1. ' SAIYED SAEED ASHHAD, C.J.---In this Constitutional Petition, the petitioners have sought the following reliefs.
(i) Declare that the item Sodium Sulphate falls under the Harmonized Code No, 2833.1900 which attracts the duty at the rate of 15%.
(ii) Declare the action of the Respondents as illegal, mala fide and without jurisdiction.
(iii) Restrain the Respondents Nos.4 and 5 from encashing the Bank Guarantee.
(iv) Cost of the petition.
(v) Such other relief which this Hon'ble Court may deem fit in the circumstances of the case.
2. ' The brief facts of the case as stated by the Petitioners in the memo of petition are that the Petitioners are a company incorporated under the Companies Ordinance, 1984 engaged in the manufacture of Detergents. Toilet Soap and Tooth Paste and in the course of their business regularly used to import Sodium Sulphate which is one of the basic raw materials- for Detergent Powder. It has further been statedthat for the purpose of Customs Duty, Sodium Sulphate used to be assessed under the PCT Harmonized Code 2839.1900 and the Customs Duty at the rate of 15%- was payable. The Petitioners further submitted that in 1997 Government changed the harmonized code for Sodium Sulphate in PCT headings 2833.1900 and 2833.1100. The Petitioners submitted that the action of the Government in changing the rate of duty under the harmonized code was illegal with mala fide intention, ulterior motive and with a view to unnecessarily burden the Petitioners with payment of heavy Customs Duty as prior to the financial year,. 1997-98 the rates of duty in respect of both the above codes 2833.1900 and 2833.1100 were the same, but in the budget for the year, 1997-98 the rate of duty under the heading 2833.1900 was reduced to 15% while the rate of duty under the heading 2833.1100 was raised to -45%. The Petitioners further averred that they submitted a representation to the Customs Department but their representation was rejected on the ground that as Sodium Sulphate was being manufactured locally, therefore, it would not be assessed under the heading 2833.1100 at the rate of 45%. The Petitioners further submitted that in the Chapter 28.3.3 of Pakistan Customs Tariff various items of Sodium Sulphate have been mentioned as well as the rates of duty payable thereon and it was pointed out \that under the heading 2833.1100 the description of the items/goods in Disodium Sulphate which was to be subjected to duty at 45% ad valorem. While other varieties of Sodium Sulphate were to be subjected to duty at the rate of 15% ad valorem and it was submitted that admittedly the item imported by the Petitioners was not Disodium Sulphate so as to be assessed, under' the heading 2833.1100 but was liable to be assessed under the heading 2833.1900 which refers to Sulphates other than the Disodium Sulphate.
3. It was also pointed out that several other kinds of Sodium Sulphate namely Magnesium, Aluminium and Chromium were made assessable under the heading 2833.2100, 2833.2200 and 2833.2300 which clearly revealed that the Disodium Sulphate was a distinct kind and variety of Sulphates and Sodium Sulphate could not be included therein. The Petitioner further submitted that Respondents vide letter, dated 6-4-1998 finally decided the matter against the Petitioners and in pursuance thereof issued demand notices for payment of duty under the heading 2833.1100, hence this Constitutional Petition.
4. ' Comments were filed on behalf of Respondent No,4, wherein the preliminary objections with regard to the maintainability of the Constitutional Petition were raised on the ground that the representation of the Petitioners before Respondent No,3 was pending as no final result was communicated and further that they did not exhaust the departmental remedy' available to them under the Customs Act.
5. ' On fact it was submitted that Sodium Sulphate having formula Na2So4 was actually the Disodium Sulphate and was correctly classified under heading 2833.1100. Respondent No,4 further stated that the Petitioners were using imported raw material -for, maintaining quality of their products and they were liable to pay high duty as they were charging higher rates for their products. The averment that Government changed the classification of PCT heading of Sodium Sulphate was denied and it was submitted that only rate of/duty was, enhanced. h was further submitted that clear-cut orders had been issued by, the competent authority namely, Respondent No,1 relative to the assessm ent of the imported goods and Respondent No,4 had no alternative but to comply with the same. It was further submitted that charging duty on the imported raw material at a rate higher than the previous rate did not violate any fundamental rights of the Petitioners.
