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Civil Appeals Nos. 69 to 72 of 1979, decided on 23rd October, 1985.
(On appeal from the judgment of the High Court of Baluchistan, Quetta, dated 30‑5‑1978, in Constitution Petitions Nos. 135/77, 155/77, 69/78 and 70/78).
‑‑‑Art. 185(3)‑‑Sales Tax Act (III of 1951), S. 7(1)‑‑Leave to appeal granted to consider question as to whether or trot packed dry milk was exempt from levy of sales tax either under Item No. 21.07 or Item No. 04,02 of Pakistan Custom Tariff,
‑‑‑S. 7(1)‑‑Customs Act (IV of 1969), First Sched., Hdg. No. 21.07‑ Pakistan Custom Tariff, Item 04.02‑‑Powdered milk, held, could be classified as 'foodstuff'.
‑‑‑S. 7(1)‑‑Customs Act (IV of 1969), First Sched., Hdg. No. 21.07‑ Pakistan Custom Tariff, Item 04.02‑‑Powedred milk (NIDO), held, could not by any stretch of imagination be said for exclusive use of infants and hence not exempt from sales tax.
Khalid M. Ishaq, Advocate Supreme Court and Nizam Ahmed, Advocate‑on‑Record for Appellants.
Wajihuddin, Advocate Supreme Court and Yousaf Rafi, Advocate -on‑Record for Respondents.
Date of hearing: 12th September, 1985.
This judgment will dispose of Civil Appeals Nos. 69 to 72 of 1979, because all of them are directed against the same judgment of the High Court and involve the same question of law.
2. Briefly stated, the facts of this case are that the appellant in each case imported NIDO milk in powdered form into Pakistan. They were required by the Central Excise and Land Customs Department at Quetta to pay sales tax on it. The appellants felt that the item in question was not subject to levy of sales tax. The matter was, therefore, agitated before the Assistant Collector and then before the Collector, Central Excise and Land Customs, Quetta, who held that the goods in question were assessable to sales tax under P.C.T. Entry No. 04.02.
Feeling aggrieved the four appellants challenged the above mentioned demand; through four separate petitions. The learned High Court, however, dismissed all the writ petitions vide the impugned judgment, dated 30‑5‑1978.
3. The appellants then challenged the judgment of the High Court through four separate petitions for leave to appeal. Leave was granted to the appellants by this Court on 9‑6‑1978 to consider as to whether or not NIDO milk was exempt from levy of sales tax either under Item No. 21.07 or Item No. 04.02 of the Pakistan Custom Tariff.
4. We have heard the learned counsel for the appellants and gone through the impugned judgment.
As is obvious from what has been stated above, the question to be determined in these appeals is as to whether or not sales tax is leviable on NIDO powdered milk.
It may be mentioned that the Federal Government is empowered under the Customs Act, 1969, to impose custom duty on various goods imported into Pakistan at any rate it considers proper and can also exempt any such item from custom duty. Similarly, under the Sales Tax, Act, 1951, the Federal Government can impose sales tax on any item, and under section 7(1) thereof, is also empowered to exempt any item from sales tax, through a notification in the official Gazette.
5. Various items on which custom duty and sales tax are leviable are mentioned in a Government Publication printed in the shape of a book by the Central Board of Revenue, known as Pakistan Custom Tariff (hereinafter referred to as P.C.T.). It may be mentioned that P.C.T. is really the 'First Schedule' to Customs Act, 1969, prepared under section 18 of the said Act. The contents of the Schedule P.C.T. Are divided into 21 sections. Each section deals with a different category of items e.g. Vegetable products, Food products, Mineral products, Wood and wooden articles, Textile and Textile articles etc. Moreover, each section is further divided into 'Chapters' but the numbering of these chapters is continuous and there are 99 chapters in all, each relating to a variety of items belonging to the category of goods to which the 'section' in which they fall, relates. Each item is given a separate Heading Number according to its place in various chapters.
The rate of customs duty leviable on each of the items is mentioned in Column No. 3 of the Schedule (P.C.T.), against that particular item. For the sake of convenience, however, sales tax leviable on that item is also mentioned under Column 4 of the said schedule, against each item and if no duty or tax is imposed on any item, the word 'Free' is printed against that item, under the relevant column.
6. Since NIDO is powdered milk it would normally fall under the heading 'Diary Produce' which is mentioned in Chapter 4 of section I of the P.C.T., wherein it has been printed under Heading Number 04.02.
7. Originally items under Heading 04.02, as printed in the P.C.T... read as follows:‑‑
‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑------------------------
Heading Description of Rate of
Rate of
No. Goods. Duty
Sales Tax
‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑------------------------
1 2 3
4
‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑-------------------------
04.02 Milk and cream, preserved,
concentrated or sweetened.
A. Whey 50% ad val. 20%
B. Milk (other than whey)
in powder or granules,
containing not more than
1.5% by weight of fat. 50% ad val. 20%
C. Milk (other than whey)
and cream, in powder or
granules containing more
than 1.5% by weight of fat.
