.
It classified the imported bricks under PCT heading 6902-1010 chargeable to customs duty at the rate of 30 percent, instead of 10 percent.
Subsequent to show-cause notices, orders-in-original were accordingly passed, which orders were set-aside by the Customs, Central Excise and Sales Tax Appellate Tribunal. The department filed the appeals against the Tribunal order in IHC, which was also dismissed.
It was the contention of the department counsel that since through letter dated 26 December 2001, the concerned Collector of Customs sought guidance from the CBR regarding the departments point of view purportedly endorsed by the HMC and M/s Fecto Cement, that the subject bricks have temperature resistance capacity of less than 1,600C, and are thus chargeable to 30 percent customs duty, and the board through its letter dated 08 January 2002, confirmed it, therefore the same should have been prevailed with the Tribunal and the High Court.
She submitted that the Board is vested with exclusive jurisdiction to classify a product for the purpose of PCT heading and such classification could not have been lawfully disturbed by the tribunal.
The judgment, authored by Justice Maqbool, stated indeed in terms of Section 223 of the Act, all officers of the customs and other persons employed in the execution of the Act are obliged to observe and follow orders, instructions and directions of the board. However, proviso to the said section itself restricts the domain of such orders, instructions and directions to the administrative fields only, as it clearly prescribes that the same shall not be so issued to interfere with the discretion of the appropriate officers of customs in exercise of their quasi-judicial functions.
The instructions, order or directions made or given must yield to the act and rules framed thereunder and should not go beyond the provision of the statute itself.
Direction as envisaged by Section 223 of the Act can be given in matter falling within the range of the administrative power so long as the field is not occupied by any statutory provision or a rule.
The provisions of the Section 223 of the Act, clearly protects discretion of the appropriate officers of Customs in exercise of their quasi-judicial function, where the Board does not figure in the hierarchy of the forums provided for adjudication of assesses liabilities to tax, any interpretation of law by board cannot be treated as a pronouncement by a forum competent to adjudicate upon.
Undoubtedly classification of goods for the purpose of duty, determination of the value, and decision of appeals under Section 193 of the Act, falls within the scope of qausi-judicial function under the Act.
In case where custom authorities exercise quasi-judicial function, it is not bound by the instructions and directions or orders of the Board which tend to interfere with its judicial discretion.
It has to make its own decision on the basis of the facts and circumstances and the law applicable to the case.
The Customs General Orders are only aids to Customs Officers in order to understand and interpret the Act.
They cannot override or modify the law.
While exercising quasi-judicial function the appropriate officer of customs are not subject to the administrative control of the board by means of the orders, instructions or directions.