1. KAMAL MANSUR ALAM, J.---By this judgment we propose to dispose of the above two Constitutional petitions as these involve common questions of facts and law.
2. The facts of Petition No, 1179 of 1992 are that the petitioner, which is a subsidiary of G.D. Searle & Co.
3. Of U.SA. Is inter alia engaged in the formulation and manufacture of Canderel tablets, a low calorie, saccharin free sweetner and for use in the said tablets imported ASPARTAME 18%. The consignment was released by the Customs authorities against undertaking pending result of laboratory test report and on receipt of such report the Principle Appraiser (Group-II) by his order dated 30-9-1990 assessed it to duty and taxes @ 100% plus Sales Tax @ 12.5% under PTC heading 2106.9090.
4. Petitioner's appeal to Collector of Customs Appeals (Appg) was dismissed by order in appeal dated 11-6-91 and its revision to respondent No, 1 alse; having failed the petitioner has come up to this Court challenging the abovementioned orders.
5. Petition No, 1633 of 1992, also by the same petitioner, calls into question the assessment of its another consignment of ASPARTAME 18% to duty and taxes @ 100% plus sales tax @ 12.5% plus fine of Rs,50,000 and seeks refund of the excess amount paid under protest.
6. ' Mr. Aziz A. Shaikh, learned counsel for the petitioner, attacked the impugned orders mainly on two grounds; firstly, that imported goods were covered under PCT heading 2924.2900 and therefore liable to duty and tax @ 50% plus sales tax @ 12.5% and, secondly, that petitioners similar goods in the past were placed under PCT heading 2924.2900 and therefore by virtue of Customs General Order No, 21/73 no departure from the existing practice could be made by the Customs Authorities without reference to Central Board of Revenue.
7. Elaborating his first point, the counsel submitted that the disputed goods, namely, Aspartame 18% was a separate chemically defined organic compound falling under explanatory note (a) to Chapter 29 of Pakistan Customs Tariff (PCT) and as such covered by heading 2924.2900. His contention was that primarily the substance was Aspartame the addition of Lactose and other ingredients to it was with the purpose of its preservation and transportation which was permissible under paras. (e) and (f) of the said note and, therefore, notwithstanding such addition the substance would still fall under heading 2924.2900. He referred to the copy of extract from the book "Martindale The Extra Pharmacopiea' (twenty-eighth edition), which while describing the characteristics of Aspartame mentions: "In the presence of moisture it hydrolyses to form aspartyphenylalanine and a dikotopiperazine derivative, with a resulting loss of sweetness. It is most stable in solution at about ph 4.3 Store in airtight containers."
8. He submitted that placing of these goods under PCT heading 2106.9090 had no basis, for, that heading relates to 'Feed Preparations' while the imported article was 'raw material' for use in `Canderel tablets'. He emphasised the distinction between the term 'preparation' and the term 'raw material' with reference to their dictionary meaning. The word 'preparation' means, "the act of preparing: preliminary arrangement that which is prepared and made up, as a medicine" and the meaning of the term 'raw material' is, material (often in its natural state) that serves as the starting point of a manufacturing or technical process: that out of which something is made, or makable, or may develop". The counsel submitted that respondents, in placing the goods under heading 2106.9090 have mainly relied on para. 10 of the list of 'substances mentioned under heading 21.06, but that para. He contended, relates only to 'preparations (e.g. Tablets) consisting of saccharin and a foodstuff, such as lactose, used for sweetening purposes". He argued that the language of para. 10 being clear its scope could not be enlarged to include spartame, for, fiscal law should be strictly interpreted and nothing should be implied adverse to the interest of the subject.
9. Mr. Naimur Rahman, the learned Standing Counsel appearing for the respondents, supported the impugned orders. He denied that the goods in question could be considered as 'separate chemically defined organic compounds' as claimed by the petitioner. He drew our attention to Brussels Nomenclature (Harmonized Commodity Description and Coding System) Notes on Chapter 29 which defines "separate chemically defined compound" as "single chemical compound of known structure, which does not contain other substances deliberately added during or after its manufacture (including purification). Accordingly, a product consisting of saccharin mixed with lactose, for example, to render the product suitable for use as a sweetening agent is excluded from this Chapter". With regard to para. 10 of the list under PCT heading 21.06 his contention, was that the list of substances mentioned under the said note was not exhaustive as is apparent from the expression "The heading includes, inter alia" at the beginning of the note.
10. It is not disputed that the substance Aspartame would be covered under Chapter 29 of PCT and perhaps under heading 2924.2900. It is also note disputed that on laboratory testing the goods in question was found to contain: (i)Aspartame 18.8% ( i i )Lactose 76.0% ( i i i )Undetermined ingredients05.2% The addition of the other substances to Aspartame was explained by the petitioners as being for the purpose of preservation and transportation. However, except for his bare words no authority was cited to show that Lactose could be used as preservative for Aspartame during transportation and that too in the ratio contained in the disputed goods. All that was referred to in this regard was extract from the book 'Martindale The Extra Pharmacopaeia" which in our view does not support petitioner's case for more than one reason. In the first place it does not mention lactose as a preservative; secondly, according to it Aspartame is "most stable in solution" which is not the case here; thirdly, it recommends storage in airtight containers to avoid moisture.
