The petitioner-Company imports accessories for the manufacture of ladies foundation garments such as Brassiers, Panties and Girdles, and is required to export 25 7, of its products in order to earn foreign exchange. The Government of Pakistan granted to the petitioner an industrial import licence No. 508761 on 20th June, 1975, to import lining materials under Serial No. 151 of the import policy order 1974-75. The description of the goods given in this item were as under:
(a) Buckram, Shoulder Pads, Alpaca and Stripped Taffeta.
(b) Elastic straps, band and Lycra.
The petitioner Company on the basis of the above licence imported not the above but:
(a) 'Made up Accessories' for Article of Apparel 1*" complete with hooks-matching (Pre-Cut) hereinafter mentioned as 'Made Up Ends'.
(b) J" No. 105 Elastic Straps, hereinafter mentioned as Elastic Straps.
Some of the stuff was imported by Air while the rest by Sea.
2. The respondent No. 4 who is incharge of customs operations at the Lahore Air Port as well as Dry Port, Moghalpura, informed the representatives of the petitioner company that some of the articles imported by it were banned items whereas the elastic straps were chargeable to duty at the rate of 155 % ad valorem + 10 Y. Sales tax. The petitioner-Company controverted but the customs authorities refused to accept their view and refused to release the goods. The petitioner-Company, thereafter, made a representation to the Secretary Ministry of Commerce who vide his letter dated 14th June, 1976, directed the petitioner-Company to obtain a clearance permit from Controller Imports and Exports at Lahore. The petitioner obeyed that direction and obtained the clearance permit on 25th August, 1976 on a payment of Rs. 1,155.
3. Armed with the permit the petitioner again approached the respondent No. 4 who instead of releasing the goods issued a show-cause notice dated 8th July, 1976 stating therein that the 'made up ends' and the clastic straps imported by the petitioner fell under I. T. C. Heading 61.09-A and 59.13 respectively while the articles included in the import licence fell under other categories. The petitioner replied to the show-cause notice but its plea was not accepted. Respondent No. 4 imposed an Import Trade Control fine of Rs. 25,000, for the release of the goods imported by Air while a penalty of Rs. 10,000, as redemption fine for the release of the other goods. He also decided that the import consisted of banned items and held that 'made up ends' fell under heading 61.09-A while the elastic straps under heading 49.13 of the P. C. T. Schedule.
4. Being aggrieved, the petitioner Company filed an appeal before respondent No. 3. He did not accept the petitioner's plea and the ruling of the Chief Controller of Imports and Exports that 'made up ends' fell under heading 83.09 (M) of the P. C. T. Schedule. He, however, held that the import of "made up ends' as against an import licence for lining material under Serial No. 151 of the Import Policy was a contravention of free list within the free list and administered only a warning for it. The duty for that item was ordered to be charged under P. C. T. Heading 61.09. With respect to the elastic straps respondent No. 3 held them to fall under P. C. T. Heading 59.13. He reduced the fine to Rs. 5,000, on each consignment.
5. Feeling yet dissatisfied the petitioner approached the Central Board of Revenue in two separate revision petitions. The learned Member (Customs) who heard the same held that the 'made up ends' could not be classified under heading 83.09 of Pakistan Custom Tariff and maintained the order of respondent No. 3. As regards the fine he reduced it to 10 of the total value of the imported goods. The petitioner has now filed the present writ petition.
6. The questions being raised before me are whether heading 83.09 or 61.09 as finally held, applies in respect of the 'made up ends' in view of rule 3 of the Rules for Interpretation of the First Schedule- Import Customs Tariff: The learned counsel relied on Brussels Nomenclature heading 58.05 Part (B), clause (g) and the ruling of the Chief Controller of Imports and Exports (Annexure 'E') to say that the 'made up ends' do not correspond to any goods falling under item 61.09 which includes corsets, corset-belts, suspender belts, brassiers, braces, suspenders garters and the like (including such articles of knitted or crocheted fabric) whether or not elastic. It was contended that the 'made up ends' are only hooks with a piece of elastic strap and is not a belt or a suspender. In fact these articles cannot be used by themselves as they are only accessories of the above.
