1. SAJJAD ALI SHAH, J.--Petitioners, a partnership firm, import consignment of uncoated Duplex 'Paper Bard and made such declaration in the t bill of entry, in the result of which goods were assessed under section 81 of Customs Act, 1969 and 90 per cent goods were released, whereas 10 per cent goods were detained subject to chemical test. Respondent No.4 (Deputy Collector Customs Karachi) held in his decision despatched on 6-8-1975, on the basis of report of Chemical Examiner, that the goods were coated as such liable to be classified for higher duty under heading Ex. 48.07B(V). Consequently 10 per cent goods, already detained, were confiscated under section 156(14) of the Customs Act, 1969 and option was given to the petitioner to pay up fine of Rs.12,000 in lieu of confiscation. Additional personal penalty of Rs. 18,000 was imposed under section 181 of the Customs Act.
2. Against the above-mentioned order an appeal was heard by respondent No.3 (Collector of Customs, Appeals), who vide his Order No. AC/714/75 dated nil dismissed the appeal upholding P.C.T. Classification determined earlier and fine but remitted in full personal penalty in spite of the fact that the second test report from Central Testing Laboratory was in favour of petitioners. In revision, respondent No. 2 (Central Board of Revenue) did not interfere in respect of higher classification bf Tariff and vide order dated 13-3-1979 dismissed revision application after remitting the redemption fine.
3. It is submitted on behalf of the petitioners that orders passed by respondent No. 3 in appeal and respondent No: 2 in revision suffer from legal infirmities for a variety of reasons. Reasons arc as under :- Firstly during the hearing of appeal objection was raised that respondent No. 4 had relied upon report of chemical examiner, copy of which was not supplied to the petitioners and further that report did not indicate method of examination. Objection was accepted and respondent No. 3 a himself chose Central Testing Laboratory of Government of Pakistan for I testing the imported material in order to find out whether the same was B coaled or not. Report carne out in favour of petitioners but respondent No. 3 refused to rely upon it simply for the reason that the Custom House had reported that reports of Central Testing Laboratory were not accepted in the past in similar cases. Question, then arises as to why respondent No. 3 selected this particular laboratory for the purpose of test. Furthermore petitioners have stated in paragraph 4 of the petition that respondent No. 3 himself accepted report of the Central Testing Laboratory in the case of M/s Gagai Export Corporation, in which he held as under :-- "The test report is from Central Testing Laboratory which is a standard laboratory where tests are carried out confidentially. As such the test report should be acceptable both to the department and the exporters."
4. "Photo copy' of the order dated 26-2-1978 mentioned above has been attached with the petition marked P/7. This order is signed by. Mr. M. M. Younus Collector of Customs, Appeals, who has signed order in appeal in the instant petition. In counter-affidavit filed on behalf of respondents 1 to 4 'the fact of passing of order stated above in the quote by respondent No. 3 is not denied. If that is so then the case under consideration in this petition smacks of discrimination. Reason assigned for not relying upon the report of Central Testing Laboratory is most unsatisfactory. In revision, which is disposed of by a short order, no reason is assigned for agreeing with order of respondent No. 3 in respect of classification of goods, which has been held to be correct.
5. Secondly it appears from the record that both respondents Nos. 3 and 2 were morally satisfied that there was no plausible reason to discard report of Central Testing Laboratory, which was selected by respondent No. 3 himself. Perhaps that is why remission was granted in respect of personal penalty by respondent No. 3 and redemption fine by respondent No. 2.
6. Thirdly, although stand was taken on behalf of respondents Nos. 3 and 2 that they were authorised legally to pick-and choose any test for reliance but no specific provision -in the rules or any other administrative instructions or directives have been cited before us in the support of that claim.
7. Our attention has been drawn to Section 191 of Customs Act, 1969 which empowers the appropriate Officer to take samples for examination or testing or for ascertaining the value thereof or for any other necessary purpose. Competence of appropriate Officer, to do so is not disputed. The question which arises for consideration is whether it is open to the Customs Authorities to rely 3 upon any one of the two reports when the findings in both reports are in conflict with each other.
8. Right of Custom Authorities to choose a particular heading for classification of goods is not called in question but at the same time it can not be; said that the authorities can do so even in arbitrary manner without there being, sufficient ad justifiable material in support of the conclusion. On behalf of respondents before us no circular issued by CBR or Customs was produced to show that Officers of the Customs were empowered or authorised to pick and choose any test report for reliance when there is conflict in the reports. On the other hand it is contended on behalf of the petitioners that the test report of Central Testing Laboratory which is favourable to the petitioners, should have been accepted by respondent No. 3 particularly, when respondent No.3 himself selected this laboratory and furthermore this laboratory is set up by Ministry of Industries, Government of Pakistan. If finding of this Government laboratory was not acceptable to Customs Authorities, attempt 'should have been made to obtain report from some other laboratory, which could be considered more reliable than the Government laboratory. We arc therefore of the view that there was no material available with respondents Nos. 3 and 2 to question the finding of Central Testing Laboratory of Government of Pakistan in this case particularly when the finding was favourable to the petitioners.
9. For the facts and reasons mentioned above impugned orders passed by' respondents Nos. 3 and 2 are quashed as having been passed without lawful authority in this case to the extent of ignoring the report of Central Testing Laboratory and classification of goods in question for higher duty. In the result the petition is allowed.