MUHAMMAD ISHAQ VS SECRETARY, REVENUE DIVISION, ISLAMABAD, 2002 PTD-FEDERAL-TAX-OMBUDSMAN-PAKISTAN 2973 (2002)

Central Excises Act (I of 1944)‑‑‑

‑‑‑‑S.3‑‑‑Central Excise Rules, 1944, R.10‑‑‑Establishment of Office of Federal Tax Ombudsman Ordinance (XXXV of 2000), S.9‑‑ S.R.O.455(I)/96, dated 13‑6‑1996‑‑‑C.B.R. Letter C. No.1(3)CEB/99 dated 7‑1‑2002‑‑‑Remission in excise duty to manufacturer‑cum‑supplier of tin (metal) containers to ghee mills‑‑‑Allowance‑‑‑Subsequently, it was inferred that the remission in excise duty was being wrongly allowed on metal containers used by ghee mills as the melting point of vegetable ghee was much higher than 10 C and Law Division also clarified that the duty was short‑levied‑‑‑Validity‑‑‑According to Law Division a wrong interpretation was placed on S.R.O.455(I)/96, dated 13‑6‑1996 whereby excise duty was wrongly considered as short levied and was sought to be recovered on tin containers supplied to vegetable ghee mills‑‑‑Was also evident that the Law Division considered the amendment brought about on 18‑6‑2001 to be only by way of abundant precaution reiterating an already existing position‑‑‑Since the opinion of the Law Division had been accepted by the Central Board of Revenue and circulated to its offices there appears to be no longer any basis for recovery action against the complainant‑‑‑Collector Adjudication would of course, decide the matter accordingly and there was no need, therefore, to go into the question whether the responsibility of paying the short levied duty was 'with the complainant or with the ghee mills‑‑ Complaint was disposed of accordingly by the Federal Tax Ombudsman.

Muhammad Anwar Bhatti, A.R. for Petitioner.

Muhammad Ashraf Khan, Collector Customs and Central Excise for Respondent.

DECISION/FINDINGS

This is a complaint relating to central excise duty by a manufacturer of tin containers. The points contained in the complaint are as under:‑‑

(i) The complainant is a manufacturer‑cum‑supplier of tin (metal) containers to ghee mills.

(ii) As per' S.R.O.455(I)/96, dated 13‑6‑1996 the ghee mills, manufactures of kerosene, and edible oil using metal containers for packing were allowed remission in excise duty to the extent of 10% and were thus required to pay only 5% excise duty on the containers.

(iii) The ghee mills got the remission by filing a bond with the Collector of Central Excise Duty who granted a licence in a proper form which was renewable after 31st December every year.

(iv) The complainant made his total supply as per the prescribed procedure to ghee mills and the required A.R.II, R.T.1, I.T.III, Gate passes, Sales Tax Invoice etc. were prepared and duly inspected.

(v) The complainant collected Excise Duty to the extent of 5% from ghee mills and deposited it in the treasury.

(vi) Now a notice dated 8‑5‑2001 for hearing has been received from Deputy Collector (Adjudication), Faisalabad although in rule 10 of the Central Excise Rules there is a limitation of one year from the date of clearance of goods in case there is any short levied excise duty sought to be recovered.

(vii) The present show‑cause notice dated 26‑4‑2001 was received in the afternoon of 8‑5‑200: which was the date fixed for hearing.

(viii) On 9‑5‑2001 the complainant visited the Office of the Collector and learnt that the case was fixed for hearing on 26‑5‑2001 but so far the case has not been fixed.

It has been contended that if at all any excise duty was short -levied and remission was wrongly allowed to the ghee mills, it is the ghee mills from whom the duty should be recovered and not the complainant.

2. The background of the matter is that under S.R.O.455(I)/96, dated 13‑6‑1996 concessional duty of 5% was leviable on metal containers as follows:‑‑

On the basis of audit it was found at a much later stage that the melting point vegetable ghee was much higher ‑than 10 C and it was inferred that the remission in excise duty was being wrongly allowed on metal containers used by ghee mills. Action for recovery of short‑levied duty was thus initiated in a large number of cases including the complainant's, which action is the subject of the present complaint.

