KARACHI: A two-member bench of the Sindh High Court (SHC) has allowed reference applications and setting aside the impugned orders passed by Customs Appellate Tribunal filed by M/s United Refrigeration Industries Ltd, M/s Yasir Chemicals, Karachi, M/s Kaghan Chemicals Co, M/s Adil Polumers, M/s Shouibee Industries & Others, M/s Atee & Company, United Refrigeration Industries Ltd, M/s Waves Singer Pakistan Limited, M/s Varioline Intercool Pakistan and others against Director D I&I FBR.
On 10 April 2021, a two-member bench, headed by Justice Muhammad Junaid Ghaffar released a details judgment on 31 reference applications.
Court observed in its verdict that” through these Reference Applications, the applicants have impugned a common judgment dated 14.05.2019 passed by the Customs Appellate Tribunal, Karachi, in Customs Appeal No. K-257 of 2017 and other connected matters.
Learned counsel for the Applicants have contended that the product(s) in question (Wannate PM-2010, Wannate PM-8221, Cosmonate M200, Millionate MR-200 and Lupranate M20S), being polymethylene polyphenylene isocyanates commonly referred to as Polymeric MDIs (generically) was regularly being classified by the Department under HS Code 3824.9091 over a considerable period of time; that time and again issue of its Classification was raised by various Departments including the Directorate of Intelligence & Investigation .
Counsel argued that the matter was referred to the Classification Committee of the Appraisement Collectorate at Karachi who vide its decision dated 27.12.2014 held that the goods in question are to be classified under HS Code 3824.9091; that despite this Classification decision, the Directorate of Intelligence was of the view that the goods in question are correctly classifiable HS Code 3909.3000 and once again various Collectorates, pursuant to such view of the Directorate of Intelligence & Investigation changed the Classification and thereafter importers at Lahore had to approach FBR, who vide letter dated 18.11.2016 took exception to such change of Classification without further referring the matter to the Classification Committee and directed to release the consignments under HS Code 3824.9091; that once again the Classification Committee vide Letter dated 02.12.2016 reiterated its earlier opinion that the goods are to be classified under HS Code 3824.9091; that Intelligence Directorate again approached FBR who vide its letter dated 7.3.2017 withdrew its earlier letter dated 18.11.2016 and once again directed the Classification Committee to re-examine the issue; that thereafter, the Classification Committee has issued a new Classification Ruling vide Public Notice No. 9/2017 dated 12.6.2017 and has now changed its opinion by holding that the goods in question are classifiable under HS Code 3909.3000; that notwithstanding the changed stance of the Classification Committee Led by Mr. Abdul Ghaffar Khan Advocate. SCRA Nos. 426 / 2019 & Others Page 5 of 22 and FBR.
Counsel stated that said Public Notice is only applicable prospectively, whereas, all consignments in question which are subject matter of these Reference Applications, were cleared prior to issuance of this Public Notice; that in terms of Para 74 of CGO 12 of 2002 it could only be applied prospectively; that subsequently, FBR has also amended the Customs Tariff through Finance Act 2017, and has now created a specific local heading of these goods under HS Code 3909.3000 which clearly reflects that insofar as the goods in question are concerned, they cannot be classified under the newly created heading as no retrospective effect can be given to an amendment made in the First Schedule to the Custom Act, 1969 by way of Finance Act, 2017; that as to the prospective Classification under HS code 3909.3000 , the Applicants are not aggrieved; but their case is that the departure from a settled practice which has resulted by way of a Public Notice, can only be applied prospectively, whereas, reliance has been placed on various reported cases2.
On the other hand, learned counsel for the department has argued that since the classification earlier determined was found to be incorrect, whereas, it was in respect of some other goods; hence, the Tribunal has come to a correct conclusion by holding that this is not a case of any retrospective application of the Public Notice but a case of mis-declaration of Classification by the Applicants and therefore, fine and penalty was also imposed upon the importers and their custom agents; that no exception can be drawn to the conclusion arrived at by the Tribunal; that it is otherwise a factual controversy which has been decided by the Tribunal against the Applicants; that the Explanatory Notes and the amendments to the harmonised coding system was very much in field and the product in question was always required to be classified under HS Code 3909.3000; that in view of the reported cases4 all these Reference Applications merit dismissal.
In view of hereinabove facts and circumstances of the case, question (a) is answered in the affirmative; in favour of the Applicants and against the Respondents; and question (b) is answered in negative; in favour of the Applicants and against the Respondents. All Reference Applications are allowed by setting aside the impugned orders passed by the forums below. Let copy of this judgment be sent to the Customs Tribunal in terms of section 196(5) of the Customs Act, and shall also be placed in all connected files”.
