Customs tribunals should not override the decision rendered by the Classification Committee in deciding which is the correct Pakistan Customs Tariff (PCT) Heading for imported commodities. They are only permitted to give an alternate decision if it is demonstrated that the first decision was arbitrary, unjust, or against the rules of classification.
From the ruling of the highest appellate body, the rulings of the Classification Committee are greatly significant. Such rulings have a presumption of being right and will be adhered to unless the error or misconduct in the procedure is evident.
The case at hand was related to a taxpayer firm that imported printed laminated packaging film. The firm was cleared for the goods under the automatic clearance process, which allows importers to clear goods without thorough inspection. The firm quoted a particular HS Code, and accordingly, customs duty was charged at the rate of 25%. The goods were released.
However once the goods were cleared, the firm subsequently requested a refund, asserting that the customs charges had been paid at an incorrect rate. They contended that the proper rate should have been 20% and not 25% because they had utilized the incorrect HS Code at clearance.
The case was referred to the Classification Committee of the Federal Board of Revenue (FBR). On going through the case, the committee upheld the customs department’s decision, and the application for a refund was dismissed. The company appealed to the Collector Customs as well, but that was also rejected. The tribunal, however, decided in favor of the company, concurring that the proper rate of duty ought to have been 20%. The higher appellate tribunal also concurred with this ruling.
However, the last appellate court differed from the tribunal and the upper appellate court. It said that the tribunals erred by not considering the ruling of the Classification Committee and classifying it themselves. The tribunal ought to have adhered to the ruling on classification by the committee.
