1. HAIDER ALI PIRZADA, J.--All these three Constitution Petition can be conveniently dealt with under a common judgment as common questions of law and facts are involved .In these petitions. The petitioners are registered importers and were granted import licences of various values by the Controller of Import and Export for importing Beads and False Pearls under Serial No. 80 of the free list Part A, Section 1 (consumer goods) of the Import Policy Order 1981 for the shipping period commencing from 1st 'of July 1981 and ending on 30th June 1982.
2. Constitution Petition No. D-53 of 1983'is comprehensive and it will be sufficient if the facts in this case are set out in details so as to understand how the questions for determination arise in these matters. The petitioner is a registered importer vide Registration No. 071472 carrying on business at Karachi and deals with import of general merchandise including imitation glass stones. The petitioner was granted Import Licence No. A-895955 on 24-8-1981 for the value of Rs. 100,000 against Serial No. 86-of the free list of Import Policy Order 1981 for import of "Beads and False Pearls" covered by P.C.T. No. 70.19.
3. The petitioner negotiated with Cristallerie Venete, Italy. The petitioner established Letter-of Credit No. 21311 on 24-10-1981 for an amount of L.I.T. 71554560 equal to Rs. 97,614. The goods 'thereafter were shipped under the Proforma Invoice dated 16-12-1981' mentioning description "Beads and'
4. False Pearls 4501-14mm, 4501-18mm 4501'-20mm and 1501-1/4m. On the importation of the consignment at Karachi the petitioner submitted a Bill of Entry as per I.G.M. No. 221 dated 27-1-1982, Index No. 87 for clearance of the consignment claiming it under heading No. 70.19 A000 P.C.T. The case as set out in the petitionis that after the submission of Bill of Entry, the Customs authorities harassed the petitioner for a period of seven months but, could not detect any irregularity with regard to declaration of value, quantity. Thereafter on 15-8-1982 a show-cause notice was issued and served upon the petitioner stating therein that the goods are "Pandant glasses in transparent white colour meant for chandlier", the import whereof is banned. The petitioner submitted a reply dated 29-8-1982, stating therein that identical glass stones of indentical article were, cleared. The petitioner submitted in his reply that according to past practice the petitioner's goods were classifiable under P.C.T. Heading No. /0.19 and the goods were duly covered under the licence. After receiving the reply to the show-cause notice and granting personal hearing the respondent No. 2 in the impugned order dated 3-11-1982 came to the conclusion that the goods imported fall more' appropriately classifiable as "glass stones given a diamond cut and having two holes, one al each end. This diamond cut and holes arc exclusive meant for use in chandlier. The reference to past practice is of no consequence as the goods covered under this Bill of Entry do not show that the glass stones were of diamond cut and hence is irrelevant." H: ordered that the goods shall be confiscated and goods were allowed to be released on redemption of fine of Rs.97,000.
5. The petitioner preferred an appeal before the respondent No. 1. In the second impugned order dated 30-11-1982, the respondent No. 1 held that "type of glass stones imported have been more specifically provided for under Tarrif heading 70.14 which provides for covering glass articles of any type of lighting things which could be made from ordinary glass of crystal dish or even fused silica."
6. The respondent No. 1 dismissed the appeal.
7. The petitioner preferred a revision application before Federal Government the respondent No. 3 and before the decision on the revision, these orders are under challenge in this Constitution Petition.
8. The petitioner in Constitutional Petition No. D-276 of 1983 is a registered importer and he was granted Import Licence for the value of Rs.1,50,000. The petitioner imported 42 cases of Beads and False Pearls as per Pro forma Invoice dated 17-6-1982 from Italy. The petitioner submitted Bill of Entry and after a period .Of five months a show-cause notice was served upon him. The petitioner submitted reply. The respondent No. 2 ordered that the goods shall be confiscated and goods were allowed to be released on redemption of fine of 100% (hundred per cent). The order is under challenge in this Petition.
9. The petitioner in Constitutiion Petition No. D-886 of 1983 established Letter of Credit. The petitioner imported 47 cases of Beads and False Pearls. The petitioner submitted Bill of Entry. After lapse of three months, a show-cause notice wits served upon him. The petitioner submitted a reply. The, respondent No. 2 ordered that the goods shall be confiscated and goods were allowed to be released on redemption of fine of Rs. 95,000. The order is under challenge in this Petition.
