The Customs Classification Committee has accepted the stance of the Inland Revenue of the Federal Board of Revenue (FBR) regarding the classification of tea whitener.
The FBR authorities had made a representation before the Member Customs (Operation), challenging the earlier classification ruling of Tea Whiteners of Brand names, Tea Max, classified under PCT heading 1901.9090 vide Public Notice dated 05.05.2011.
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The FBR authorities contended that according to the test report dated 25.05.2017 conducted by Deputy Chemical Examiner (DCE), Customs Dry Port Mughalpura, Lahore, the tea whiteners are not products of Chapter 1901 and should be classified under PCT 2106.9090.
The issue was raised by the FBR in the backdrop of the admissibility of zero rating and exemption under 5th and 6th Schedules of the Sales Tax Act, 1990 on tea whiteners of various brands being manufactured locally in Pakistan.
Subsequent proceedings initiated by the FBR based on the Test Report were challenged by the manufacturers on the basis that the Classification Committee had already issued Classification Ruling dated 05.05.2011 for Tea Whiteners. The Board vide letter No. 3(6) Tar-I/2020 dated 13.11.2020 referred the representation to the Classification Committee for its views/comments.
Meanwhile, manufacturers filed Writ Petition No.80484 of 2021 before the Honourable Lahore High Court against the report dated 10.12.2021. The Honourable Lahore High Court passed orders dated 28.10.2022 in Writ Petition No.80484 of 2021 directing the matter to be deemed as pending before Collector of Customs (Appraisement East), Custom House, Karachi/respondent No.3 for exercise of powers under the Clause (v) through speaking order, which shall be communicated relevant authority in accordance with law along with a copy to the petitioner.
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In compliance with the Honourable Lahore High Court’s aforementioned orders, opportunities of hearings as a special case were provided to the petitioners (manufacturers of tea whiteners) and representatives of FBR, on 18.11.2022 and 23.12.2022, which were held in the Conference Room of the Collectorate of Customs Appraisement (East) Karachi.
Arguments and written submissions put forth by the petitioners (manufacturers of tea whiteners) and the representative of the FBR were perused, and the Classification Committee’s Report dated 10.12.2021 was examined, and the Collector of Customs concurred with the findings/conclusion at paras 10 & 11 of the said report, inter alia on, on the following grounds: Classification of a product is determined strictly in light of General Rules of Interpretation.
In compliance with the Honourable Lahore High Court’s aforementioned orders, the above finding/conclusion/decision of the Collector of Customs was communicated to the Board vide letter C-72/ICAPE/DC/PCT/ 2017 (PT-II) dated 28.02.2023, and to the petitioners via a letter dated 18.03.2023. The Board vide letter C.No.3(6) Tar-I/2020 dated 28.03.2023 directed for compliance with the Honourable Lahore High Court’s orders dated 28.10.2022. Accordingly, ‘Tea Whiteners’ are notified in terms of Chapter II of CGO 12/2002 to be classifiable under PCT heading 2106.9090.