6. ' We have heard the arguments of Mr. Junaid Ghaffar, Advocate for the petitioners, Mr. Mahmood Alam Rzivi, learned Standing Counsel on behalf of the Official Respondents and Mr. Fariduddin, Advocate for Respondent No,5. We have also perused the material on record and the relevant provision of law applicable to the facts and circumstances of the case.
7. ' The grievance of the Petitioners is .That the Respondents had assessed the imported commodity namely, Sodium Sulphate under PCT heading 2833.1100 which dealt with Disodium Sulphate which was a commodity/item distinct from Sodium Sulphate and could not have been assessed under the PCT heading 28.33 sub-heading 2833.1100 but ought to have been assessed under subheading 2833.1900, wherein the description was given as "other". The question .Whether Sodium Sulphate is a distinct item/commodity from Disodium Sulphate, or both are one and the same cannot be decided by this Court as it is a technical question requiring know-how relating to the various varieties and kinds of Sulphates.
8. ' However, it is an admitted fact, that prior to this the Sodium Sulphate imported by the Petitioners was being assessed under- PCT Subheading 2833.1900 but in the budget for the year, 1997-98 the Government changed the rates of duties and taxes relative Code for Sodium Sulphate from PCT sub-headings 2833.1900 and 2833.1100.
9. ' Before the above change the rates/tariff of duty under both the subheadings 2833.1100 and 2833.1900 used to be the same but in the budget of 1997-98 the rate of Customs Duty under PCT sub-heading 2833.1100 was fixed at 45% ad valorem while under sub-heading 2833.1900 for "Other" it was fixed at 15% ad valorem. Mr. Fariduddin, learned advocate for Respondents Nos.2, 3 and 4 as well as Mr. Mehmood Alam Rizvi, learned Standing Counsel appearing on behalf of Respondent No,1 were not able to give any satisfactory and plausible reason for assessing the Sodium Sulphate for levy of Customs Duty under sub-heading 2833.1100 instead of 2833.1900 which had been the practice in the past. In the circumstances, the contention raised on behalf of the. Petitioners that the change was made illegally with mala fide intention and ulterior motive to unnecessarily harass and burden the Petitioners by subjecting them to heavy Customs Duty after the rates of Customs Duty under the two sub-headings were changed in the financial year 1997-98 is not without any substance. Prior to the change of the rates of Customs Duty in respect of above two sub-headings, the rates of Customs Duty under both the sub-headings were same, which fact has not been denied either by Mr. Fariduddin or Mr. Mehmood Alam Rizvi. In the budget for the year, 1997-98 the rates of Customs Duty under sub-heading 2833.1100 was fixed at 45% whereas the rate of Customs Duty under sub-heading 2833.1900 was fixed at 15%. Subheading 2833.1900 relates to other kinds of Sulphates which according to Mr. Junaid Ghaffar would include Sodium Sulphate imported by the Petitioner which has not been specifically described in the PCT Code. It is also pertinent to note that under the heading 28.33 relating to Sulphates, Alums, Peroxosulphates (Persulphates), there appears description of Sodium Sulphates which have not been further classified in "Sodium Sulphate" and "Other". As already observed above, it cannot be decided whether Disodium Sulphate would not be the same as the Sodium Sulphate, which the Petitioner imported, as submitted by Mr. Junaid Ghaffar and was to be assessed under the heading/description of item/commodity "Other". However, in view of the past practice of the Customs Department in assessing the Sodium Sulphate under sub-heading 2833.1900 some support is lent .To the contention of Mr. Junaid Ghaffar. It is not known as to why subsequently, the Code for Sodium Sulphate was changed from 2833.1900 to 2833.1100 and in view of absence of any plausible and satisfactory explanation for such change, it is to be assumed that the same was done as under sub-heading 2833.1900 as the rate of Customs Duty was much lower as compared to the rate of Customs Duty under the subheading 2833.1100. In other words the change of subheading by the Customs Department was with a view to subject the Petitioners to higher rate of Customs Duty under the sub-heading 2833.1100 which was made effective' from the financial year 1997-98. Prior to this the rates of Customs Duty under both the subheadings 2833.11QO and 2833.1900 were the same and, therefore, the department never raised the issue