ISMAN DRUG HOUSE LIMITED Versus C.A. BOKHARI, ASSISTANT COLLECTOR CUSTOMS, LAHORE AIRPORT

This is a constitutional petition filed by Isman Drug House Limited, petitioner, to compel the Assistant Collector, Customs, Lahore Airport, Lahore, respondent No.l, to release the consignment of the drug captioned Fucidin Leo Intertulle imported through a valid licence issued by the Controller of Imports and Exports, Lahore, without payment of any customs duty and sales tax and not to cash the bank guarantee furnished by the petitioner.

2. The brief facts of the case are that the petitioner‑company deals in drugs and medicines and is the sole distributor in Pakistan of Leo Pharmaceutical products of Denmark. The petitioner‑company applied for the registration of Fucidin Leo Intertulle as a drug with the Government of Pakistan, Ministry of Health. The same was accordingly registered under section 7 of the Drugs Act, XXXI of 1976, under Registration No. 004115 in the National Formulary. The petitioner‑company imported the said drug through various letters of credit opened in that connection. Whilst the said drug imported through Karachi was cleared by the Customs without payment of any customs duty of sales tax, one of the consignments imported through Lahore vide bill of entry dated 28‑7‑1986 was detained by the Assistant Collector, Customs, Lahore Airport, respondent No.l, for payment of customs duty and sales tax under heading 30.04 of the First Schedule to the Customs Act, 1969 (also known as the Pakistan Customs Tariff). It is the case of the petitioner‑company that the Fucidin Leo Intertulle falls under heading 30.03 of the said Schedule and is not liable to any customs duty and Sales tax. Being aggrieved by the action of the Assistant Collector, Customs, Lahore Airport, the petitioner company made a number of representations to him, but failed. The Assistant Collector agreed to release the goods, subject to the furnishing of a bank guarantee by the petitioner‑company covering the payment of customs duty and sales tax, to enable the petitioner to move the higher authorites for clarification whether the goods were dutiable or not. The petitioner accordingly furnishing the bank guarantee and secured the release of the goods, subject to its right of securing necessary clearance from the Chairman, Central Board of Revenue, Islamabad. Having failed in the said direction, the petitioner‑company has now filed the present writ petition for the relief stated in para. No.l above, which is now before me for disposal.

3. Mr. Munir Ahmad Bhatti, Advocate, has appeared for the petitioner‑company. Syed Niaz Ali Shah, Standing Counsel for the Federal Government, assisted by Muhammad Salim DS Customs has appeared for the Federal Government. At the last hearing I had directed the respondents to appear through their legal advisers and to be prepared to argue the main writ petition, if it was admitted. Since the case has been argued at length by both the learned counsel, I am admitting this petition and will dispose of this case as a notice case.

4. On behalf of the petitioner‑company it is submitted that "Fucidin Leo Intertulle" was registered in Pakistan as a drug vide Head No. 004115 in the National Formulary. It is submitted that the said "Fucidin Leo Intertulle" is a sterile square guaze impregnated with approx 1.5 gram of two per cent Sodium Fusidate Ointment, which is an anti‑biotic, which has strong effect against Gram Positive Bacteria. Since the impregnated solution is an anti‑biotic, the said Fucidin Leo Intertulle gauze comes in the Category of "medicaments" containing anti‑biotics under Category 'A' of head No.30.03 of the Schedule to the Customs Act, 1969, and is, therefore, free from any customs duty or sales tax.

5. On behalf of the Federal Government it is submitted that the Fucidin Leo Intertulle gauze comes under Category 'A' of heading 30.04 of Schedule 1 to the Customs Act, 1969 and this is also obvious when one reads pages 456 to 459 of the Explanatory Notes to the Nomenclature for the Classification of Goods in Customs Tariff which covers Headings 30.03 and 30.04. In this connection item No. (1) of para (A) under 'Heading 30.03 covering "Medicaments (including veterinary medicaments)" has been read, which clearly shows that it excludes preparation falling under Heading 30.02 or 30.04.

6. I have given my anxious consideration to this case. The only point in dispute is whether Fucidin Leo Inertulle gauzes which are packed in packs of tin, and which have been imported by the petitioner‑company from Denmark, come under Heading 30.03 or 30.04 of the First Schedule to the Customs Act, 1969. The said headings are reproduced below for necessary interpretation:

"Head Description Customs Sales

Duty Tax

30.03 Medicaments (including veterinary medicaments)

A. Containing anti‑biotics or deriva‑ tives thereof.

01 penicillin, finished and combinations thereof. Free Free

02 other. Free Free

B. Containing hormones or productts with a hormone function but containing neither anti‑biotics nor derivatives thereof. Free Free

C. Containing alkaloids or derivatives thereof but containing neither hormones nor products with a hormone function, nor anti‑biotics nor derivatives of antibiotics. Free Free

D. Other Free Free

30.04 Wadding, gauze, bandages and similar articles (for example, dressing, adhesive plasters, poultices), impregnated or coated with pharmaceutical substance or put up in retail packings for medical or surgical purposes, other than goods specified in Note

3 to this Chapter.

