MUHAMMAD ARIF MOTON (MEMBER JUDICIAL-II).-This order will dispose of Customs Appeal No. K-366 of 2009 filed by the appellant against Order-in-Appeal No. 1721 of 2008, dated 18-4-2009, passed by the Collector of Customs, Sales Tax and Federal Excise (appeals), Karachi.

2. Brief facts of the case are that the appellant imported a consignment of "Vivioptal Capsules (Multivitamin)" declaring the description of goods as "Drugs and Medicines" and claimed assessment thereof under PCT code 3004.5090. On physical examination of the consignment, customs shed staff confirmed the description of imported goods as Food Supplement (Multivitamin Geriatric with H3 Capsules) and classified the same under PCT Heading 2106. However, the appellants did not agree with the classification of their goods determined by Customs Shed Staff and requested for release of the same on the declared/claimed PCT and subsequent referral to release of the same to Classification Centre. Appraisement Collectorate, Custom House, Karachi for determination of correct classification of the goods. The goods were accordingly assessed and released on declared/claimed PCT after obtaining undertaking from the appellants to the effect that they would pay differential amount of customs duty and other taxes if it was ruled by the Classification Centre that the goods were Food Supplement and classifiable under PCT heading 2106. The ruling (No.CC-04/2003-a dated 7-5-2003) of the Classification Centre, Appraisement, Collector, Custom House Karachi held that the goods were "Dietary Food Supplements" consisting of vitamin, mineral substances and salts in the from of tablets which are used for daily requirements of the human body to restore its health. The same are used as defence against exhaustion, reduced vital force (disturbance of potency) increased nervousness and irritability, defective memory, lack of concentration, diurnal tiredness, disturbed blood supply and general weaknesses i.e. in all symptoms indicating a deficiency of vital substance. The capsules can be used without Doctors Prescription. Therefore, the same do not qualify for classification under Chapter 30 as per explanatory notes of (3004) which read as "Further, this heading excludes food supplements containing vitamins or mineral salts which are put up for the purpose of maintaining health or well-being but have no indication as to use for the prevention or treatment of any diseases or ailment. These products which are usually in liquid form but may also be put up in powder or tablet form, are generally classified in heading 21.06 or Chapter 22." Further as per notes of (2106), "(16) Preparations, often referred to as food supplements, based on extracts from plants, fruit concentrates, honey, fructose, etc. and containing added vitamins and sometimes minute quantities of iron compounds. These preparations are often put up on packaging with indications that they maintain general health or well-being. Similar preparations however, intended for the prevention or treatment of diseases or ailments are excluded (heading 30.03 or 30.04). Thus the instant goods qualify for definition of Food Supplement classifiable under PCT heading 2106. In view of the classification Centres ruling and Customs Explanatory notes the goods were classified under PCT heading 21.06 instead of 30.04 and re-assessment thereof was carried out which indicated a short levy of duty/taxes amounting Rs.2,146,998.

3. The Appellants were served with a show-cause notice as to why action under the aforesaid provisions should not be taken against them.

4. Adjudication proceedings were initiated by the Additional Collector who after hearing the parties passed the Order-in-Original No.13 of 2008 dated 19-9-2008. The relevant extract is as follows:--

"I have considered the case record as well the detailed arguments of the respondents. From the characteristics of the imported goods as mentioned in the literate as well as on the packing it is evident that the same are multivitamin preparation referred to as food supplements in the light of Explanatory Notes of HS 2106 read with Classification Centre Ruling dated 7-5-2003 and the under reference goods were correctly classifiable under PCT heading 21.06. I, therefore, order Messrs A.G.P. (Pvt.) Ltd., to pay the short recovered amount of Rs.2,146,998 (Rupees twenty one lac forty six thousand nine hundred ninety eight only) within 14 days of issuance of this order under section 32(2) of the Customs Act, 1969 read with section 36(1) of the Sales Tax Act, 1990."

Appeal filed against the said order-in-original met the same fate. Hence this appeal.