10. Mr. Raja Haq Nawaz, the learned counsel for. The petitioners has raised the following contentions:-- '
11. (1)The Custom authorities had assessed the goods under-P.C.T. Beading 70-- 19 for over two years, the practice could not have been departed.
12. (2)Classification under heading 70-19 as moulded gloss stones is a specific classification and should prevail over the general classification as chandlier parts of 70-14.
13. On the other hand Mr. S.M. Nurul Hasan, the learned counsel for the respondents has submitted that the respondents have correctly assessed the goods in question under P.C.T. Heading 70-14. The goods in the past were released through inadvertence under heading 70-19 and there is no evidence that similar goods were classified differently in the past.
14. "70.14 Illuminating glasswa re, signalling glassware and optical elements of glass, not `optically worked nor of optical glass.
15. A. Illuminating glasswa re.
16. 01 Glass globes & bowls.120% as vat. 20%oF. List-429.435912.41 02 Other.120% ad vat. 20%F.List-429812.41 01 For red signals and traffic control.120% ad val. 20%F. List-386 81,2.41 02 For more vehicles.120% ad val. 20%F. List-422812.41 03 Other.120% ad val. 20%F. List-386-387 812.41" <p.m><p.m>"70.19 Glass beads, imitation peatls imitation precious and semi-precious stones, fragments and chippings, and similar fancy or decorative glass small wares, and articles of glasswa re made therefrom; glass cubes and small glass plates, whether or not on a backing, for mosaics and similar decorative purposes; artificial eyes of glass including those for toys but excluding those for wear by humans; ornaments and other fancy articles of lamp worked glass; glass grains.</p.m></p.m> <p.m><p.m> </p.m></p.m> A. Glass beads.70% ad vat. 20%F.List-86065.82 B. Limitation pearls of70% ad vat. 20%F.List-8665.82 of glass C. Imitation precious70% ad vat. 20%F. List-368665.82 and semi-precious stones of glass D. Artificial eyes,70 ad vat. 20%Banned665.82 of glass.
17. E. Other120% ad vat. 20%Banned665.82"
18. Mr. Raja Haq Nawaz, the learned counsel for the petitioners has invited our attention to paras 219 and 221 from the well-known book on Statutory Construction, by Carwford (1940 Ed). It is a advantageous to reproduce the relevant paras 219 and 221 which read: "219.Executive construction.--As a general rule executive and administrative officers will be called upon to interpret certain statutes long before the courts may have an occasion. To construe them, Inasmuch as the interpretation of statutes is a judicial function, naturally the construction placed upon a statute by an executive or administrative official will not be binding upon the Court. Yet where a certain cotitemporaneous construction has been placed upon an ambiguous statute by the executive or administrative officers, who are charged with executing the statute, and especially if such construction has been observed and acted upon for a long period of time, and generally or uniformally acquiesced in, it will not be disregarded by the courts, excepts for the most satisfactory, cogent or impelling reasons. In other words, the administrative construction generally should be clearly wrong before it is overturned. Such a construction, commonly referred to as practical construction, although not controlling, is nevertheless entitled to considerable weight. It is highly persuasive.
19. And whereas vested rights have grown up under departmental construction, the courts are justified in being more reluctant than in ordinary cases in adopting a construction which will destroy or disturb such rights. A similar reluctancy is also proper where a departure from the executive interpretation will result in injustice, or where contracts have been entered into with the Government in reliance on the departmental construction.
20. Undoubtedly, the contemporaneous construction of executive and administrative officers, that is, the construction placed by such officers on a statute at the time of, or seen after its enactment even though it is entitled to some weight should not receive as much as -where the departmental construction has been followed for a long time. And in either case, if the legislature impliedly approves the construction of an administrative or executive officer by later legislation, or fails to indicate its disapproval of such a construction when the same statute or one of pari materra is relature is apt to occur. And the beneficial results that were attainable under this doctrine are now obtained by the courts largely through the use of other principles or rules of construction."
