COLLECTOR, CENTRAL EXCISE, CUSTOMS HOUSE, LAHORE VS Messrs SHEZAN INTERNATIONAL LIMITED, LAHORE
2005 P T D 1325
[Lahore High Court]
Before Nasim Sikandar and Jawwad S. Khawaja, JJ
COLLECTOR, CENTRAL EXCISE, CUSTOMS HOUSE, LAHORE
Versus
Messrs SHEZAN INTERNATIONAL LIMITED, LAHORE
Customs Appeals Nos.61 to 66 and 70 of 1998, heard on 08/02/2005.
Central Excises Act (I of 1944)---
----S. 4(2)---Determination of value for the purposes of duty---Excise duty though a tax still was not includable in fixing the retail price---Principles.
Collector of Customs and Central Excise, Customs House, Multan v. Messrs Pakistan Daries, Kabirwala and others Civil Petitions Nos.1527-L to 1530-L and 1576-L to 1579-L of 2000; Customs Appeal No.41 of 1998, dated 12-4-2000 and Pakistan Beverages Limited v. Federation of Pakistan and others Constitutional Petition No.D-1926 of 2002 fol.
A. Karim Malik for Appellant.
Ali Sibtain Fazli, Ashtar Ausaf Ali and Ahmad Jamal Sukherafor Respondents.
Date of hearing: 8th February, 2005.
JUDGMENT
NASIM SIKANDAR, J.---Through this single judgment we intend to dispose of C.As. Nos. 61, 62, 63, 64, 65, 66 and 70 of 1998.
2.These departmental appeals seek to challenge two identical orders of the Customs, Excise and Sales Tax Appellate Tribunal recorded on 29-4-1998 and 13-5-1998.
3.The respondents as manufacturers were charged with short payment of excise duty inasmuch as allegedly they failed "to conform to the norms laid down under section 4(2) of the Central Excises Act, 1944". After seeking explanations of the respondents through show-cause notices the matter was referred for adjudication. The Adjudicating Authority through different orders concluded that the respondents had violated the provisions of section 3 and section 4(2) of the Central Excises Act, 1944 read with rules 7, 9 and 10of the Central Excise Rules, 1944 punishable under rule 210 and sections 2(31), 3, 6, 23, 34 and 36 of the Sales Tax Act, 1990. In substance the Adjudicating Authority held that the retail price fixed by the manufacturers should include the Central Excise Duty.
4.The respondents failed before the First Appellate Authority while the Tribunal in para-11 of the impugned order, dated 29-4-1998 (para. 9 of the order, dated 13-5-1998) agreed with the respondents that the excise duty could not be treated as part of "retail price" for the purposeofcalculationofexcisedutypayableundertheCentralExcises Act, 1944. The findings of the Tribunal so recorded read as under:--
"(11) The other argument namely that the excise duty had to be notionally fixed in the first instance as one of the taxes and then fixing it again subsequently on a certain percentage of the retail price, was indeed something un-inspiring. The subsection does not clearly contemplate that the expression "charges and taxes" would include the excise duty much less in a notional way also for the purposes of fixing the retail price. Such taxes obviously meant the taxes other than theexcise duty which is imposable independently under the Central Excises Act, 1944. Secondly the excise duty has been prescribed at a certain percentage of the "retail price". It abegs an argument that it would be imposable only when the retail price is fixed, and correspondingly shall not be levied presumptuous at a stage prior to fixing it finally. Indeed no such computation was visualized all the more when it was not indicated specifically as on what rate and on what base price it would be calculated. It did not clearly state that calculation at that penultimate stage shall be certain percentage of the sum total of the charges and the other taxes including the excise duty. It could not be sustained by any interpretation all the more when it involves levying excise duty two times in a rigmarole manner. The argument of Mr. M. Javed Ghani, Additional Collector was that there was no recovery being made at that penultimate stage and hence it would notbe a case of double taxation. I hesitate to agree. Adding the element of excise duty as a part of taxes already paid would at least enhance the liability ofthe manufacturer in the matter of paying excise duty on the over all retail price and thus even if there may be no double payment, at least liability to pay the excise duty on a comparatively higher value would definitely be involved and that too on a merely notional interpretation of a fiscal statute which in no case has to be punitive at least by interpretation."
5.Through these appeals the department objects to the aforesaid interpretation of the provisions of section 4(2) of the Central Excises Act, 1944 by the Tribunal.
6.After hearing the learned counsel for the parties we will readily agree that the issue in hand already stands decided by the Hon'ble Supreme Court of Pakistan on 20-12-2000 in Civil Petitions No.1527-L to 1530-L and 1576-L to 1579-L of 2000 re. Collector of Customs and Central Excise, Customs House, Multan v. Messrs Pakistan Daries, Kabirwala etc. The apex Court in para. 8 of the order maintained the findings recorded by a Division Bench of this Court which comprised one of us (Naseem Sikandar)in Customs Appeal No.41 of 1998, dated 12-4-2000. In that order this Court had concluded that excise duty though a tax stillwas not includable in fixing the retail price.
7.Learned counsel for the respondents have also relied upon two judgments, one by the Sindh High Court and the other by the Peshawar High Court. In the first judgment recorded in Constitutional PetitionNo. D-1926 of 2002 re: Pakistan Beverages Limited v. Federation of Pakistan etc. a Division Bench of the Karachi High Court on 14-1-2005 declared;--
"that the retail price to be determined under section 4(2) of the Central Excises Act, 1944 would be fixed by an assessee which would include all charges/taxes which would include all charges/ taxes (less sales tax) and upon such retail price the central excise duty is to bedetermined."
8.In the second judgment a Division Bench of the Peshawar High Court dealing with the issue held that:--
"present system of realization of duties of excise on the "Retail Price" inclusive of excise duty was illegal and without lawful authority and that duties of excise on cement must not form part of retail price nor the manufacturers were liable to pay duties of excise forming part of the retail price of cement."
9.The interpretation of the provisions of section 4(2) of the Central Excises Act, 1944 by the Tribunal being in line with the said judgment of this Court whichwas maintained by the Hon'ble Supreme Court of Pakistan as also the two judgments of the Karachi and Peshawar High Courts we find no substancein the departmental appeals which shall accordingly be dismissed.
M.B.A./C-46/LAppeals dismissed.