A. Wadding, gauze and bandages impregnated or coated with pharmaceutical substances. 40% ad val. 12 %

B. Other Free Free

01 Impregnated or coated with pharmaceutical substances. 40% ad val. 12 %

02 Other 40% ad val. 121%"

It is not disputed that the Fucidin Leo Intertulle gauze is a drug' within the meaning of section 3 (g) of the Drugs Act XXXI of 1976 and is also registered as a drug under section 7 of the said Act, but the mere registration of substances, mixtures, powders, solutions, bandages, agents, devices as "drugs" under the Drugs Act, or any other substance which the Federal Government may by notification in the official Gazette declare to be "drug" for the purposes of that Act, does not mean that in the classification of "medicaments (including veterinary medicaments)" as given in heading 30.03 of the Pakistan Customs Tariff, all what comes under the definition of "drug" under the Drugs Act, 1976, will stand included. The classification of drugs for the purposes of the Pakistan Customs Tariff in totally different. In order to understand the classification of Medicaments (including veterinary medicaments)" as given in heading 30.03 of the Schedule, the Notes given in the heading to Chapter XXX, which deal with "Pharmaceutical products" is relevant: The said Notes read as follows:

" Note s:

(1) For the purposes of heading No.30.03, "medicaments" means goods (other than foods or beverages such as diatetic, diabetic or fortified foods, tonic beverages, spa water) not falling within Heading No.30.02 or 30.04 which are either:

(a) Products comprising two or more constituents which have been mixed or compounded together for therapeutic or prophylactic uses; or

(b) Unmixed products suitable for such uses put up in measured doses or in forms or in packings of a kind sold by retail for therapeutic or prophylactic purposes.

For the purposes of these provisions and of Note 3 (d) to this Chapter, the following are to be treated:

(A) As unmixed products:

(1) Unmixed products dissolved in water;

(2) All goods falling in Chapter 28 or 29; and

(3) Simple vegetable extracts falling in Heading No.13.03, merely standardised or dissolved in any solvent;

(B) As products which have been mixed:

(1) Colloidal solutions and suspension (other than colloidal sulphur);

(2) Vegetable extracts obtained by the treatment of mixtures of vegetable materials; and

(3) Salts and concentrates obtained by evaporating natural mineral waters.

2. The headings of this Chapter are to be taken not to apply to:

(a) Aqueous distillates and aqueous solutions of essential oils, suitable for medicinal uses (Heading No.33.06);

(b) Dentifrices of all kinds, including those having therapeutic or prophylactic properties, which are to be considered as falling within heading No.33.06; or

(c) Soap or other products of Heading No.34.01 containing added medicaments.

3. Heading No. 30.05 is to be taken to apply, and to apply only, to:

(a) Sterile surgical catgut and similar sterile suture materials .

(b). . . . . . . . . "

Note No.l in the heading of Chapter XXX clearly states that for the purposes of Heading 30.03, "medicaments" means "goods ....not falling within Heading No.30.02 or 30.04 " Sub‑para. (1) of para. (A) under Heading 30.03 of the Explanatory Notes to the Nomenclature for the Classification of Goods clearly states that medical preparations covered by this heading include 'mixed or compounded medical preparations listed in the official pharmacopoeia, proprietary medicines, etc. , including those in the form of gargles, eye‑drops, ointments, linaments, injection, counter‑irritants and other preparations not falling within Heading 30.02 or 30.04." Heading 30.04 expressly covers gauze impregnated or coated with pharmaceutical substances. Thus in view of the Notes in the heading to Chapter XXX, gauze impregnated or coated with pharmaceutical substances, including anti‑biotic solutions, would be covered by classification given in Heading 30.04. The special overrides the general. The words "other than goods specified in Note 3 to this Chapter' do not refer to Heading 30.03, but Note 3 in the heading to Chapter XXX. In these circumstances, the stand taken by the department appears to be legal and correct and Fucidin Leo Intertulle is liable for the customs duty and the sales tax, under Heading 30.04 of Schedule 1 of the Customs Act, 1969.

7. It is submitted that since the Karachi Customs have been exempting the said drug from payment of duties under Heading 30.03, that the department should be compelled to give equal treatment to the petitioner. I am afraid I cannot accept this position. The Central Board of Revenue, vide its letter C.No. 78‑79/Cus‑Ex/6 (3)‑Pt.I, dated 18‑9‑1987, addressed to the Collector of Customs, Lahore, has already fixed the classification of the disputed drug under Heading 30.04 of the Pakistan Customs Tariff. The Karachi Customs will also be complying with the said directive in future. I cannot, therefore, accede to the request of the petitioner.

8. There being no merit in this petition, the same is dismissed.

However, there shall be no order as to costs.

A. A. /1‑46/L Petition dismissed.