5. Mr. S.M. Kazimi Consultant appeared on behalf of the appellant and reiterated the arguments incorporated in his memo. of appeal. He mainly emphasized on the following points:---

(i) That the impugned order ignores and fails to appreciate that the Order-in-Original No.13 of 2008 dated 19-9-2008 is manifestly time-barred under the provisions of section 179(3) of the Customs Act, 1969 with reference to the show cause notice dated 21-2-2008 and is therefore, unlawful and void. The impugned order (based on and confirming such a time-barred, unlawful and void order-in-original) is also void and unlawful accordingly. The prescribed limitation of 90 days for adjunction expired on 21-5-2008 and no reasoned ordered of extension of this time limit has either been recorded in that order-in-original or communicated to the appellant. It is, therefore, construed that no valid and reasoned order of extension in adjudication period was obtained for the Collector. Even otherwise, there can be no justifiable reason for any such extension because the case was last heard by the respondent on 10-5-2008 and judgment was reserved by him. No proceedings took place after 10-5-2008 and, therefore, there could be no justification for obtaining/ allowing extension beyond the original limitation of 90 days which expired on 21-5-2008. Section 179(3) requires that the reasons for extension, where granted, has to be specified in writing. He referred to the judgments reported as PLD 1990 Karachi 412, 1998 MLD 650, PTCL 2003 CL 716.

(ii) That without prejudice to the aforesaid arguments, the order-in-original passed by the respondent in unlawful and void because:

(i) It has been after the expiry of more than 3 months from the date of last hearing. In its judgment dated 19-9-1981 in I.C.A. No.110 of 1978 in the case of Crescent Sugar Mills v. C.B.R. and others (PI D 1982 Lah. 1), the honourable Lahore Court had held that `Repeatedly, the Supreme Court has made observation that in any case where judgment is reserved and it has not been written within a period of three or four months, fresh hearing is necessary in such circumstances. Surely this principle would be attracted to the instant case as well; and

(ii) It is time-barred under all circumstances under section 179(3). It has been held by the Honble Lahore High Court in its judgment dated 7-11-2007 in Writ Petition No.13331 of 2006 (2008 PTD 60) that the limitation period for adjudication is mandatory in nature and is not directory and that once limitation had started to run and had come to an end the assessee had acquired a vested right of escapement of assessment by lapse of time.

(iii) That both the learned Collector (Appeals) and the respondent have failed to appreciate that no sales tax is leviable in terms of S.R.O. 555(I)/2002 dated 23-8-2002, now Serial No.7 of S.R.O. 555(I)/2008 dated 11-6-2008 which exempts all substances (irrespective of its PCT heading classification) from the whole of sales tax if registered as drug under the Drugs Act, 1976. Vivioptal Capsules is a registered drug under registration No.014800 dated 6-12-1993. That being so, the demand for sales tax of Rs.1,125,261 as made by the respondent in the order-in-original and also confirmed by Collector (Appeals) in the impugned order is unlawful and not sustainable and void.

(iv) That both the learned Collector (Appeals) and the respondent have also failed to appreciate that while customs is empowered to assess and collect the amount of advance income tax on imports under section 148, Division-II of Part-V, of the Income Tax Ordinance, 2001, they (Customs) are not empowered to recover the not-collected or short-collected amounts of advance income tax of the escaped assessments of such advance income tax. It is only the Commissioner of Income Tax, in terms of section 162 of the said Ordinance, who can pass an order to that effect and recover the amount not collected from the person from whom the advance income tax (of section 148, Division-II of part-V of the Ordinance) should have been collected. Therefore, the demand for recovery of the advance income tax of Rs.12,528 as made by the respondents is ultra vires, unlawful, not sustainable and void. At best the respondents could inform the appellants Commissioner of Income Tax for necessary action, if lawfully under section 162 of the said Ordinance but he himself is not legally empowered to demand or recover this short levy, even if lawfully payable.