that Sodium Sulphate ought to be assessed under sub-heading 2833.1100 and not under sub-heading 2833.1900 as it would not have made any difference to the revenue earned by the Government. It is an established principle that a long standing departmental practice cannot be ignored or discarded without plausible, satisfactory and cogent reasons. The Customs Department, could not be allowed shifting of versions in respect of same product with mere change in law pertaining to taxability thereof. This Court in the case of Super Industries (Pvt.) Ltd. v. Central Board of Revenue and others reported in 2002 PTD 955 held that one of that cardinal principles of tax is that the revenue should be consistent in its practice and version and if a product was given a particular treatment over course of a long period then the revenue should continue to follow the same even if the assessee or the product was allowed any exemption/benefit or there was any enhancement or reduction in the rate of tax. It will be useful to reproduce the relevant portion from the same judgment as under:-- "One of the cardinal principles of tax law is that the Revenue should be consistent in its practice and version. If an assessee or a product is given a .Particular treatment over course of a long period then the Revenue should continue the same even if the assessee or the product is allowed any exemption/benefit or there is any enhancement or reduction in the rate of tax. There is another cardinal principle of the law of taxation that an assessee should know his status or the character and status of his-product, vis-a-vis, the chargeability of the tax. The Revenue should not be allowed to take inconsistent and changing version, as, such indiscipline in realm of taxation is always injurious and hazardous to the health of economy, industry and business. We are, therefore, persuaded to agree with the contentions of Mr. Muhammad Ali Sayeed that the Revenue cannot be allowed to resort to inconsistent practices merely with the change in the chargeability or exemption of a tax."
10. ' M. Junaid Ghaffar also referred us to the Explanatory Notes of Harmonized Commodity, Description and Coding System, Third Edition (2002), Volume-I issued by the World Customs Organization.
11. These are general rules for interpretation of the Harmonized System and it will be advantageous to reproduce Rules 4 and 6 thereof as under:-- "Rule 4 ' GOODS WHICH CANNO T BE CLASSIFIED IN ACCORDANCE WITH THE ABOVE RULES SHALL BE CLASSIFIED UNDER THE HEADING APPROPRIATE TO THE GOODS TO WHICH THEY ARE MOST AKIN.
' EXPLANATORY NOTE
(I) This Rule relates to goods which cannot be classified in accordance with Rules 1 to 3. It provides that such goods shall be classified under the heading appropriate to the goods to which they are most akin.
(II) In classifying in accordance with Rule 4, it is necessary to compare the presented goods with similar goods in order to determine the goods to which the presented goods are most akin. The presented goods are akin. The presented goods are classified in the same heading as the similar goods to which they are most akin.
(III) Kinship can, of course, depend on many factors, such as description, character, purpose."
12. "RULE 6 ' FOR LEGAL PURPOSES, THE CLASSIFICATION OF GOODS IN THE SUBHEADINGS OF A HEADING SHALL BE DETERMINED ACCORDING TO THE TERMS OF THOSE SUBHEADINGS AND ANY RELATED SUBHEADING NOTES AND, MUTATIS MUTANDIS, TO THE ABOVE RULES, ON THE UNDERSTANDING THAT ONLY SUBHEADINGS AT THE SAME LEVEL ARE COMPARABLE. FOR THE PURPOSES OF THIS RULE THE RELATIVE SECTION AND CHAPTER NOTES ALSO APPLY, UNLESS THE CONTEXT OTHERWISE REQUIRES.
(I) Rules 1 to 5 above govern, mutatis mutandis, classification at subheading levels within the same headings.
(II) For the purposes of Rule 6, the following expressions have the meanings hereby assigned to them;
(a) "subheadings at the same level"; one-dash subheadings (level 1) or two-dash subheadings (level 2).
13. ' Thus, when considering the relative merits of two or more one dash subheadings within a single heading in the context of Rule 3(a), their specificity or kinship in relation to a given article is to be assessed solely on the basis of the texts of the competing one-dash subheadings. When the one- dash subheading that is most specific has been chosen and when that subheading is itself subdivided, then, as only then, shall the texts of the two-dash subheadings be taken into consideration for determining which two-dash subheading should be selected."
