(a) Central Excises Act (I of 1944)---

‑‑‑‑S. 3‑‑‑S.R.O. 456(I)/96, dated 13‑6‑1996‑‑‑PCT Headings 9801‑1010 & 9801‑1030‑‑‑Marriage Functions (Prohibition. of Ostentatious Displays and Wasteful Expenses) Ordinance (II of 2000), S.2‑‑‑Amount received by assessee‑Hotel for rendering services for parties relating to ordinary matrimonial ceremonies and functions‑‑‑Demand of excise duty @ 20% on such amount instead of 12.50% as statutory rate of duty ‑‑‑Validity‑‑ Word "function" was used in both PCT Headings 9801‑1010 & 9801‑1030‑‑‑Word "and" used in PCT Heading 9801‑1030 was not disjunctive‑‑‑PCT Heading 9801‑1010 was a general heading providing for all kinds of functions falling under any other specific heading‑‑‑PCT Heading 9801‑1030 was relating to marriage ceremonies‑‑Other functions not directly relating to marriage could not be read or considered to be part of marriage ceremonies‑‑‑Residual PCT Heading 9801‑1010 providing for charge of exercise duty @ 12.50 % would apply to all kinds of functions excluding marriage ceremonies covered by specific PCT Heading 9801‑1030‑‑‑Impugned order imposing 20% exercise duty on account of ordinary functions was, against law.  

(b) Interpretation of statutes‑‑‑

‑‑‑‑ Fiscal statutes‑‑‑Where two equally reasonable interpretations of a taxing provision are possible, then the one favourable to the subject should be adopted.

Sajjid Hussain and Mian Nazir Azhar for Appellant.

Izhar‑ul‑Haq for Respondents.

Date of hearing: 21st October, 2003.

JUDGMENT

NASIM SIKANDAR, J.‑‑‑This is an appeal under section 36‑C of the Central Excise Act, 1944.

2. The appellant a well‑known member of a chain of hotels under the name of Holiday Inn, Multan was served with a show -cause notice on 3‑9‑1997 alleging evasion of duty to the tune of Rs.6,68,232,85. In the show‑cause notice it was stated that during the course of checking the record of the hotel it was found that the hotel received an amount of Rs.89,09,771,34 for rendering excisable services for parties relating to matrimonial ceremonies and functions during the period June, 96 to June, 97. However, the Central Excise duty was paid only at the rate of 12.50% while prescribed tariff of central excise duty on matrimonial ceremonies and functions was to be charged at the rate of 20% as prescribed vide S.R.O. No. 456(I)/96, dated 13‑6‑1996.

3. The appellant pleaded that only parties and functions relating to matrimonial ceremonies were liable to central excise duty at the rate of 20% of the charges but other functions relating to companies, firms etc. were liable to statutory rate of duty at the rate of 12.50 % and not as 20% as alleged by the department. Reference in that regard was also made to facts and pleaded that the hotel did not render any service for a function relating to matrimonial rites during the period in question and therefore, there was no default on their part in charging and paying the prescribed central excise duty.

4. The department however, did not agree. By way of the order‑in- original, dated 14‑6‑2000 Additional Collector Multan rejected the aforesaid defence in the following words:‑‑

"The case record has been examined at length and heard the arguments advanced by the defence. Heading 9801‑1030 of Central Excise Tariff reveals that "services" for parties relating to matrimonial ceremonies and functions are liable to central excise duty @ 20% instead of 12.12% which was statutory rate of duty. The plea of the defence counsel that only services relating to parties matrimonial ceremonies are liable to central excise duty @ 20% and other services rendered in functions relating to companies or units does not fall @ 20% is not tenable under the law. The plain reading of the S.RO. 456(I)/96, dated 13‑6‑1996 against heading 9801‑1080 clearly reveals that services for parties relating to matrimonial ceremonies and functions are liable to central excise duty @ 20%. It has been observed that for matrimonial ceremonies the word has been used "parties" and for other services which does not attract the statutory rate of duty the word had been used "functions". If the services rendered in parties and functions relating to matrimonial ceremonies were same then the word should have been used "services for parties and functions" relating to matrimonial ceremonies but it had been enumerated that "services of parties relating to matrimonial ceremonies and functions are liable to central excise duty @ 20%. Thus all the functions including parties relating to matrimonial ceremonies are liable to central excise duty. In the light of above fact, the charges as enumerated in the show‑cause notice stand established. "