(v) That the respondents have committed a breach of the provisions of section 223 of the Customs Act, 1969 by ignoring and not adhering to the guidelines provided by the F.B.R. in the long practiced (Since 1973) para 74 of Customs General Order No.12 of 2002 dated 15-6-2002 based on the previous C.G.O No.21 of 1973 dated 26-5-1973. Vivioptal Capsules, registered as drug under the Drugs Act, 1976 has all along been assessed by the Customs Department under PCT heading 3004.5090 and this classification and assessment is a long-established uninterrupted practice since the date of registration. The appellant acquired a vested right of assessment of Vivioptal Capsules under PCT heading 3004.5090. Without prejudice to the merits of Vivioptal being classifiable under PCT heading 3004.5090, the customs are not empowered to make a sudden departure from the said established practice of assessment of Vivioptal Capsules under PCT heading 3004.5090. Without prejudice to the merits of Vivioptal being classifiable under PCT heading 3004.5090 the customs are not empowered to make a sudden departure from the said established practice of assessment of Vivioptal Capsules under PCT heading 3004-5090 unless they issue a Public Notice giving reasons for the new classification and even then such a public notice will be applicable and enforceable prospectively for the imports after the date of that Public Notice. Since no such Public Notice has been issued by the Customs Department or by the respondent, the classification of Vivioptal Capsules under PCT heading 3004.5090 will rule and reign in this case under appeal. The orders for change in classification of Vivioptal imported prior to the date of order is ab initio void, unlawful and non-sustainable being violative of the legal principles outlined under the provision of para 74 of the said CG No.12 of 2002 read with section 223 of the Customs Act, 1969.

(vi) That as regards the so-called Classification Centre Ruling during 7-5-2003 heavily and solely relied upon by the Collector (Appeals) and the respondent, the appellant begs to state that:

(i) That it is not a Ruling by the Classification Centre. It is simply a letter (reply) from the Collector of Customs (Appraisement) addressed to Secretary, (STT), F.B.R. stating that:

(a) The case of Classification of Multivitamin Dietary Supplement was discussed in the Classification Centre in its meeting held on 9-4-2003. It does not give the details of any decision or opinion of the said Classification Centre.

(b) The Customs are already classifying such multivitamin dietary supplements under PCT heading 21.06 as food supplements. It neither gives the names of the products nor specifies its exact chemical composition and packing presentation; and

(c) Advises the Sales Tax Wing of F.B.R. to take necessary action as per law against the local suppliers.

(ii) That the methodology for issuance of Classification Rulings is given in Chapter-II of the F.B.Rs C.G.O.No.12 of 2002 dated 15-6-2002 it is pertinent to say that the Note appended to para.2 of Chapter-II of C.G.O No.12 of 2002 states that The Classification ruling so issued by the Centre will be widely circulated in the form of public notice amongst the trade, industry and Customs organization in the country. The Collectors letter to F.B.R (i.e. the said so-called Ruling dated 7-5-2003) is a letter exchanged between the Sales Tax Wing of F.B.R. and the Collector (requesting further necessary action by F.B.R.) and it does not qualify to be Classification Ruling issued under Chapter-II of F.B.Rs C.G.O. No.12 of 2002. Reliance upon this letter by terming it with a misnomer of classification Ruling is an act of mischief on the part of the respondent.

(iii) That the Collectors letter dated 7-5-2003 is neither specific to nor related to the appellants goods (Vivioptal Capsules). This is. confirmed by the fact that while the said letter states that multivitamin Dietary Supplements are already being classified by the Customs under heading 21.06, the fact remains that the customs were classifying vivioptal capsules and a similar geriatric multivitamin (Pharmation) Capsules regularly and consistently under PCT heading 3004.5090, showing that the Collectors report was not relatable to the appellants vivioptal (imported from Germany) or its competitors Pharmaton (imported from Switzerland). Had there been a valid, applicable and lawful Ruling of 2003 or any consistent practice for assessment of Multivitamin Capsules (like Vivioptal or Pharmaton) under PCT heading 3004.5090 during 2003 or prior to 2003 or after 2003.

