Imports under HS Codes 3402.1300 and 3402.1190: SC dismisses petition seeking zero duty

ISLAMABAD: The Supreme Court dismissed a petition seeking zero per cent customs duty on the import of items under HS Codes 3402.1300 and 3402.1190.

A three-judge bench, headed by Chief Justice Yahya Afridi and comprising Justice Muhammad Shafi Siddiqui and Justice Shakeel Ahmad decided the matter on an appeal against the Sindh High Court (SHC) verdict.

The petitioner (Surfactant Chemicals Company (Pvt) Limited, Karachi) sought exemption from customs duty in excess of zero per cent (0%) vide SRO 565(I)/2006, dated 05.06.2006 as amended vide SRO 474(I)/2016, dated 24.06.2016] on the import of items under HS Codes 3402.1300 and 3402.1190.

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As the respondents (Secretary Ministry of Finance & Customs Department), declined relief, the petitioner filed constitutional petitions before the Sindh High Court claiming that the goods imported by the petitioner-company were fully covered by the exemption as per Column (3) of the Table at Serial (3) of the amending SRO.

The respondents stance was that they were/are neither registered/recognised by the Federal Ministry of National Food Security and Research nor were manufacturer of pesticides.

The petitioner claimed that it is not required to get such registration or approval, as the petitioner by itself is not a manufacturer of any agricultural pesticides. The petitioner stated that it imports, formulates and manufactures agricultural surfactants/surface active agents namely stabilisers, emulsifiers and solvents which were used in manufacturing pesticides.

The judgment noted that under the SRO the treatment of such goods on its import as zero per cent duty is not absolute; it is qualified/contingent upon terms in the SRO itself. The requisite condition in respect of goods on zero per cent in terms of Serial (3) of the Table in Column (2) is apparent which requires approval by the Ministry of National Food Security and Research which has not been fulfilled by the petitioner.

The goods were imported and were classified under HS Code 3402.1190 and 3402.1300 of the Pakistan Customs Tariff. On the strength of HS Code alone, as available in the column, the treatment cannot be extended as zero per cent duty, for such goods the pre requisites are inevitable.

The judgment said that the treatment of goods disclosed in the SRO were subject to fulfillment of certain obligations. The amended SRO itself put the petitioner under obligations to provide its qualification in order to fetch the exemption as it was only available for manufacturing or formulation of agricultural pesticides by manufacturers and formulators and this could only be recognized and approved by the Ministry of National Food Security and Research. The Column (2) has restricted and prescribed a condition and the treatment of goods of Column (3) in terms of exemption of customs duty could only be if condition prescribed in Column (2) is met. Admittedly, the petitioner is neither recognized nor approved by the Ministry of National Food Security and Research either as manufacturer or formulator of Agricultural pesticides.

The Court said that the application of the order passed in Constitution Petition No.D-8496 of 2017 was also rightly distinguished in impugned judgment as it relates to clause 133 of the Sixth Schedule to the Sales Tax Act, 1990 and was not pari materia with the aforesaid SRO. The Restriction, as is apparent in the ibid SRO, is not seen in respect of goods disclosed in clause 133 of the Sixth Schedule to the Sales Tax Act, 1990.

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