21. "221. Construction by the Executive Department analyzed.---Of course, the construction placed upon a law by the executive department is not the law of the statute but only evidence of what the law is, It is simply an aid to which the courts may resort` in their efforts to ascertain the legislative intent. It may be set forth as an argument or a reason four the acceptance of a certain construction, for where the executive places a certain interpretation represents the legislative will.
22. At least, the interpretation given the statute by the executive officer would seem to be the obvious one and therefore the one actually intended be the law--makers. But to give the construction placed upon a law the power to control the Court in its interpretation thereof, would clearly vest legislative, if not judicial power, in the executive department.
23. As we have already pointed out, where the executive construction has been followed for a long time, an clement of estoppel seems to be involved. Naturally, many rights will grow up in reliance upon the interpretation placed upon a statute by those whose duty it is to execute it. Often grave injustices will result should the Courts reject the construction adopted by the executive department. But actually, in many cases of this type, that is, in those where the executive construction does not actually give the legislative intent effect, the officials who administer the law exercise legislative or judicial power, or both. Practical considerations and considerations of justice, however, seem of more importance inthese instances than a strict adherence to the triparte theory of Government."
24. Mr. Raja Haq Nawaz has also referred to the cases reported in PLD 1970 SC 453, PLD 1976 Kar. 253, PLD 1976 Kar. 449, 1977 ` C M R 371 and PLD .1975 SC 435:, "It is a settled rule that an executive authority cannot in exercise of the rule-making power or the power to amend, vary or rescind an earlier order, take away the rights vested in the citizens by law."
25. The Court further held: The respondent had acquired a vested right of exemption from the levy of excise duty on all the goods produced or manufactured by it for a period of four years under the Notifications of the Central Government referred to above. That vested right could not, therefore, be taken away by an executive action. The Notification dated the 28th February, 1964, being completely destructive of the right vested in the respondent-- company was in this view without lawful authority and of no legal effect:"
26. "The departmental practice has followed the right course in the implementation of the relevant rule but whether right or wrong, it will be extremely unfair to make a departure from it now after a lapse of so many years and to disturb rights that have been settled by along and consistent course by this practice. In the case of the appellant, the seniority initially accorded to him has held the ground continuously for ten long years until it was disturbed by the impugned older. This to say the least, is bound to weaken the faith of the employees to the attitude and behaviour of the department.
27. 1n the case of Messrs Abdul Majeed Khan v. Collector of Customs and another PLD 1976 Kar. 446 a Division Bench of the Sind and Baluchistan High Court held that the terms `tube' and `pipe' are not synonymous and the ban provided for the import of steel pipes could not have been extended to the import of steel tubes.
28. "A look at these successive Import Policies is sufficient to arrive at the conclusion that the Central Government has in the past all along consistently regarded the pipes and tubes as distinct and separate commodities and never for once even treated the two as synonymous. A fortiori it cannot be held that the omission of the mention of tubes in the exclusion clause in the entry at Serial I4o.
29. 128(h) in question from the Free List, Part A (Annexure 1) of the Import Policy Order, 1974 was inadvertent only and not deliberate.
30. According to the Oxford English Dictionary "tube" means a hollow body, usually cylindrical and long in proportion to its diameter, of wood, metal; glass or other material, used to convey or contain a liquid or fluid, or for other purposes; a pipe. It is "a more recent and a more generic term than a pipe, in which the form of the thing is chiefly considered and thus used in reference to many things to which pipe is not applied, pipe being an older term retained for tubes used for passage of liquids, smoke, air, or gas, while tube is applied to most recent invention; but the distinction is often arbitratory depending on the custom of the workshop". From this definition it follows that strictly speaking the term "tube" is not synonymous with but distinct from "pipe". Tubes is a more recent and a more generic term than a pipe and is used in reference to many things to, which pipe it; not applied. It is applied to most recent inventions. It cannot therefore; be legitimately urged that there is no distinction between the two, although at time this distinction may be thin and may even tend to vanish. Yet strictly speaking the two are not synonymous."
31. "We are: inclined to hold that in order to press into service the departmental practice of putting particular construction on a provision of P.C.T. Heading as to bind the department, it is necessary to show that for a long period of time, the construction sought to be pressed into service, was placed by the department itself consistently and generally or uniformly acquiesced in."