(iv) That the respondent has not given the reason that when the specific issue of PCT Classification of vivioptal Capsules was referred by him to the Classification Centre vide his letter No.UT/840/2007-AFU dated 24-5-2007, why it was not put up before the Classification Centre. The Secretary of the Classification Centre, who reportedly returned the matter vide his letter dated 31-5-2007, is not legally empowered or authorized to decide a reference (to the Classification Centre) without obtaining a specific order/approval of the meting of the Committee of that Classification Centre. The so-called Secretary of the Classification Centre cannot act singly or unilaterally without obtaining the written directives of the Committee of the said Centre. The said action of the so-called Secretary of the Classification Centre is arbitrary, uncalled for, unlawful and void.

(v) That the respondent has not given in the show-cause notice or his order-in-original any reason as to why he did not refer back the matter to the Classification Centre for a meeting and a specific ruling in accordance with the revisions of para 2 of Chapter-II of C.G.O No.12 of 2002 in view of the deficiency highlighted in sub-para above.

(vi) That the respondent has also not given reason why he had to wait for 9 long months (from 31-5-2007 to 21-2-2008) from the date of the letter dated 31-5-2007 from the Secretary of the Classification Centre to the date (21-2-2008) that he issued the shows-cause notice. It is pertinent to say that 4 such consignments of Vivioptal Capsules imported by the appellant (IGM No.15651/20-6-2007, Index No.15, C-1299/7-6-2007; IGM No.16094/20-6-2007, index No.39, 5056725-6-2007, IGM No.18586/5-9-2007, index No.27, C-1236/7-9-2007; and IGM No.1316/14-2-2008, index, No.20, C-2376/14-2-2008) were cleared under PCT heading 3004.5090 even after the date (31-5-2007) of the so-called Ruling and before the date (21-2-2008) of the show-cause notice. This shows that even the respondent and his subordinates had not accepted the so-called Ruling whether after the date of its issue (7-5-2003) or after the receipt of the Secretary, Classification Centres letter dated 31-5-2007. Thus the past practice continued and para. 74 of the C.G.O. No.12 of 2002 applies in such cases.

(vii) That no Classification Ruling on Vivioptal has as yet been issued by the Classification Centre (in terms of the Note appended to para 03 of C.G.O. No.12 of 2002 or by the F.B.R whether on the basis of Collectors letter No.CC-4/2003-A dated 7-5-2003 or otherwise.

(viii) The learned Collector (Appeals) and the respondent have erred in holding that Vivioptal is a food supplement and/or is not a medicament. The printed literature available in all the packages of Vivioptal Capsules indicate that it:-

(i) has a well-balanced complex spectrum of vital substances: vitamins, lipotropic substances, mineral salts, trace elements and other bio-activators;

(ii) contains specified quantity/unit of U.S.P grades of vitamin A, vitamin B-1, Vitamin B-2, Vitamin B-6, Vitamin B-12, Nicotinamide, D-Panthenol, Biotin, Procaine HCL, Folic Acid, Inositol, Orotic Aid, Vitamin C, Vitamin D-3, Vitamin-E, Ethyl Linoleate, Lecithin, Choline Hydrogen Tartarte, L-Lysinmonohydrocholoride, Hematoporphyrin, Adenosine, Intrinsifactor, Magnesium, Glycerophosphte, Calcium Hydroigen Phosphate, Potassium Sulphate, Ferrous Sulphate, Cupric Sulphate, Manganous Sulphae, Caboltous Sulphae, Sodium Molbdate and Zinc Oxide.

(iii) contain no food or food substitute and is not (repent) not based on extracts from plants, fruit concentrates, honey, fructose, etc. and that while the product is a Geriatric multivitamin Capsules, it is not a food with added vitamins;

(iv) is indicated for the prevention and treatment of various symptoms like Exhaustion, Reduced Vital Force, increased nervousness and irritability, defective memory, lack of concentration, diurnal tiredness, disturbed blood supply and general weakness. It improves vesicul