11. It would, therefore, seem that adding of 76% Lactose to 18.8% Spartame was not at all necessary for preserving the substance during transportation. It could be transported in airtight containers. We may point out that from copy of a laboratory report, produced by the learned Standing Counsel, it would appear that Aspartame has been imported, without adding any other substance to it by some other party. Petitioner's bills of entry of past years also mention "Aspartame (Canderel Chemical)" and not Aspartame 18% as stated in the disputed bills of entry, seemingly, as unlike the present imports, the previous imports were without addition of other substances. We, therefore, consider that the benefit of paras. (e) and (f) of the explanatory note to Chapter 29 of PCT would not be attracted to the present case.
12. This brings us to para. (a) of the aforesaid note. Contention of the petitioner's counsel that the imported consignments could be classified as `separate chemically defined organic compound' under that para. Does not find support from the Explanatory Notes of Brussels Nomenclature (Harmonized Commodity Description and Coding System) relating to Chapter 29 which excludes from that Chapter a 'separate chemically defined compound' which contains 'other substances deliberately added during or after its manufacture (including purification)". The note cites the example of "a product containing saccharin mixed with lactose, to render the product suitable for use as sweetening agent", as a substance excluded from that Chapter, although, saccharin and its salts otherwise would seem to be covered by that Chapter.
13. In the instant case it cannot be denied that lactose and other ingredients had been mixed in aspartame deliberately and the resultant product was suitable for use as a sweetening agent.
14. Accordingly, Aspartame too though covered by Chapter 29, a product consisting of Aspartame mixed with lactose and other ingredients would fall out of the Chapter.
15. As regards PCT heading 21.06 it is true that para. 10 of the list of items under the heading relates to 'preparations consisting of saccharin and a foodstuff, such as lactose, used for sweetening purpose' but it is obvious from the expression: "The heading includes inter alia", at the beginning of the list that the same is not exhaustive and preparations similar to those listed, not specifically excluded or not elsewhere specified, would be covered by the heading. We are not impressed by the argument that aspartame 18% was not a 'preparation' but just a 'raw material' for preparing 'Canderal Tablets'. Raw material is a relative term, a substance in finished form may nonetheless act as raw material for preparation of another substance. Take, for instance, 'Canderal tablet' which, undisputedly, is a finished product yet for manufacturing sugar-free sweetened drinks, sweets, chocolates etc. It may still be used as one of the raw materials. Similarly, Aspartame 18% is itself a sweetening agent with active ingredient not much different from 'canderal tablet'. This is borne out from the chemical anlaysis report of Pakistan Council of Scientific and Industrial Research Laboratories Complex, Karachi, addressed to the Marketing manager of the petitioner, a copy of which was placed on record on behalf of the petitioner. According to this report the ingredients of Aspartame 18% and 'canderal tablets' are common except for "magnessium stearate" which is present in 'Canderal tablets' as apparently it is required for making tablets. It would be appropriate to reproduce the said report here, "Dear Sir, This refers to your letter of November 23, 1992 on the above subject. After analytical examination of "Canderel Chemical" supplied by you we came to the following conclusion: The composition of the mixture is as follows:--- (i)Aspartame 19% ( i i )Lactose 76% ( i i i )Undetermined5% Pointwise observations on your queries are as follows:- 1/2 It is certified that the "Canderel Chemical" is a formulated product (a mixture of Aspartame, Lactose plus some other ingredients) in powder form/is tabletted to prepare "Canderel Tablets".
(3) Canderel tablets contain magnessium stearate (not present in "Canderel Chemical") which is required for making tablets.
(4) No saccharin could be detected in either the canderel chemical or canderel tablets.
16. Yours faithfully (Sd.)
17. (Dr. S.S.H. Rizvi), Director General."
18. There is no cavil about the settled principle of interpretation that taxing provisions should be strictly interpreted and the benefit of ambiguity, if any, must go to the subject. However, here, in view of the above discussion, neither there appears to be any ambiguity in the exclusion of Aspartame 18% from Chapter 29 nor in the fact that the same is a preparation fit for use as sweetening agent. As the petitioner's counsel has not pointed out any PCT heading more appropriatedly applicable to the disputed goods than 2106.9090 and as we consider that the heading 2924.2900 referred to by the counsel would not be attracted in the case, no fault can be found with assessment of the goods under heading 2106.9090.
19. The second ground urged by the counsel was that as in the past similar goods of the petitioner were being placed under heading 2924.2900 that practice, by virtue of Customs General Order No,21/73, could not be changed in the present case. The contention has no force. It is obvious from the impugned orders as also from the documents such as old bills of entry and laboratory reports that goods imported in the past were 'Aspartame (Canderel Chemical)' as distinct from the present aspartame 18%. Moreover, the impugned orders were passed by the respondents in exercise of powers conferred on them under the Customs Act, while the Customs General Orders are in the nature of administrative orders issued by the Central Board of Revenue for the guidance of subordinate authorities and these by no means can have the effect of overriding the statutory provisions.
20. Before parting with these petitions we may, however, say a few words about the confiscation of the goods under section 156(1)(9) of the Customs Act and its release subject to payments of redemption fine of Rs,50,000 in Petition No,1633/92. It would appear that in the instant case the only dispute was with regard to the classification of the goods under appropriate PCT heading. It was never the case of the respondents that the import of these goods was restricted and the same had been imported in violation of such restriction. It can also not be said that the petitioner had avoided payment of leviable customs duty. Though the petitioner had sought assessment of the goods under heading 2924.2900 the fact remains that it was not so assessed and was released only on payment of full duty and taxes under heading 2106.9090. In these circumstances, there could be no justification for the levy of the fine of Rs,50,000.
21. In the result, we find no force in these petitions which are dismissed. However, the amount of Rs,50,000 recovered from the petitioner by way of redemption fine shall be refunded to it.