7. The 'made up ends' consist of Elastic Straps measuring 1j" with matching hooks, stitched on it, through the eyes. These 'made upends' are stitched to the ends of brassiers or other under- garments in order to fasten them on the part of the body on which they are worn. According to the ruling given by the Chief Controller of Imports and Exports (Annexure 'E') this item fell under heading 83.09. None of the custom authorities, however, shared his view. Rule 3 of the Rules referred to in para 6 above provides guidelines where there is a difficulty in the classification of dutiable goods which are of composite nature. It will be therefore, advantageous to reproduce rule 3 here.
"When, for any reason, goods are, prima facie, classifiable under two or more headings, classification shall be effected as follows:-
(p) The heading which provides the most specific description shall be preferred to headings providing a more general description.
(b) Mixtures and composite goods which consist of different materials or are made up of different components and which cannot be classified by reference to (a) shall be classified as if they consisted of the material or component which gives the goods their essential character, in so far as this criterion is applicable.
(c) When goods cannot be classified by reference to (a) or (b), they shall be classified undo; the heading which involves the highest rate of duty."
8. The 'made up ends' do not fall under rule 3(a) as their description is neither specific nor general.
These goods are meant to facilitate fastening the main garments on the body. The hook is there to join the two parts of the garments. The purpose of the elastic strap is only to allow the hook to be fixed and then to let it come back to its place to give the garment a close fitting. Under rule 3(b) the essential character of the good appears to be of a hook which is covered by item 83.09 of the Pakistan Customs Tariff. It is described as under: "83.09-Clasps, frames with clasps for handbags and the like, buckles, buckle-clasps, hooks, eyes, eyelets, and the like, of base metal, of a kind commonly used for clothing, travel goods, handbags, or other textile or leather goods; tubular rivets and bifurcated rivets, of base metal."
The rate of duty in case of this heading is 50 % ad valorem. The elastic straps are admittedly covered by heading 59.13 which is subject to 62J ad valorem duty. Chapter 58 expressly excludes such goods. However, these goods could be assessed under P. C. T. Heading 83.09 in view of rule 3lhl noted above. ` '
9. It was argued by the learned counsel for the respondent on the basis of a letter dated 13th September, 1973, of the Chief Controller of Imports and Exports that his previous rulings would be deemed to have been superseded as the new Pakistan Customs Tariff Schedule, based on Brussels Nomenclature, had been enforced. It has not been shown to me under what provisions of law the Chief Controller of Imports and Exports could give a ruling that a particular Article should be assessed under a particular heading of P. C. T. Schedule. However, Notes 3 and 6 at page V of the 'Pakistan Customs Tariff' issued by the Government of Pakistan, Ministry of Finance, Planning and Development (Central Board of Revenue), Islamabad, Eighth Edition, do render guidance in case of doubt or difficulty of classification. Note 3 reads as under: "3. Arrangements on the basis of 'progressive classification, which is the basis of Brussels system of classification, is made so that raw material or substance and all articles derived from it are classified as far as possible in the same Chapter. In spite of all the care taken to make classification accurate and precise, there is and will always remain the possibility of genuine difference of opinion in the matter of interpretation particularly where an item is capable of being classified under more than one heading."
Note 6 at the same page reads as under: "6. In case of doubt, it is always useful to consult the Alphabetical Index to the Brussels Nomenclature or the Explanatory Notes."
10. The Explanatory Notes of the Brussels Nomenclature with regard to heading 83.09 are as under : "83.09(The description as in P. C. T.-already reproduced in para. 8 above).
This heading covers a range of metal fittings of a kind commonly used for clothing, or for various textiles, leather, rubber, paper, paperboard, etc., goods for example;
(1) ---------------------.
(2) ---------------------.
(3) Hooks, eyes and eyelets, for clothing, footwear, awnings, tents or sails.
All these articles may contain parts of leather, textiles, plastics, wood, horn, bone, ebonite, mother of pearl, ivory, imitation precious stones, etc., provided that they retain the essential character of articles of base metal. They may also be ornamented by working of the metal.
(The underliningis by me).
Thus the presence of a 1.1/8 elastic strap of textile would not bring this article to another classification if its essential character remains that of a~ hook, meant to fasten the main garment.
Description of heading 58.05 part (B) clause (g) in the Brussels Nomenclature shows that if hooks fixed) at intervals on tape give the goods their essential character, they will be classified under heading 83.09.
