MUHAMMAD MUJEEBULLAH SIDDIQUI, J.---In all the above appeals the following common question of law, arising out of the order of Customs, Excise and Sales Tax Appellate Tribunal, Karachi, requires consideration.
QUESTION OF LAW Whether on the facts and in the circumstances of the case the learned Tribunal correctly applied classification/PCT Heading to the submersible pump motors imported by the Appellant?
2. The relevant facts giving rise to the above question of law are that the appellant is a public limited company engaged in the manufacture and supply of submersible pumping sets. The pumps are manufactured locally by the appellant, while electric submersible motors required to operate the sets are imported. The appellant imported the submersible motors in the year 2000, and classified the same in the Bill of Entry under PCT Heading 8501.5390, attracting customs duty at the rate of 10%. According to appellant, the earlier imports were also classified under the same PCT headings, which were always accepted. The imports in the present appeals were also cleared and released on payment of customs duty under PCT heading 8501.5390. Subsequently, demandcum- show-cause notices were issued under section 32(3) of the Customs Act, 1969, stating that the assessm ent was required to be made under PCT Heading 8501.5210 chargeable to customs duty at 35%. The appellant replied to show-cause notice contending that the classification under PCT Heading 8501.5390 was correct. However, the contention was not accepted and Additional Collector of Customs Adjudication-I, vide order, dated 25-10-2001, observed that, the main issue involved in the case was of classification of "submersible motors". She recorded the fact that according to departmental representation, the Central Board of Revenue has already decided the issue confirming the view point of Appraisement Collectorate, that the goods were classifiable under heading 8501.5210 attracting customs duty at 35%. A Reference made by Appraisement Collectorate, to the CBR, dated 15-5-2001 and Board's reply, dated 5-9-2001 were placed on record.
3. It was contended on he half of the appellant's representative that in identical case of Messrs Wazir Ali and Company, the Board confirmed vide its letter, dated 26-5-2001, that the submersible electric motors are classifiable under PCT Heading 8501.5390.
4. The Adjudication Officer observed that both the parties made representation to the C.B.R. And the Board through its letter, dated 5-9-2001 has confirmed that the imported goods were classifiable under PCT Heading 8501.5210. She further observed that the CBR has given ruling, dated 5-9-2001 in the instant cases therefore, it will prevail upon the former ruling, dated 26-5-2001 issued in the case of another importer. With these observations, she held that the import of submersible electric motors were classifiable under PCT Heading 8501.5210 and consequently, it was the case of short levy of customs duty which was liable to be recovered.
5. The appellants feeling aggrieved, preferred appeals before the Customs, Excise and Sales Tax Appellate Tribunal Karachi Bench-III. The appeals were dismissed vide order, dated 6-5-2004. It was contended on behalf of the Department before the Tribunal, that the goods imported were not submersible pumps but they were simple electric motors. It was further stated that there was no established practice of department classifying the imported goods under PCT Heading 8501.5390 but there were five or six cases only in which such imported goods were classified under PCT Heading 8501.5390. The learned Members of the Tribunal, observed that on perusal of the bills of entry it was revealed to them that the goods imported were electric motors and not submersible pumps, and therefore, the motors were rightly assessed @ 35% of customs duty.
6. Being still aggrieved, the appellant has preferred these appeals.
7. We have heard Mr. Khlaid Jawed Khan, learned counsel for the appellant and Mr. Muhammad Nadeem Qureshi, learned counsel for the respondent.
8. Mr. Khalid Jawed Khan has submitted that the learned Tribunal has fallen in error on account of wrong appreciation of facts and non-consideration of the contentions raised before it. In support of his contention, he has shown us bills of entry, which clearly contain that the goods imported were, "submersible electric motors". He has further submitted that the learned Members of the Tribunal have confused the submersible electric motors with submersible pumps. He has submitted that so far, pumps are concerned, they are locally manufactured by the appellant while submersible electric motors are imported by them. He has further produced the copy of invoice issued by the Exporter giving the description of the imported goods, as submersible electric motors.
He has also referred to the show-cause notice, which contains that there was short recovery in respect of the submersible motors. He has further referred to the subject given in the order-in- original which gives the description of goods, as submersible motors and in very first sentence of the order-in-original, it is stated that the reported facts were that appellant imported a consignment of submersible electric motors. He has next referred to the letter, dated 15-5-2001, written by Collector (Appraisement) Karachi, to CBR. It is clearly stated in this letter that, "the facts of the case are that Messrs KSB Pumps Company Limited, 14/B, Sir Aga Khan Road, Lahore, imported a consignment of submersible electric motors". It is further stated in this letter that, "on physical examination item Nos.3 to 7 were found to be water submersible 3-phase asynchronous motors".
9. Mr. Khalid Jawed Khan further contended that it is undeniable fact that similar goods were imported by Messrs Wazir Ali & Co., Gulab Shah Colony, Dharki, and on reference by the Collector of Customs Karachi, vide letter, dated 14-4-2001, the CBR opined vide letter, dated 26th of May, 2001 as follows:-- "It is clarified that the heading 8501.5310 covers electric induction motors excluding 15-110 HP (or 11, 18 to 82 KW). Understanding of Collectorate to classify the goods under PCT 8501.5310 is not correct.
The motors imported in this case are of capacity more than ranges of 15-110 HP and are classifiable under PCT 8501.5390. Collectorate is advised to take necessary action accordingly".