3. The respondent's reply was received and the two sides were heard. The respondent's reply contained the comments of the Collector (Adjudication), Multan in which it was stated that the hearing of the case had been adjourned and that the complainant will be allowed full opportunity of presenting his case. It was, however, stated that since the matter was sub‑judice before him it was not possible to offer any comments on the merits of the complaint.

4. During the hearing the respondent's representative requested the grant of some further time for furnishing additional written comments as the issue was involved in a large number of cases and the implication of an amendment made w.e.f 8‑6‑2001 raising the required melting point for vegetable ghee to 32 ‑ 34 was also to be examined. This was allowed and the respondent in its further written comments stated that the same issue had arisen in a large number of cases because of demand created on the basis of a report of the Revenue Receipt Audit Department. It was stated that the issue was pending before the Appellate Tribunal in many cases and the Collector (Adjudication) Faisalabad may be advised to send further proceedings in the complainant's case till the matter is decided by the Appellate Tribunal. It was also again pointed out that the necessary amendment had been made in the S.R.O. effective from 18‑6‑2001 and the melting point of ghee was indicated as between 32 to 34 . This meant that the objection that the tin containers had not been sold to ghee mills which fulfilled the specific conditions was no longer relevant w.e.f. 18‑6‑2001. It had already been indicated during the earlier hearing that the implication of this amendment with reference to the earlier years was also being considered at the appropriate level. The respondent, however, contested the complainant's contention that if excise duty had been wrongly levied at a lower rate it is the ghee mills from whom recovery of short‑levied duty should be made and not the complainant. In this context it was contended that the manufacturers of tin containers were also liable to recovery of short‑levied excise duty.

5. Subsequently a letter was written to the Revenue Division asking it to ‑clarify whether it was considering any steps for resolving the issue relating to excise duty on tin containers supplies by the manufacturers to ghee mills prior to the amendment dated 18‑6‑2001. In its reply the Revenue Division intimated that the C.B.R. was already seized with the problem involved in the complaint and that a reference had been made to the Law Division in this regard. It was stated that further action would be taken in the light of the opinion of the Law Division. A copy of the reference to Law Division was also furnished in which it was stated that if the earlier condition of 10 C for ghee mills etc. was not the intention of the Government how it could be corrected now particularly when the amendment in this regard was dated 18‑6‑2001. The Law Division was also requested to advise whether C.B.R. can issue clarification or correction on the issue with retrospective application when cases had been decided against the units by the Adjudicating Authorities and the matter was pending with appellate authorities. On a further query regarding progress in the matter, the Revenue Division intimated vide its letter dated 4‑3‑2002 that the opinion of the Law Division had been received in the light of which instructions had been issued to all Collectors/Collectors of Adjudication vide C..B.R. C. No.1(3)‑CEB/99, dated 7‑1‑2002. A copy of the said letter to Collectors was enclosed in which the C.B.R. queries and rulings by Law Division were given as under.

6. It. appears from the above that according to the Law Division a wrong interpretation was placed on S.R.O.455(I)/96, dated 13‑6‑1996 whereby excise duty was wrongly considered as short‑levied and was being sought to be recovered on tin containers supplied to vegetable ghee mills. It is also evident that the Law Division considered the amendment brought about on 18‑6‑2001 to be only by way of abundant precaution reiterating an already existing position. Since this opinion of the Law Division has been accepted by the C.B.R. and circulated to its officers there appears to be no longer any basis for recovery action against the complainant. The Collector (Adjudication) will, of course, decide the matter accordingly and there is no need, therefore, to go into the question whether the responsibility of paying the short‑levied duty was with the complainant or with the ghee mills.

7. The complainant's problem, thus stands resolved and the complaint is disposed of accordingly.

C.M.A./M.A.K.//408/FTO Order accordingly.