11. The Note I of Chapter 61 of the Pakistan Customs Tariff Schedule makes that Chapter applicable to the articles mentioned therein only when they are made up of any textile fabric. It also applies to textile fabrics cut to shape for making those articles vide Note 5. Thus, to see if an article falls under Chapter 61, the test is that it should either be one of those 'made up' named articles or it should be cut to shape for making those articles. Here admittedly the 'made up ends' are only accessories or minor [Here I n italic.) parts of those articles. They cannot by themselves be used as one of those articles. They cannot be called corsets, corset-belts, suspenderbelts, brassiers, braces, suspenders, garters or the like. Their essertial character remains that of hooks or accessories. The 'made up ends', therefore, could not be brought under heading 61.09.
12. The Explanatory Notes of Brussels Nomenclature with regard to headings 61.09 and 61.11 further support the above conclusion and do clearly show that the 'made up ends' alone would not fall thereunder. It will be useful to reproduce them hereunder for ready reference : "61.09. Corsets, Corset-belts, suspender-belts, brassiers, braces, suspenders, garters and the like (including such articles of knitted or crocheted fabric), whether or not elastic.
This heading covers articles of a kind designed for wear as body-supporting garments or as supporters for certain other articles of apparel. These articles may be made of any textile material including knitted or crocheted fabrics (whether or nor elastic).
The heading includes, inter alia: All the above articles may be furnished with trimmings of various kinds (ribbons, lace, etc.) and may incorporate fittings and accessories in non-textile materials (e. g., metal, rubber, plastic or leather).
The above heading thus covers articles of a kind designed for wear as body supporting-garments or as support for certain other articles of apparel and these articles may incorporate fittings and accessories in metal, etc. So the hook or hook with elastic strap cannot be called an article for wear .As it is only an accessory of metal.
The relevant portion of the Explanatory Notes in respect of heading 61-11 is as under : "61-11. Made up accessories for articles of apparel (for example), dress shields, shoulder and other pads, belts, muggs, sleeve protectors; pockets). ---611This heading covers made up textile accessories for articles of apparel, not specified or included in other headings of this Chapter or elsewhere in the Nomenclature.
These accessories include This heading does not include : (a)---------------
(b) Strips of press fasteners on hooks and eyes on tape (heading 58.05, 83.09 or 98.01).
(c)------------------------------ Thus the strips of press fasteners or hooks and eyes on tape could be included in headings 58.05, 83.03 or 98.01 but not under Chapter 61.
13. In any case the elastic straps being covered by heading 59.13 are subject to 62J % ad valorem duty wherea3 the rate of duty on hooks covered by heading 83.09 is 50 % ad valorem. In the circumstances the D rate of duty of the composite article could be only 621 % under rule 3(c) of the Rules or the Interpretation of the First Schedule. In this view of the' matter 155 % duty under heading 61.09 could in no case be imposed. However, in view of the above, I have come to the conclusion that heading 83.09 applies and I uphold the ruling of the Chief Controller of Imports and Exports. .
14. The second question raised is, whether fine could be imposed in respect of elastic straps particularly when a clearance permit had been issued by the Chief Controller of Imports and Exports. The learned counsel for the petitioner mainly relied on the clearance permit. The learned standing counsel of the respondents also relied on the same but referred to the last portion of it which is as follows : " . Which are not covered by exceptions (i) to (x vi) of Commerce Division Notification No. 317/260/24 dated 12th .Tune, 1951, are hereby permitted to be cleared from Lahore Airport/Dry Port (Port of Entry) without prejudice to any action (other than outright confiscation) under section 167 of the Sea Customs Act (VIII of 1878) by the customs authorities concerned."
15. The learned counsel for the respondents further submitted that the petitioner wilfully violated the import licence and imported such goods as fell under the P. C. T. Heading 59.13 which being absent in the relevant import policy, were banned items. He also referred to sections 16 and _17 of the Customs Act, 1969, to say that the Federal Government may prohibit import of any goods and relied on section 156(9) (i) to say that a penalty could be imposed in such a situation. In view of the above, it was argued by him that though the goods in question could not be confiscated yet other alternate action like penalty could be taken. This contention of the learned counsel could not be effectively met by the learned counsel for the petitioner. The clearance permit is not unconditional.
It waived only the confiscation but was issued without prejudice;, to any other action. 1, therefore, do not find any valid objection against the imposition of penalty.
In view of the above, this petition partly succeeds. The impugned order, so far as, assessing the goods under P. C. T. Item 61.09, is declared to be without lawful authority. The respondent No. 4 shall assess the goods under P. C. T. Heading 83.09 and levy the tax accordingly, As question involved was not free from difficulty, there will be no order as to costs.