COLLECTOR, CENTRAL EXCISE, CUSTOM HOUSE, LAHORE VS RIAZ BOTTLERS (PVT.) LTD., LAHORE
2001 P T D 1854
[Supreme Court of Pakistan]
Present: Iftikhar Muhammad Chaudhry and Hamid Ali Mirza, JJ
COLLECTOR, CENTRAL EXCISE, CUSTOM HOUSE,
LAHORE and others
Versus
Messrs RIAZ BOTTLERS (PVT.) LTD.,
LAHORE and others
Civil Appeals Nos. 1512 and 1686 of 1999, Civil Petitions Nos. 1916‑L of 1999, 185‑L, 198‑L, 865‑L, 951‑L, 1060‑L, 1061‑L and 1064‑L of 2000, decided on 31/01/2001.
(On appeal from the judgment dated 2‑9‑1999 of Lahore High Court, Lahore in Writ Petition No. 15188 of 1999, order dated 12‑10‑1999 in W.P. 18769 of 1999, order dated 15‑9‑1999 in W.P. 14794 of 1999, order dated 23‑11‑1999 in W.P. 10607 of 1999, order dated 1‑12‑1999 in W.P. 10969 of 1999, order dated 3‑3‑2000 in W.P. 3183 of 2000, order dated 22‑2‑2000 in W.P. 2320 of 2000, order dated 16‑3‑2000 in W. P. 2413 of 2000, order dated 22‑3‑2000 in W. P. 2633 of 2000 and order dated 20‑3‑2000 in W.P. 3543 of 2000).
(a) Central Excises Act (I of 1944)‑‑‑
‑‑‑‑S.4(2)‑‑‑Constitution of Pakistan (1973), Arts.185(3) & 199‑‑ Constitutional petition before High Court‑‑‑Alternate/adequate remedy‑‑ Non‑availing of such remedy before invoking jurisdiction of High Court‑‑ Effect‑‑‑Fixing of retail price by the Authorities for the purpose of central excise duty‑‑‑Leave to appeal was granted by Supreme Court to consider, whether the question of fact with regard to fixation of the retail price and its determination for the purpose of recovery of taxes in the matter could navy been determined in the Constitutional jurisdiction by the High Court and whether the manufacturers without exhausting the statutory remedies under the Central Excises Act, 1944, could invoke the jurisdiction of the High Court for the relief under Art. 199 of the Constitution.
(b) Central Excises Act (I of 1944)‑‑‑
‑‑‑‑S.4(2)‑‑‑Sales Tax Act (VII of 1990), S.3‑‑‑Retail price‑‑‑Fixation of‑‑ Procedure‑‑‑Levy of Central Excise Duty‑‑‑Inclusion of chilling charges in retail price of aerated waters/juices for recovery of excise duty‑‑‑Authorities included such charges. while recovering central excise duty‑‑‑Manufacturers assailed the decision of the Authorities before High Court‑‑‑Constitutional petition was allowed and the Authorities were directed by High Court not to include such charges while recovering the excise duty‑‑‑Validity‑‑‑Retail price of goods/articles chargeable with the duty was to be fixed by the manufacturer which would include all the charges and taxes other than the sales tax levied and collected under S.3 of Sales Tax Act, 1990‑‑‑While fixing such price the manufacturer had to include all charges and taxes incurred and payable by him‑‑‑Only the charges incurred by the manufacturer/producer and tax payable by him were to be taken into account, while fixing retail price of the goods‑‑‑Such was the right of manufacturer to fix retail price of the goods/articles and he could not be dictated to include those charges which he had not incurred in the production of saleable goods/articles‑‑‑Aerated waters/juices were supplied to the wholesaler and retailers in unchilled condition, consequently the chilling charges could not be included in the retail price of articles/goods sold‑‑‑Where retail price was printed on each bottle or packet as required by S.4(2) of Central Excises Act, 1944, the excise duty would be charged only on the retail price fixed by the manufacturer, considering that the manufacturer had not incurred any amount on the chilling process, therefore, such charges could not be charged towards the retail price to be fixed by the manufacturers/producers‑‑7 Inclusion of the chilling charges towards the retail price of the article when the same were not incurred by the manufacturer/producer would be against the spirit of S.4(2) of Central Excises Act, 1944‑‑‑Retailers who had to sell the articles to the consumers could not be burdened with the chilling charges when the same had not been received by them in chilled condition‑‑ Manufacturers/producers could not be compelled to add chilling charges, not incurred by them, towards the retail price‑‑‑High Court had given cogent and valid reasons in support of the judgments/orders‑‑‑Supreme Court declined interference.
Atlas Battery Limited, Karachi v. Superintendent, Central Excise and Land Customs, Circle 'C', Karachi and others PLD 1984 SC 86; Souvenir Tobacco Co. Ltd. v. Deputy Collector 1989 CLC 1134; Julian Hoshang Dinshaw Trust v. I.T.O. 1992 SCMR 250, Deputy Collector v. Premier Tobacco Industries Ltd. 1993 SCMR 447; Attock Cement Pakistan Ltd. v. Collector of Customs 1999 PTD 1892 and Edulji Dinshaw Limited v. Income‑tax Officer 1990 PTD 155 ref.
