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Civil Petition No.359 of 1984, decided on 9th April, 1984.

(On appeal from the judgment dated 24‑3‑1984 of the Lahore High Court, Lahore in W.P. No.1084 of 1984).

‑‑Art. 185(3)‑‑Pakistan Custom Tariff Heads 21.07 & 33.04‑‑Concentrates imported from abroad being chief ingredients in preparation of R. C Cola Beverage and not merely odoriferous substances, fall under head 21.07‑‑While upholding such view of High Court, leave to appeal refused by Supreme Court.

Asif Sajjad Jan, Advocate Supreme Court and Mahmood A. Qureshi, Advocate‑on‑Record for Petitioner.

Malik Muhammad Qayyum, Deputy Attorney‑General Pakistan for Respondents.

Date of hearing: 9th April, 1984.

.‑‑The petitioner‑Company is engaged in the manufacture of a Beverage known as R.C. Cola. This Beverage is prepared from two kinds of concentrates, which are imported from a Company situated in the United States of America. The question falling for consideration in this petition is whether these concentrates fall under head 21.07 of the Pakistan Custom Tariff or under head 33.04 thereof

It is relevant to mention that the sales tax on articles falling under head 21.07 is leviable at the rate of 20%, while that in respect of articles falling under the other head is leviable at 10% only.

Head 21.07 to the extent relevant reads as follows:‑

"Food preparation not elsewhere specified or included.

A. Flavouring powders and. concentrated extracts for the Preparation of food and beverages ‑‑‑‑‑‑‑‑‑"

While head 33.04 is as follows:‑

"Mixtures of two or more odoriferous substances (natural or artificial) and mixture (including alcoholic solutions) with a basis of one or more of these substances of a kind used as raw Materials in the perfumery, food, drink or other industries."

The High Court has found that the Beverage in question is covered by head 21.07 and does not come under the purview of head 3304. In this connection, it has observed that:

"in head 33.04 the key word is 'odoriferous' According to the dictionary it means yielding or diffusing an odour, especially a fragrant one. On examining the composition of concentrates imported by the petitioner, as disclosed by itself, it does not appear that they are intended to be used in the beverage merely for the purpose of imparting a pleasant smell to them. In fact, they are the chief ingredients of the beverages and all that the petitioner does is to dissolve them in carbonated water to which) some sugar has been added. Caramel color gum acacia, cola extracts, phosphoric acid and caffeine, are by no means odoriferous substances. By adding flavor would not make them a mixture of odoriferous substances within the meaning of head 33.04."

The above finding of the High Court has been challenged in this petition.

Mr. Arif Sajjad Jan, learned counsel for the petitioner, contended that the head 33.04, is in fact, applicable and, therefore, the judgment of the High Court merits to be set aside. Malik Muhammad Qayyum, Deputy Attorney‑General has been heard in reply.

After hearing both the learned counsel and giving this matter our full consideration, we are inclined to agree with the view expressed by the learned Judge in the High Court and reproduced above and find no reason to disagree with it. We would, accordingly, dismiss this petition.

However, the learned counsel for the petitioner‑Company submitted that the respondents should be directed not to en cash the bank guarantee furnished by the petitioner‑Company but it should be permitted to deposit the additional tax payable in cash and that a period of one month may be allowed for this purpose. The learned Deputy Attorney General has not opposed this request.

The respondents shall, therefore, not en cash the bank guarantee for a period of one month from today, within which period the petitioner Company should pay the additional amount of sales tax in cash. In case, the said amount is not paid in cash within the stipulated period, the respondents will be at liberty to en cash the bank guarantee thereafter.

The petition, with the above directions stands dismissed.

M. I Petition dismissed

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