32. "It is true that a departmental practice consistently followed, giving rise to vested rights over the years will not be lightly interfered so as to disturb or destroy the rights.
33. The Hon'ble Supreme Court further held: "....---.We are of the view that the commodity imported by the appellants and the subject-matter of these appeals qualifies under P.C.T. Heading 17.02-A for duty. We accept all the four appeals with costs allowing there constitutional petitions and declaring the liability of the appellants to pad duty accordingly."
34. "Indeed it is well-settled that tax exemptions are founded on public policy such as the encouragement of manufacturing and other industries or trades. They are granted on the theory that they will benefit the public generally or are awarded as compensation for services rendered to the performance of some function deemed socially desirable. Therefore, the exemption notification is basically addressed to public at large or in any case to prospective importers. It will he inequitable and unjust to deprive a person who acts upon such assurance of the right to exemption and expose him to unforeseen loss in the business transaction by suddenly withdrawing the exemption after he has made legal commitments. It is in this perspective that a right is created in his favour and a subsequent withdrawal of exemption cannot be given retrospective operation by an executive, act to destroy this right."
35. Mr. Raja has also referred to a photostat copy from .The General Manual of orders relating to Customs & Tariff Laws in which the following passage as regards to the departure from existing practice is provided for, which reads as under:-- Departure from existing practice.---Where there is a question of departing from existing practice whether governed by express orders of higher authority or not, the Collector of Customs should, of the proposed departure is in the :direction of an assessment more favourable to the importer, adhere to the existing practice and make a reference to the Central Board of Revenue, accepting duty meanwhile from the assessee under protest, if the assessee so requires: Where the Collector contemplates a change to a higher assessment than has been the practice, he should not take action upon his view, until he has obtained orders, but such orders would not have retrospective effect.
36. Note:---The term "Existing practice" has been .Used with reference to identical entries in. The Tariff Schedule. Where there has been an amendment of the- Tariff Schedule with an alteration of definitions, all existing practice in respect of the goods affected-becomes absolete."
37. Mr. S.M. Nurul Hassan, the learned counsel for the respondent has preferred to the case of Chhuna Mal Salig Ram of Delhi v. Commissioner of Income-tax, Punjab AIR 1931 Lah. 320 (2). In this case the Income Tax Officer determined the annual value of the assessee's house property to be Rs.
38. 2.39,253. 1n coming to this figure he did not exclude a sum of Rs. 4,931-7-0 which the assessee claimed should be deducted on the ground that it represented house tax payable by him to the Delhi Municipality which he received from the tenant in addition to which he called rent. The assessee appealed to the Assistant Commissioner of Income-Tax who accepted assessee's contention. As there was conflict of decision,, the matter was referred to Full Bench. Both the learned counsel referred to certain passages. Mr. Tekchand, J. Held: "Both counsel referred us to certain passages from the Income-tax Manual, and claimed that they supported their respective contentions. I do not however think it necessary to discuss them, as the Manual merely contains departmental instructions for administering the Act, and is not an authoritative interpretation of the statute which is binding on Courts. Moreover these instructions in the present manual were first issued in 1922, only four years before the present dispute arose and they are certainly not in accord with the practice which had been followed for a long time by the income tax authorities themselves."
39. The petitioners annexed 10 copies of invoices and Bills of Entry commencing from 8-10-1979 to 28- 7-1981.
40. S.No.Name of ConsigneeName of the Exporter Bill of Entry No.Dated 1 Pak Burma TradersRenze Mencaraglia & Co.2283 8-10-1979 2 M.J. Impex Cristallerie Venete 4279 15-5-1979 3 Pak Burma TradersRenze Mencaraglia & Co.1946 29-4-1980 4 Pak Burma TradersRenze Mencaraglia & Co.602 2-2-1981 5 Pak Burma TradersRenze Mencaraglia & Co.9002 21-1-1981 6 Zeeshan EnterpriseCristallerie Venete 7543 16-4-1981 7 Pak Burma TradersRenze Mencaraglia & Co.7594 18-5-1981 8 Pak Burma TradersRenze Mencaraglia & Co.7593 18-5-1981 9 M J Impex Cristallerie Venete 10621 24-3-1891 10 M J Impex Cristallerie Venete 11188 28-7-1981 The respondent admitted in the counter-affidavit that consignments from serial Nos. I to 10 relating to the year 1979 to July 1981 were released. The respondents submitted that the consignments were released through inadvertence under heading 7(1.19. The other plea raised in the counter-affidavits is that there is no evidence to establish whether the earlier goods were indeed identical or somewhat different since these goods claimed to have been cleared in the post are not available for examination and comparison with the constant goods, no conclusion can be drawn on this behalf.