A. Karim Malik, Senior Advocate Supreme Court for Appellants (in C.As. Nos. 1512 and 1686 of 1999).
Sh. Izharul Haq, Advocate Supreme Court for Petitioners (in C.P No. 1916‑L of 1999).
Ch. Saghir Ahmad, Advocate Supreme Court for Petitioners (in C. Ps. Nos. 185‑L of 1999, 198‑L, 1060‑L and 1061‑L of 2000).
K. M. Virk, Advocate Supreme Court for Petitioners (in C.Ps. Nos.865‑L, 951‑L and 1064‑L of 2000).
Ali Sibtain Fazli, Advocate Supreme Court for the Private Respondent (in C. A. No. 1512 of 1999).
Ashtar Ausaf Ali, Advocate Supreme Court for Appellants (in C.A. No. 1686 of 1999 and for Petitioners in C. P. No. 865‑L of 2000).
Raja Muhammad Akram, Advocate Supreme Court for Respondent (in C. P. No. 1916‑L of 1999).
Date of hearing: 31st January, 2001.
JUDGMENT
HAMID ALI MIRZA, J.‑‑‑Civil Appeals Nos.1512 of 1999 and 1686 of 1999 with leave of this Court and Civil Petitions Nos.1916‑L of 1999 and 185‑L, 198‑L, 865‑L, 951‑L, 1060‑L, 1061‑L and 1064‑L of 2000 are being disposed of by this common judgment as they involve common question of law and arise out of the judgments/orders of various dates impugned before us whereby the writ petitions filed by the private respondents were allowed.
2. Leave was granted by this Court in the two petitions giving rise to C.As. Nos.1512 and 1686 of 1999 to examine the contentions raised by the learned counsel for the appellants/petitioners (i) whether the question of fact with regard to fixation of the retail price and its determination for the purpose of recovery of taxes in the matter could have been determined in the Constitutional jurisdiction; and (ii) whether the respondents, without exhausting the statutory, remedies under the Central Excises Act, 1944, could invoke the jurisdiction of the High Court for the relief under Article 199 of the Constitution.
3. The brief facts of the case are that the respondents are the manufacturers of beverages of different brands, which are chargeable with duty under section 4(2) of the Central Excises Act, 1944 at the retail price fixed by the manufacturers inclusive of all charges and taxes other than sales tax levied and collected under section 3 of the Sales Tax Act, 1990 which articles are to be sold to the general body of consumers provided the, retail price of such goods has been legibly, prominently and indelibly printed or embossed on each article, packet, container, package, cover or label, as the case may be. The appellants/petitioners as per Letter No. l(2)‑CEB/94, dated 29‑10‑1994 stated that the chilling charges will not be included in the retail price of aerated water and same shall be excluded but after five years another letter was issued by the Central Board of Revenue whereby the earlier letter was withdrawn and directions were issued to all the collectorates that chilling charges shall now be included while calculating retail price of the products. The respondents made representations against the said decision but their representations were rejected by the appellants/petitioners, consequently the respondents filed Constitutional petitions, under Article 199 of the Constitution of Islamic Republic of Pakistan wherein they claimed that the appellants/petitioners were not entitled under the law to direct the respondents to include chilling charges while fixing retail price. The writ petitions were heard and allowed by the High Court as per judgments/orders of different dates impugned in these appeals and petitions.
4. We have heard the learned counsel for the parties and perused the record.
5. The only contention raised and pressed before us by the learned counsel for the appellants/petitioners is that the respondents are supplying beverages of different brands in chilled condition, therefore, chilling charges are to be included in the retail price consequently impugned orders/notifications passed by the appellants/petitioners are legal and valid in terms of section 4(2) of the Central Excises Act, 1944. The learned counsel has referred to letters, dated 27‑9‑1994, 9‑10‑1994, 13‑4‑1995 and 12‑6‑1999 issued by the appellants/petitioners from time to time in the said respect. At the end of his arguments, the learned counsel for the, appellants/petitioners conceded that at the factory gate the beverages are passed in unchilled condition but refrigerators are supplied to the retail shopkeepers by the respondents for chilling aerated water.