01 Milk 50% ad val. 20%
02 Cream 50% ad val. 20%
‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑
8. On 5th of June, 1976; the Federal Government by a Notification No. SIt0. 526(1)/76 added another item to entry No. 04.02 which reads as follows:‑‑
04.02 Concentrated powdered milk Free 20%
9. The 'powdered milk' can also be classified as 'Food Stuff' because admittedly, it can be used as a part of one's diet. The category of good, relating to 'Food Stuff' are contained in section IV of the P. C. I., which consists of Chapters 16 to 24. Relevant 'Chapter for the purpose of this case is Chapter No. 21, which relates to 'Miscellaneous Edible Products . In the items mentioned in this Chapter (No. 21), powdered milk comes under the Heading 21.07. Originally this entry road as follows:‑‑
---------------------------------------------------------------------------------------------
Heading Description of Rate of Rate of
No. Goods. Duty
Sales Tax
‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑------------------------
21.07 food preparations not elsewhere
specified or included.
A. Flavouring powders and
concentrated extracts for
the preparation of food and
beverages. 12% ad val. 20%
B. Concentrated and powedered
milk in which animal fat
has been wholly or
partially substituted by
vegetable fat. 50% ad val. 20%
C. Other.
01 Food for infants and
invalids. 50% ad val. Free
02 Other 160% ad val. 20%
‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑‑--------------------------
10. On 5‑6‑1976 the Federal Government added a new entry under this heading which reads as follows:‑‑
21.07 Baby Milk Food Free 20%
Since we are concerned with the position as it existed in 1977, when the imports in question were made by the appellants, it is this entry which would be relevant for the purpose of this case.
11. Since powdered milk mentioned under Heading Number 04.02 is clearly subject to 20% Sales Tax, the learned counsel for the appellants submitted that NIDO milk falls under Heading Number 21.07 because it was infant/baby milk food' meant for the consumption of infants. For this purpose he relied on a poster printed by the manufacturers which described it as:
"Infant feeding formula from the finest quality cow's milk in which small part of the butter fat is replaced by corn oil and is modified in such a way that the infant's requirements are fully met. It is enriched with normally recommended vitamins. Instant Nido is manufactured according to the Nastle Processes which give every guarantee of bacteriological party.‑‑
He also urged that milk becomes 'food' when something is taken out of it and replaced with some other article and argued further that since, while manufacturing NIDO, butter fat is replaced by corn oil and Vitamins A and D are added to it, the product would be described as 'food' rather than just powdered milk. He then urged that milk used as 'infant food' had been exempted from sales tax through a Notification in 1975.
11. To understand this contention it may be mentioned here that certain items had been exempted from sales tax by the Federal Government through a Notification No. 7, dated 27‑6‑1951, issued in exercise of the provisions under section 7(i) of Sales Tax Act, 1951. A new item (No. 57) was added therein by a subsequent notification, dated 28‑6‑1969, which read as follows:‑‑
"57. Milk food for infants and invalid foods."
This entry was thereafter amended from time to time. In 1975, through Notification No. S.R.O. 740(17)/75, dated 1‑7‑1975. Item No. 57 was amended to read as follows:‑‑
"57. Milk food falling under heading No. 21.07 of the First Schedule to the Customs Act, 1969 (IV of 1969), for exclusive use by infants and invalids."
12. As a result milk food exclusively meant .for the consumption of infants and invalids was exempted from sales tax. As already mentioned, the contention of the appellants' counsel is that NIDO is food for the exclusive use by infants. We are, therefore, not concerned as to whether it is also food usable by invalids.
13. The only question before us, therefore, is whether NIDO powdered milk is food exclusively for the use of infants. As already observed, in support of his contention the appellants' counsel relied on a pamphlet issued by the manufacturers which has been reproduced in paragraph No. 10 above.
On the other hand, the learned counsel for the respondent -department relied on the matter printed on the tins in which NIDO powdered milk is packed, which reads as follows:‑‑
"This tin of INSTANT NIDO will make 7 litres of pure, delicious, nourishing milk, INSTANT NIDO provides health for the whole family because it not only contains all vitamins of fresh milk but is also enriched with Vitamins A and D, it dissolves instantly, without lumps, in hot or cold water."
14. We have given our anxious consideration to the contentions raise by the counsel for the appellants, but are not persuaded to agree with the view canvassed by the appellants' counsel. Brands of powdered milk used exclusively for feeding children are well‑known, for example. Cow and Gate, Oster Milk and Similar, etc. But even if one was to agree that NIDO powdered milk could be used as 'food' for infants by diluting it considerably, it cannot be said by any stretch of imagination that it is meant for the exclusive use of the infants. The qualities of the milk as printed on the tins in which NIDO is packed themselves mention that it can be used, with advantage, by the whole family. It is, therefore, clear that it is not meant for "exclusive use by infants". Consequently, it cannot .be held to be exempt from sales tax.
The upshot of the above discussion is that we uphold the judgments of the High Court and dismiss the four appeals as having no force.
No order as to costs
M. Y . H . Appeals dismissed.
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