14. ' Mr. Junaid Ghaffar stated that the imported goods were to be classified under Rule 4 as they were not covered by Rules 1 to 3 therefore, they will have to be classified under the heading appropriate to the goods to which they are 'most akin. He further submitted that from perusal of the Explanatory Note appearing under Rule 6 it would be absolutely clear that the Sodium Sulphate imported by the Petitioners could not be classified under the sub-heading Sodium Sulphate as the imported goods were not akin or similar to Disodium Sulphate but was to be classified under the subheading "Other". Mr. Sajjad Ali Shah, the learned Standing Counsel was unable to controvert the contention raised by Mr. Junaid Ghaffar and could not satisfy us as to how the imported material could be treated as Sodium Sulphate and assessed under subheading 2833.1100 relative to the Sodium Sulphate in view of the above Rules 4 and 6 of the General Rules for the interpretation of the Harmonized System.
15. It is absolutely clear that the Customs Department had acted illegally and with mala fide intention in assessing the Sodium Sulphate under sub-heading 2833.1100 in view of the fact that the rate of Customs Duty under the sub-heading 2833.1100 was much higher as compared to the rate of Customs Duty under sub-heading 2833.1900 with effect from financial year, 1997-98 and the impugned demand notice calling upon the petitioners to pay the Customs Duty at the rate of 45 ad valorem under PCT sub-heading 2833.1100 was without jurisdiction, illegal ab initio.
16. ' We now take up the issue of maintainability of the Constitutional Petition. The Respondents have challenged the maintainability of the Constitutional Petition on the grounds; firstly, that the Petitioners had submitted a representation to Respondent No,3 which was pending and no final result was communicated to them; and secondly, that the Petitioners did not exhaust the departmental remedies available to them under the Customs Act. With regard to the first objection, Mr. Junaid Ghaffar drew our attention to the order of the Secretary (Customs Tariff Reforms), Central Board of Revenue (Customs Wing) dated 7-3-1998, wherein the Central Board of Revenue on the representation made by Pakistan Glass Manufacturers Association had decided that Sodium Sulphate (Na2So4) whether hydrated or unhydrated falls under heading 2833.1100 and was chargeable to duty at 45% ad valorem. In the said letter it was further stated that other Sulphates of Sodium like Sodium Disulphate or Sodium Pyrosulphate (Na2So4) would fall under heading 2833.1900 and submitted that in view of decision taken by the Central Board of Revenue there was no point in pursuing the representation before Respondent No,3 or to have recourse to the legal remedies available under the Customs Act inasmuch as they would follow the decision taken by the Central Board of Revenue as all authorities of the Customs Department being subordinate to the Central Board of Revenue would follow the decision of the Central Board of Revenue and they could not be expected to give a decision contrary to the view taken by the Central Board of Revenue. The contention raised by Mr. Junaid Ghaffar carries weight. Even, otherwise it is a settled principle for invocation of constitutional jurisdiction under Article 199 of the Constitution of the Islamic Republic of Pakistan that if an order or decision is absolutely illegal, contrary to the provisions of law or established practice or is mala fide then the aggrieved party can approach this Court directly by way of Constitutional Petition. The question of legality or validity of the demand under the impugned demand notice, dated 27-9-1997 calling upon the petitioners that the Imported goods were liable to be assessed under PCT heading 2833.1100 chargeable to Customs Duty at 45% ad valorem and not under PCT heading 2833.1900 as claimed by the Petitioners has already been dealt with in the foregoing paragraphs and we have come to the conclusion that the same was illegal, mala fide and void ab initio, therefore, the same could be assailed by the Petitioners by way of this Constitutional Petition without having recourse to the legal remedies available to them under the Customs Act.
17. For the foregoing reasons and discussions we find that this Constitutional Petition merits consideration and is allowed. The impugned demand notice is set aside and the Respondents are directed to assess the imported Sodium Sulphate for levy of Customs Duty and other taxes under sub-heading 2833.1900 of heading 28.33 of the PCT Code.