We represent a global consumer healthcare and pharmaceutical industry leader in a complex customs duty dispute before the Sindh High Court. The case challenges the denial of concessionary customs duty rates on materials required to manufacture an over-the-counter medicine that is a household name.
The dispute centres on the interpretation of a condition in the Fifth Schedule to the Customs Act, 1969, which allows concessionary rates for importing packaging and other raw materials for the manufacture of drugs registered under the Drugs Act, 1976, subject to their “in-house use in the manufacture of specified pharmaceutical substances”. The Directorate General of Input Output Co-efficient Organisation (IOCO) rejected our client’s application for quantitative entitlement enabling the import, arguing that the use of a toll manufacturer disqualifies it from availing concessionary rates.
Our client’s petition before the Sindh High Court challenges this rejection, arguing that the condition is satisfied even when our client uses a toll manufacturer, as it retains ownership of the materials and finished product throughout the process. The petition argues that the rejection contradicts the Supreme Court’s judgment in Commissioner Inland Revenue vs Messrs Ori Tech Oil (Pvt.) Limited (2019 SCMR 875), which held that “in-house consumption” for manufacturing includes toll manufacturing arrangements.
Mayhar Kazi, Partner at RIAA Barker Gillette and lead counsel in this litigation, said:
“This case has significant implications for the pharmaceutical industry and the interpretation of concessionary customs duty provisions. It highlights the complex interplay between fiscal and regulatory regimes in the pharmaceutical sector. Our strategic legal representation aims to ensure the uninterrupted supply of essential medicines while asserting our client’s legal rights.”
This petition follows an earlier one we filed to challenge the jurisdiction of the IOCO to determine entitlement to concessionary benefits and contest the vires of Rule 313B of the Customs Rules as inconsistent with the Customs Act’s adjudication procedure. The Sindh High Court restrained coercive action against our client pursuant to such demand without proper adjudication. We also represented the company before the Customs Appellate Tribunal in appeals against orders passed in adjudication proceedings concerning its entitlement to the concessionary rates.
Our team on this matter is led by Pakistan Partner Mayhar Kazi and includes Associate Muhammad Turhan Khan.
For more information on our tax dispute practice, please contact Mayhar Kazi.
This article is not legal advice; it provides information of general interest about current legal issues.
RIAA Barker Gillette is Pakistan’s premier law firm, with an on-the-ground presence in four major cities in Pakistan: Karachi, Islamabad, Lahore, and Peshawar, and affiliated offices in Dubai (DIFC) and London.
The firm practices in all areas of corporate, commercial and dispute resolution law. Leading international legal directories consistently recognize the firm as a top-tier law firm in Pakistan.
RIAA Barker Gillette is the exclusive member firm in Pakistan for Lex Mundi, the world’s leading network of independent law firms with in-depth experience in over 125 countries worldwide.