41. The learned counsel for the petitioners has invited our attention for his proposition that a prior decision concerning the classification of goods for the purpose of taxation under the Act binds the department and the orders passed by the Customs authorities were apparently valid orders which they were competent to make. When as a result of that orders, the consignments were cleared under heading 70.19, it was not opened to the Customs authorities to ignore these orders either for 'the year in which the consignment were cleared or for any subsequent years, and to assess these consignments under heading 70.14.
42. The learned counsel for the petitioner has submitted that the prig adjudication by the Customs authorities is a relevant material which ought to have been taken into consideration of the same vitiated the adjudication by the respondents. In the orders made by the respondents there is no reference whatsoever to the earlier decisions (in ten consignments) of the Customs authorities upholding the contention of the petitioners. These decisions being relevant factor in the determination of the same question at a subsequent period, the failure to take into consideration the earlier decisions has clearly vitiated the' orders made by the, respondents. When the orders held that "Beads and false`B pearls" imported by the petitioners are assessable under heading 70.14 the burden was on the department to show that decisions are erroneous teen the question was sought to be reopened.
43. The show-cause notices issued to the petitioners by the second respondent did not 'disclose the materials relied on by him for coming to adifferent conclusion, The orders of the second respondent do not give any reasons as to why "Beads and False Pearls" should be classified under Heading 70.14. The orders of the first respondent also do not give any reason as to why "Beads and False Pearls" should be classified as chandlier parts. The first respondent observed that "the release of few consignments of contravening goods as result of collusion or unholy alliance between an unscrupulous importer and Custom House official cannot be considered to have resulted in the establishment of a precedent or practice the, departure from which Would requite the approval of C.B.R. The very first release appears to be the result of mala ride Consideration and motives". 'The respondents without giving any reason whatsoever could not depart from the past practice.
44. The decisions of the respondent arc largely based on the use of the "Beads and False Pearls" for the purpose of classification. It is quite obvious that the classification' made by the respondents, is not based -on the process of manufacture and the materials used for the manufacture of imitation glass stones. The decisions of the respondents are vitiated by the failure to take into consideration the prior decisions (Annexures H-1 to 'H-2 annexed to the petitions) and also for non-consideration of the relevant material viz. The basis of classification according to the process of manufacture, the material used for manufacture etc. The contention of the learned counsel for the petitioners is that moulded glass stones arc covered in paragraph `C' under heading 70.19 of CCCN. The learned counsel for the respondents submitted that the goods are chandlier parts fall under heading 70.14.
45. The question for our consideration is whether glass stones are comprehended within the expression `illuminating' glasswa re, signalling glassware and optical elements of glass, not optically worked nor of optical glass under heading 70.1.1 or within the expression" imitation precious and semi-precious stone" of glass under heading 70.19 (C). Rule 1 of the Rules for the interpretation of the First Schedule of Pakistan Customs Tariff provides that for legal purpose, classification shall be determined according to the terms of headings and relative Section or Chapter Notes and, provided such headings or notes do not otherwise require, according to the provisional contained in the following Rules. By Rule .2(b) the classification of goods consisting of more than one material or substance shall be according to the principles contained in Rule 3. Rule 3, on its own terms, is applicable only when goods are prima facie classifiable under two or more Headings. Under Clause (a) of Rule 3, Heading which provides the most specific description shall be preferred to Headings providing a more general description. Under Clause (b) of Rule 3, Mixtures and Composite goods which consist of different materials or are made up of different components and which can not be classified by reference to Clause (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 criterian is applicable. Under Clause (c) of Rule 3 when goods cannot be classified by reference to 3 (a) or 3 (b), they shall be classified under the heading which occurs latest among those which equally merit consideration.
