(On appeal from the judgment, dated 6‑10‑2000 of High Court of Sindh, Karachi passed in Constitutional Petition No.D‑1577 of 1991).

Sales Tax Act (VII of 1990)‑‑‑

‑‑‑‑S.3‑‑‑Central Excise Act (I pf 1944), S.2(f)‑‑‑Constitution of Pakistan (1973), Art. 185(3)‑‑‑Levy of sales tax‑‑‑Slitting of M.S. sheet/strips/coils‑‑ Process of manufacturing‑‑‑Contention of the Authorities was that by slitting of M.S. sheet/strip/coils they were changed into "intermediary goods, as such, the same were leviable to sales tax‑‑‑Validity‑‑Process of slitting neither made nor produced any new product as the process started with M. S. strips/coils and ended as such‑‑‑Process in question kept original character of the goods intact‑‑‑Mere cutting to the required size by itself did not Change the nature of the goods and its utility also remained the same‑‑Final commodity was not essentially different from the original one‑‑‑Contention of the Authorities was that it was the case of "manufacturing" ‑‑Such contention being devoid of any force leave to appeal was refused.

Assistant Collector of Central Excises and Land Customs and 2 others v. Orient Straw Board and Paper Mills Ltd. PLD 1991 SC 992 fol.

Abdul Saeed Khan Ghori, Advocate‑on‑Record for Petitioners:

Nemo for Respondents

Date of hearing: 8th August, 2001

JUDGMENT

NAZIM HUSSAIN SIDDIQUI, J.‑‑‑The petitioners have impugned judgment, dated 6‑10‑2000 of a learned Division Bench, High Court of Sindh, Karachi, whereby C.P. No.D‑1577 of 1991 filed by the respondents was allowed.

2. The petitioners visited the respondents, Messrs Hilal Steel Industries (Pvt.) Ltd. on 2‑1‑1990 and found them engaged in the process of slitting M. S. Sheets Coils for consumption in manufacturing of M. S. Pipes (unglavanised wedded pipe), for which they hold valid Central Excise Licence. It is alleged that the respondents during last five years preceding the date of inspection slit the M.S. Sheets Coils, weighing 10844 M. Ton, worth Rs.7,15,00,000 and cleared the same without payment of sales tax leviable thereon. The petitioners claimed that process of slitting amounted to "manufacturing", as per section 2(f) of the Central Excises and Salt Act, 1944 and that the slitted M. S. Strips fell under PCT Heading 73.12 and were chargeable to sales tax, to the tune of Rs.79,44,444.45. On 24‑2‑1990, show‑cause notice was served upon the respondents for paying the aforesaid amount as sales tax. The respondents submitted reply to show‑cause notice, but the same was found unsatisfactory and it was held that they were liable to pay aforesaid amount.

3. The respondents preferred appeal before Collector of Central Excise and Sales Tax (Appeal), Karachi, which was dismissed vide order, dated 13‑7‑1991. Being dissatisfied with above decision they preferred revision petition before the Member (Judicial), C.B.R., which was also dismissed as ?er order, dated 14‑10‑1991. Then they filed C. P. No. 1577 of 1991 before High Court, which as stated earlier, was allowed.

4. The expression "manufacture" as defined in section 2(t) of the Central Excises and Salt Act, 1944, is as follows:‑‑‑

S.2(f) "manufacture" includes any process incidental or ancillary to the completion of a manufactured product (and any process of remanufacture, remaking, reconditioning or repair) (and the processes of packing or repacking such product);

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5. Learned Assistant Collector, Central Excise and Land Customs, Karachi in his order hell that slitting of M.S. Sheets Coils amounted to "manufacturing" and the respondents were liable to pay said amount as sales tax and this finding was affirmed in appeal by Collector and in Revision by learned Member, (Judicial), C.B.R. Learned Division Bench, however, held that the slitting was not manufacturing.

6. The only point for the consideration is whether the respondents' process of slitting of M.S. Sheets Coils would constitute manufacturing or not.

7. Learned High Court relying upon the case reported as Assistant Collector of Central Excise and Land Customs and 2 others v. Orient Straw Board and Paper Mills Ltd. PLD 1991 SC 992 ruled as under:‑‑‑

"that mere slitting of M.S. Coils in the certain sizes would not amount to manufacture even for the purposes of the Central Excise Act. "

8, In the aforesaid reported case this Court having taken into consideration the meaning of expression "manufacture", as appearing in Black's Law Dictionary; Stroud's Judicial Dictionary and the case‑law cited at the bar observed as follows:‑‑‑

"In general and literal sense 'manufacture' means production, preparation or making any article or product of corporeal or substantial nature manually or mechanically from material which after such production changes its shape, character, or nomenclature or transforms into goods complete for use or sale in the existing form or otherwise. "

9. It is contended on behalf of the petitioners that by slitting of M.S. Sheets/strips/coils they were changed into "intermediary goods", as such, the same were leviable to sales tax. The contention is devoid of any force. Slitting neither makes nor produces any new product. The process starts with M.S. Strips Coils and ends as such. It keeps original character of the goods intact. Although learned counsel for the petitioners argued that intermediary goods are produced by said process but never provided any details in that regard. Mere cutting to the required size by itself did not change the nature of the goods and its utility also remained the sane. In other words, the final commodity is not essentially and commercially different from the original one. We are of the view that it is not the case of "manufacturing".

10. In consequence leave to appeal is refused and petition is dismissed.

Q.M.H./M.A.K./C‑40/SPetition dismissed.