DELITE HOUSE LTD. Versus ASSISTANT COLLECTOR, CUSTOMS

1. By this order I propose to decide Writ Petition Nos. 4029/84, 4030/84, 4031/84, 4032/94, 1380/85, 217/87 and 3485/87 as common questions of law and facts are involved therein.

2. The petitioners, claim that they import Gas Thermostats, Water Heater Thermostats for domestic use. These goods were assessed by the Customs authorities under Pakistan Custom Tariff, item 90.24 of the First Schedule to the Customs Act, 1969 and were free from custom duty. Only sales tax at the rate of 10% was leviable. The petitioners maintain that the goods in question are essentially thermostats in character and existence of valve therein is merely a part of the main device. The main unit is a thermostat and a valve attached thereto, has a secondary function. It was contended, that their combination would attract classification under item 84.61 only if these are essentially valves in character. The thermostats in question are energy saving devices. Their function is to control the admission of the gas to the burner with the object of raising the temperature of water to a pre‑determined level. It has an inbuilt mechanism to cut off flow of gas to the burner in order to keep the temperature at a particular level. It was also argued that the mere combination of valve with thermostat does not bring it within the mischief of heading 84.61. It was also contended that the respondents had throughout been classifying the goods in question under item 90.24, but owing to the latest instructions of the Central Board of Revenue, conveyed vide Letter No. 80‑81/Cus(T&V)7(12), dated 9‑3‑1983 and Letter No. 3(7)TAR.11/85, dated 19‑10‑1986, the appraising unit of the Customs Department, started assessing the aforementioned goods under PCT heading 84.61(D.) which provided custom duty payable at 40% plus sales tax at 12.5$. It was argued that the aforesaid provisions of the fiscal statute, are required to be construed strictly. The construction favouring the subject, is to be preferred. In support of this submission reliance was placed on Mrs. Momtaz Malik v. The Taxing Officer (Registrar, High Court) Dacca P L D 1969 Dacca 803 and Muhammad Khan v. Syed Abdul Khaliq and others, Syed Abdul Khaliq and others v. Muhammad Khan P L D 1986 S C 717.

2. In order to explain the nature of the goods imported, the petitioners produced a unitrol apparatus and brought Mr. Sirfraz A. Khan an expert, to explain the function and mechanism of the instrument.

3. Whether the instrument in question, is thermostatically controlled valve, or a thermostat having valve therein, can .be gone into by 'this Court in writ jurisdiction, learned counsel for petitioner cited M.Y. Khan v. M.M. Aslam and 2 others 1974 S C M R 196 and submitted that this ‑ Court is competent to investigate into such questions of fact, for finding out as to whether the impugned order passed by Custom authorities, is based on relevant considerations.

3. Syed Niaz Ali Shah, Advocate and Mr. Maqbool Ahmad‑II, Advocate, representing the respondents, on the contrary contended that unitrol is brand name of thermostatically controlled valve and has correctly been classified under item 84.61 of the Pakistan Custom Tariff. This instrument is valve designed to be fitted to gas‑water heaters and ovens, for regulating the admission of gas to the burners for heating to a predetermined level. It combines in a single unit, a valve admitting or cutting off the gas to the burner and a thermostat which controls the operation of the valve. It was stated that the apparatus is thermostatically controlled valve, and rot a thermostat pure and simple so as to justify its classification under item 90.24. It was also submitted that the Custom Cooperation Council Brussels had given their expert opinion, after due deliberation at the international level, firstly in the year 1975 and thereafter reiterated the same in 1981 classifying the apparatus under item 84.61. It was also contended that there is no ambiguity whatsoever that the apparatus in question is thermostatically controlled valve, irrespective of the fact that the thermostat part thereof is larger in size than the valve.

4. I have considered the contentions raised by learned counsel for the parties, examined the apparatus and learnt about its mechanism as explained. by the expert produced by the petitioner. The sole question which falls for determination by this Court is, whether the apparatus is to be classified under Pakistan Custom Tariff item 84.61 or 90.24 of the 1st Schedule to the Customs Act, 1969. In order to appreciate the controversial point, in its correct perspective it will be useful to reproduce hereunder both these items:

5. "90.24 Instruments and apparatus for measuring checking or automatically controlling the flow, depth, pressure or other variables liquids or gases, or for automatically controlling temperature (for example, pressure gauges, thermostats, level gauges, flow meters, heat meters, automatic ovendraught regulators), not being articles falling within heading No. 90.14.

6. 84.61 Taps, cocks, valves and' similar appliances, for pipes, boiler shells, tanks, vats and the like, including pressure reducing valves and thermostatically controlled valves."

7. It cannot be denied that the apparatus, regulates the flow of gas by opening or closing of an apurture. This opening or closing of the! aperture regulating the flow is controlled by thermostat. Had the thermostat been functioning independently of the valve it could have been classified under heading 90.24 but as the thermostat combines with the valve and thereby automatically controls opening or closing of the apurture it has to be classified under item No. 84.61. In most of the bills of entries brought on the record the goods imported were described as thermostats without disclosing that in fact those were thermostatically controlled valves. The valves are to be classified under this item, even if other assessories in the nature of thermostat are attached therewith.

8. Undoubtedly the apparatus in question is designed to be fitted to gas‑water heaters/ovens, incorporating therein a valve to regulate the admission of gas to the burner for heating to a predetermined temperature. It combines in a single unit a valve admitting or cutting off the gas to the burner and a thermostat which controls the operation of the value. After noticing the function of the apparatus, I am convinced that the respondents have correctly classified the instrument under item 84.61.

9. The cases cited by learned counsel for petitioner, in support of the proposition, that where the interpretation of provisions of law involve fiscal‑consideration, the interpretation favouring the subject is to be preferred, propound correct legal principle, but is applicable r only where there is element of doubt or ambiguity. In the circumstances of the instant case, however, the description given iii the relevant item and its function duly demonstrated by the expert, produced by the petitioners, leave me in no manner of doubt, about its classification under item 84.61 of the Schedule.

10. As regards the other contention about the competency of this Court to investigate into question of fact; I may observe that, whether apparatus in question is classifiable under item 90.24 or 84.61 of the Schedule is not a pure question of fact, rather is a mixed question of law and fact. In my view, this Court is competent to adjudicate upon this question in writ jurisdiction in the light of the dictum laid down by the Supreme Court in M.Y. Khan's case cited above by learned counsel for petitioners.

11. In the result these petitions fail and are dismissed with costs.

12. A . A . / D‑20/ L. Petition dismissed.