46. We will immediately proceed to consider the impact of these rules on the case in hand but before doing so, it must be mentioned and appreciated-that the sole ground on which the petitioners claim Payment of duty under Heading 7,0.19 is that the goods imported are moulded glass. The contention of the learned counsel for the respondents is that the imported goods are Chandlier parts and classifiable under Heading 70.14.
47. Turning to the Rule 1 of the Pakistan Customs Tariff in so far as relevant classification has to be determined according to` the terms of the Headings, and, provided such Headings do not otherwise require, classification has to be determined according to the provisions of the rules following Rule 1. Heading No. 70.14 consists of two items which have been mentioned in the earlier part of this judgment. Rule 1 provides that classification has to be determined according to description of the article in the Heading and if the Heading or a note does not otherwise require according to the provisions of the other Rules and notes. Rules 1 to 4 become relevant or deciding the question whether goods fall within Heading 70.14 or Heading 70.19. Rule 2 has no application Clause (a) and (b) of Rule 3 have no application. Clause (c) of Rule 3 is applicable. Applying the principle contained to Clause (c) of Rule 3 imitation glass stones is a specific classification and chandlier parts is a general classification and the prevails over the letter.
48. 'We may usefully turn to the note `C' to Section XIII (Explanatory Notes to the Brussels Nomenclature Volume 2 page reads as under:- "(C). Imitation precious stones (including imitation semi-precious stones) should -not be confused with the synthetic or reconstructed precious stones of heading 70.13 (Sec corresponding Explanatory Note) These imitation stones are made of special glass (e.g. Strass) with a high retractive index which may be colourless or coloured directly with metallic oxides.
49. Imitation 'stones are, generally obtained by cutting fragments of the required size front the glass black; these fragments are then arranged on a piece of sheet metal covered with tripoli and placed in a small oven in which edges are rounded off. The stones can then be cut (in the shape of diamonds, rose-cut diamonds, etc.)or engraved imitation cameous and itaglios. These stones can also be obtained by direct moulding (e. g. In .The case of stones of a definite shape fur trankets): The underside of such stones is often covered with reflecting metallic paint (gemtinish)."
50. The stones are includible in the expression imitation precious stones the petitioner's case would fall under Heading 70.19. Accordingly they would be entitled to assessment under Heading 70.19.
51. The learned counsel for the respondents has submitted that the goods fall under classification 70.14 or 70.19 is a question of fact and this Court cannot go into it. On the other hand Mr. Raja Haq Nawaz has submitted that an assessment without the application of an identifiable test is nothing but perverse and arbitrary.
52. He submits that in the present case there was no identifiable-test before the Customs authorities by which the goods could be held to be Chandlier parts. The earlier decisions Annexures H-1 to H-19 relied upon by the petitioners do come to their aid in these cases since there is no identifiable standard or test to determine clearly which product can be moulded glass and not Chandlier parts.
53. We are of the view that it is primarily for the Customs authorities to determine the head or entry in the Tariff' Schedule under which, a particular commodity fails but if in doing so, these authorities adopt a construction which no g reasonable person can adopt, that is to say, if the construction is perverse, then it is a case in which the Courts is competent to interfere.
54. The Customs Department cannot depart from the existing practice without reference to the Central Board of Revenue. -It is an admitted position that Customs General Order No. 31/83 dated 28-12- 1983 was issued by the Central Board of Revenue wherein the Board has classified the goods under Heading 70.14 P.C.T. The consignments in these petitions were arrived to Pakistan prior to this Customs General Order. We are of the. View that the past practice is applicable to the consignments as these consignments-were arrived much prior to[, 28-12-1983.
55. The "Beads and False Pearls" fall under the heading 70.19 of Pakistan Customs Tariff. The orders of the respondents involving heading No. 70.14 are I wrong and illegal and therefore they are set aside. In the result, we set aside the impugned orders of the respondents and declare that the "Beads and False Pearls" arc moulded stones within the meaning of Heading 70.19.