5. On further appeal a Division Bench of the Tribunal maintained the findings recorded by the department for almost similar reasons On comparing the word used in PCT heading 9801‑1030 relating to marriage ceremonies and functions chargeable at the rate of 207 and the residual PCT heading 9801‑1010 providing for charge of duty at the rate of 12.50% for other functions, the Tribunal concluded that marriage ceremonies included all religious and civil rituals 'though not connected with marriage functions and therefore, CPT heading 9801‑1030 covered both kinds of functions. The operative part of the older of the Tribunal reads as under:‑‑

"In the Legislative instruments, the word "and" is some time used as conjunctive and some time disjunctive, depending upon the intention of the legislature to meet a particular situation. In the instant case, in our opinion the word "and" used in PCT heading 9801‑1030 in disjunctive and there was no intention on the part of framers of PCT to include other formalized social gatherings such as receptions, sends‑off, meeting etc. which have no connection or nexus with the marriage ceremonies, to include them in such ceremonies and add verbosity to a clear phase unnecessarily. Thus the marriage ceremonies, which include all the religious and civil rituals (mentioned more precisely in section 2 of the said Ordinance), are separate functions from other functions not connected with marriage functions and PCT heading 9801‑1030 covers both kinds of functions. Therefore, we hold that all these functions, which have no connections with any marriage ceremony are also chargeable under PCT heading 9801‑1030 at the rate of 20% and the amount demanded from the appellant has to be paid by them to the department. "

6. Heard the learned counsel for the parties. It is the case of the appellant that a simple reading of the above two entries clearly shows that only the ceremonies and functions directly connected to marriage are to be subjected to higher rate of 20% while a general and residual rate of Rs.12.50% is applicable to the ordinary ceremonies. According to him PCT heading 9801‑1030 is a specific heading introduces to charge a higher rate in order to discourage unnecessary expenses on marriage ceremonies. Also refers to section 2 of Marriage Functions (Prohibition of Ostentatious Displays and Wasteful Expenses) Ordinance, 2000 to show that marriage ceremonies include only Nikah Rukhsati, Valima, rasm‑e‑hina etc. which are totally different from an ordinary function like a reception, send‑off, get together or a meeting. Also states that the principle of ejusdum generis applies to PCT heading 9801‑1020 and therefore, the word "function" cannot be considered separately and disjunctively.

Learned counsel for the Revenue, on the other hand, supports the impugned order of the Tribunal for the reasons stated therein.

8. Having heard the learned counsel for the parties, we are of the considered view that the learned Tribunal erred in law while interpreting the aforesaid two PCT headings. There hardly appears any justification or a material on record for the Tribunal to hold that the word "and" in, PCT heading 9801‑1030 was disjunctive. Their reading of the legislative intent for that purpose also appears without any basis whatsoever. It is also our view that their reasoning as reproduced above is at times contradictory.

9. We are also of the view that the residual PCT heading 9801‑1010 is a general heading which provides for all kinds of functions which do not fall under any other specific, preceding or succeeding heading. Since PCT heading 9801‑1030 admittedly relates to marriage ceremonies, other functions cannot be read or considered to be a part of marriage ceremonies which are not directly related thereto. There is another reason for our holding so. It is the cardinal principle of interpretation of fiscal statutes that where two equally reasonable interpretations of a taxing provision are possible, then the one favourable to the subject should be adopted.

10. In the case in hand even if we go by the interpretation of the Tribunal two equally reasonable interpretations of the said two PCT headings are possible. The presence of the word "function" in both the above PCT headings makes the interpretation of clause very convenient. It is beyond any doubt that both the PCT headings relate to functions though one PCT heading has a specific reference to the nature of functions while the residual article does not make a reference to a specific nature of the function. In such a situation on the above principle it must be found that residual PCT heading 9801‑1010 providing for charge of excise duty at 12.50% is applicable to all kinds of functions excluding marriage ceremonies which are covered by the other specific PCT heading 9801‑1030.

11. The answer to the proposition advanced at the bar is, therefore, in the negative. Resultantly, it is declared that interpretation of the Revenue as well as that of the learned Tribunal of the aforesaid PCT heading is not in accordance with law. This appeal succeeds and the order imposing levy of 20% excise duty on account of ordinary functions is held to be against law.

S.A.K./H‑3/LAppeal accepted.