6. The learned counsel for the respondents have submitted that all the beverages which, are manufactured/produced in the factories pf the respondents are supplied in upchilled condition, therefore, the respondents cannot be compelled do include chilling charges in the retail price in terms of section 4(2) of the Central Excises Act, 1944. It was further submitted that as per letters, dated 27‑9‑1994 and 9‑10‑1994 the chilling. charges were excluded from the consumer price even of chilled bottles, but subse quently illegally as per impugned Notification/order No. l(7)‑CEB/99, dated 12‑6‑1999, the earlier notification/orders were recalled/withdrawn and it was directed that the central excise duty shall be calculated and paid on the basis of retail price and no deduction whatsoever on account of chilling charges shall be made by any manufacturer of aerated waters and fruit juices. It was further submitted that the Board of Revenue, the final authority, had decided against the respondents, therefore, there was no justification to again approach the subordinate functionaries of the Central Board of Revenue for redress of the grievance. It is further submitted that no question of fact is involved and the only legal question with regard to section 4(2) of the Central Excises Act, 1944 required its true construction and scope whereunder the manufacturer has been given right to fix retail price of the goods/articles to be sold. Reliance is placed upon Atlas Battery Limited, Karachi v. Superintendent, Central Excise and Land Customs, Circle 'C', Karachi and others (PLD 1984 SC 86), Souvenir Tobacco Co. Ltd v. Deputy Collector (1989 CLC 1134), Julian Hoshang Dinshaw Trust v: I.T.O. (1992 SCMR 250), Deputy Collector v. Premier Tobacco Industries Ltd. (1993 SCMR 447), Attock Cement Pakistan Ltd. v. Collector of Customs (1999 PTD 1892) and Edulji Dinshaw Limited v. Income Tax Officer (1990 PTD 155,).
7.Subsection (2) of section 4 of the Central Excises Act, 1944 reads:‑‑
(2)Notwithstanding the provisions of subsection (1), the Federal Government may, by notification in the official Gazette, declare that in respect of any goods or class of goods the duty shall be charged on the retail price fixed by the manufacturer, inclusive of all charges and taxes, other than sales tax levied and collected under section 3 of the Sales Tax Act, 1990, at which any particular brand or variety of such article should be sold to the general body of consumers or, if more than one such price is so fixed for the same brand or variety, the highest of such price:
Provided that the retail price shall be legibly, prominently and indelibly printed or embossed on each article, packet, container, package, cover or label, as the case may be.
The above provisions of the subsection show that for the assessment of excise duty "retail price" has, been basis/foundation which is to comprise of viz. (i) Duty shall be charged on the retail price, (ii) the retail price shall be fixed by the manufacturer, (iii) the retail price shall .be inclusive of all charges incurred by the manufacturer and tax payable by him, (iv) the retail price shall not include the tax under Sales Tax Act, .1990, (v) the goods/articles shall be sold to general body of consumers at the fixed price, and (vi) in case more than one such price is so fixed for the same brand or variety, the highest of such price. It is quite clear from the above provision of law that retail price of the goods/articles chargeable with duty is to be fixed by the manufacturer which would include all the charges and taxes other than the sales tax levied and collected under section 3 of the Sales Tax Act, 1990. Admittedly, the retail price is to be fixed by the manufacturer but while fixing such price he has to include all charges and taxes incurred and payable by the manufacturer. It is only the charges incurred by the manufacturer/producer and tax payable by him which are to be taken into account while fixing retail price of the goods. It is the right of manufacturer to fix retail price of the goods/articles consequently he cannot be dictated to include the chilling charges when he has not incurred in the production of saleable goods/articles. It has been conceded by the learned counsel for the appellants/petitioners that aerated water/juices are supplied to the whole salers and retailers in unchilled condition consequently the chilling charges could not be included in the retail price of articles/goods sold. It has also been admitted before us that retail price is printed on each bottle or packet as required by subsection (2) of section 4 of the said Act, therefore, excise duty would be charged only on the retail price fixed by the manufacturer, considering that the manufacturer has not incurred any amount on the chilling process, therefore, cannot charge the same towards the retail price to be fixed by him. The inclusion of the chilling charges towards the retail price of the article when the same is not incurred by him would be against the spirit of subsection (2) of section 4 of ‑the said Act. Even if it be assumed that the retailers sell their aerated water/juices in chilled condition, then also, because the factories supply the said beverages/juices in unchilled condition, the expenses incurred on chilling cannot be included in the retail price by the manufacturers. There is no logic to burden the retailers, who‑ have to sell the articles to the consumers, with the chilling charges when the same have not been received by them in chilled condition. In the circumstances, the respondents cannot be compelled to add chilling charges, not incurred by them, towards the retail price.
8. No other plea has been raised before us consequently we do not find any merit and substance in the contention of the learned counsel for the appellants/petitioners. However, there is force and substance in the submissions made by the learned counsel for the respondents. The facts of the‑cases cited above are quite different and distinguishable to the facts of the instant appeals and petitions except the facts of Atlas Battery Limited. Karachi v. Superintendent, Central Excise and Land Customs, Circle 'C', Karachi and others (PLD 1984 SC 86) which to some extent support the case of the respondents that in terms of subsection (2) of section 4 of the Central Excises Act, 1944 it would be the prerogative of the manufacturer to fix the retail price. The learned Judge in Chambers has given cogent and valid reasons in support of the impugned judgment/orders. In view of the aforesaid reasons, we do not find any merit in these appeals and the petitions, which are hereby dismissed.
Q.M.H./M.A.K./C‑28/SAppeals dismissed.