10. Mr. Khalid Jawed Khan has submitted that in similar circumstances and in respect of similar goods iwo references were made by Appraisement Collector Karachi, to C.B.R. One in respect of imports by Wazir Ali & Co. On 14-4-2001 and other in respect of imports by, appellant's on 15-5-2001.
The first reference was replied under the signatures of Mr. S. Shahanshah Husain, Secretary (Tariff- II), vide letter, dated 26th of May, 2001, with opinion that correct classification was under PCT Heading 8501.5390, while the reference in the case of appellant which contained the information that an identical reply vide letter, dated 14-4-2001, was made to the Board, a different opinion was furnished to the' effect that the view point of the Collectorate was confirmed by the Board. This letter, dated 5-9-2001 was also issued under the signatures of same officer namely, S. Shahanshah Hussain. Mr. Khalid Jawed Khan has vehemently argued that the treatment given to the appellant is discriminatory.
11, The learned counsel for the appellant has further submitted that the Adjudication Officer, as well as the learned Members of the Tribunal have placed implicit reliance on the opinion of C.B.R., although any such opinion has no binding, effect on the officers/forums exercising quasi judicial functions. He has contended that the officers performing quasi judicial functions are required to apply their independent mind while deciding such issues. Both the learned forums below have not examined first schedule to the Customs Act, 1969, containing the classification of PCT heading. He has taken-us through the schedule, the relevant part whereof reads as follows:- PCT Code Description Rate of C.
DutyRate of S. Tax
(1) (2) (3) (4)
8501.4010 Electric induction motors 0.810 500 HP35% ad val. 15% 8501.4090 Other 10% ad val. 15% Other AC motors multi-phase Of an output not exceeding 750 W: 8501.5110 Electric induction motors 35% ad val. 15% 8501.5190 Other 10% ad val. 15% Of an output exceeding 750 W but not exceeding 75 KW: Of an output exceeding 750 W: 8501.5210 Electric induction motors 35% ad val. 15% 8501.5290 Other 10% ad val. 15% Of an output exceeding 75 KW: 8501.5310 Electric induction motors excluding submersible pump motors with rating of 15-110 HP35% ad val. 15% 8501.5390 Other 10% ad val. 15%
12. Mr. Khalid Jawed Khan has pointed out that electric induction motors have been separately classified expressly excluding submersible pump motors, as is evident from the description given under PCT Heading 8501.5310 and the opinion of C.B.R., dated 26th of May, 2001, which is a detailed one is based on consideration of the classification contained under these headings. The second opinion, which is contrary to first opinion is bald and not supported with any reason.
13. Mr. Khalid Jawed Khan urged that on a plain reading of the relevant PCT headings in the first schedule to the Customs Act, 1969, coupled with departmental practice and reasoned opinion of C.B.R. Contained in its letter, dated 26th of May, 2001 (delivered during the pendency of reference, dated 15-5-2001, in the case of appellant) is sufficient to hold that the learned Members of Tribunal have fallen in error by holding that the PCT Heading 8501.5210 is attracted to the imports made by the appellant. - 14. The learned counsel for he respondent supported the impugned finding given by the Tribunal.
He was specifically asked to obtain instructions from the C.B.R. About the contrary opinions in respect of two importers. Inspite of seeking several adjournments, the learned counsel could not produce any explanation on behalf of C.B.R. He was not able to assign any reason for change of opinion by the C.B.R. In the case of appellant.
15. We have carefully considered the contentions raised by the learned Advocates for the parties before us and the material placed on record. We are constrained to observe that the learned Members of the Tribunal have decided the issue under consideration in a perfunctory manner by a slipshod order, which is totally bald and devoid of any reason. The learned Members of the Tribunal have neither appreciated the correct facts nor law. The finding that goods imported by the appellant were simply electric motors and not submersible electric motor is against the material available on record. We are persuaded to agree with the submissions made by Mr. Khalid Jawed Khan. A perusal of the relevant PCT headings in the first schedule shows that electric induction motors have been dealt with separately from submersible pump motors thereby bringing the submersible pump motors under the PCT Headings 8501.5390 and 8501.5190. Under both these headings the rate of customs duty is 10% ad. Val. The first opinion of the C.B.R. Contained in its letter, dated 26th of May, 2001, in respect of imports made by Messrs Wazir Ali & Co. Is correct which is based on examination of the relevant PCT headings. The second opinion of the C.B.R. Contained in its letter, dated 5-9-2001, contrary to its earlier opinion is not based on any reason and is discriminatory in nature. The second opinion is violative of the provisions contained in subsection
(2) of section 24-A of General Clauses Act, 1897.
16. In the above circumstances, it is held that, both the forums below have misdirected in arriving at the conclusion that the imports by the appellant are covered by PCT Heading 8501.5210. It is further held that, the imports made by the appellant are covered under PCT Heading 8501.5390 and consequently, there is no short levy of any customs duty.
17. The question of law referred to in the opening part of this judgment is answered in negative.
18. A copy of this judgment be sent to the Appellate Tribunal, who shall pass necessary orders to dispose of the case conformably to the decision in this judgment
19. After hearing the learned advocates for the parties on 15-3-2005, the appeals were allowed by a short order. These are the detailed reasons in support thereof.
20. The Appeals are allowed accordingly.