Messrs PAK-ARAB REFINERY LTD., MUZAFFARGARH VS SUPERINTENDENT, CUSTOMS AND CENTRAL EXCISE, MUZAFFARGARH
2005 P T D 2392
[Lahore High Court]
Before Nazir Ahmad Siddiqui and Muhammad Nawaz Bhatti, JJ
Messrs PAK-ARAB REFINERY LTD., MUZAFFARGARH
Versus
SUPERINTENDENT, CUSTOMS AND CENTRAL EXCISE, MUZAFFARGARH and 2 others
Customs Appeals No. 12 and 3 of 2003, heard on /01/.
th
July, 2005. Petroleum Products (Development Surcharge) Ordinance (XXV of 1961)---
----Ss.3 & 3-A---Petroleum Products (Development Surcharge) Rules, 1967, R.8 --Central Excise Act (I of 1944), S.3-B---Levy of development surcharge---Charging of additional duty/surcharge, in case the due development surcharge was not paid within prescribed time---Validity---Held, there was no provision in the Petroleum Products (Development Surcharge) Ordinance, 1961 regarding charging of additional duty/surcharge, in case the due development surcharge was not paid within the prescribed time---Provision of S.3-B, Central Excise Act, 1944 could not be made applicable, which would be too far away from the true import of S.3-A (3) of Petroleum Products (Development Surcharge) Ordinance, 1961 and S.3-B, Central Excise Act, 1944---High Court, in appeal, declared the levy of additional duty/surcharge with reference to alleged late payment of development surcharge leviable under the Ordinance, as without lawful authority---Principles.
Messrs Hashwani Hotel Limited through Executive Director v. Government of Pakistan through Secretary Finance and 5 others 2004 PTD 901; Messrs Al-Haj Industrial Corporation (Pvt.) Ltd. Peshawar v. Collector of Customs (Appraisement), Customs House, Karachi 2004 PTD 801 and Messrs Metropole Cinema Pvt. Ltd. through Managing Director and others v. Government of Punjab through Secretary Excise and Taxation Department, Lahore and 4 others PLD 2004 Lah. 351 ref.
Malik Muhammad Akram Bhatti for Appellant.
Ch. Saghir Ahmad, Standing Counsel for Respondents.
Date of hearing: 14th July, 2005.
JUDGMENT
MUHAMMAD NAWAZ BHATTI, J.---Through this single judgment, we propose to dispose of the following Customs Appeals arising out of common question of law and facts:--
(i) Customs Appeal No. 12 of 2003 (Pak Arab Refinery Limited v. The Customs Appellate Tribunal, Lahore etc.) and;
(ii) Customs Appeal No.3 of 2003 (P.S.O. Company Limited v. Appellate Tribunal etc.).
2. Appellants in the above-referred appeals are engaged in the production of Petroleum Products and they are liable to pay the development surcharge on the same under section 3 of the Petroleum Products (Development Surcharge) Ordinance, 1961, (hereinafter called the Ordinance, 1961 as amended by Ordinance XXII of 1971 vide sections 3 & 3-A(2)(b) read with Rule 8 of the Petroleum Products Development Surcharge Rules, 1967.
3. During the audit conducted by the Superintendent Customs and Central Excise, it was observed that the appellants had not paid the due development surcharge within the prescribed period, therefore, respondent No.2 (Collector (Adjudication), Customs, Sales Tax and Central Excise, Multan) on the basis of the same issued show-cause notices to the appellants requiring them as to why the additional development surcharge for late payment of development surcharge should not be levied under the Central Excise Act, 1944 (hereinafter called the Act). Appellants promptly responded to the said notices with all the legal and factual pleas available to them but without appreciating the same, respondent No.2 held them responsible for late payment and they were directed to pay the additional development surcharge. Appellants challenged this order of respondent No.2 through an appeal before the learned Appellate Tribunal who confirmed the levy of additional development surcharge, vide judgment, dated 9-6-2003, now impugned through the instant appeals.
4. Arguments heard. Record perused.
5. Section 3 of the Ordinance, 1961 (reproduced hereunder) relates to levy of development surcharge;--
"(3) Levy of Development Surcharge (1) Subject to the provisions of this Ordinance, every refinery and every company shall pay to 'the Central Government a development surcharge equal to the differential margin in respect of petroleum products produced or, as the case may be, purchased by it for resale except for export.
(2)The development surcharge in respect of the period commencing from the first day of August, 1959, and ending on the day this Ordinance is promulgated shall become payable immediately on such promulgation.
(3)Any amount due as development surcharge under subsection (1) or arrears thereof under subsection (2) and not paid within the time allowed by the Central Government or any officer, authorized by it in that behalf shall be recoverable as arrears of land revenue.
(3A)Power to grant exemption from payment, authorize refund and procedure for collection and refund of surcharge.
(1) Subject to such conditions, limitations or restrictions as it may think fit to impose, the Central Government may, in such general cases as it may prescribe by rules or in particular cases by special order, exempt a refinery or company from the payment of the development surcharge in respect of all or any of -the petroleum products or authorize the refund in whole or in part of the development surcharge paid by a refinery or company.
(2) Subject to any rules made under this Ordinance, the development surcharge shall be collected.---
(a) in respect of imported petroleum products, in the same manner as an imported duty payable under the [Custom Act, (IV of 1969)] is collected; and
(b) in respect of petroleum products produced in Pakistan, in the same manner as a duty of excise leviable under the Central Excises and Salt Act, 1944 (I of 1944), is collected.
(3) The provisions of the Customs. Act, 1969 (IV of 1969), or as the case may be, the provisions of the Central Excises and Salt Act, 1944 (I of 1944), shall, so far as may be, apply to the levy, collection and refund of the development surcharge)".
There is no other provision in the said Ordinance regarding charging of additional duty/surcharge, in case the due development surcharge is not paid within the prescribed time. Seen from this angle, the plea of learned counsel for the respondents is that additional duty/surcharge can be levied with reference to section 3-13 of the Act (reproduced hereunder), if the due development surcharge(undeniably levied under the Ordinance, 1961) is not paid within the prescribed time, is not legally tenable.
"3-B Levy of additional duty.---If a person fails to pay the duty within the prescribed time, he shall, in addition to the duty payable under section 3, be liable to pay additional duty at the rate of two per cent. per month".
6. We have noticed that in the earlier judgment of learned Appellate Tribunal, dated 28-1-2003, it has been categorically observed in its para. 4, "it is correct, that additional development surcharge cannot be levied because there is no charging provision in the Petroleum Products (Development Surcharge) Ordinance but additional duty under section 3-13 of the Central Excise Act, 1944 shall be leviable in the situation of late payment of development surcharge". Therefore, the learned Appellate Tribunal affirmed the order of respondent No. 2 with the reasons that,
"The provisions of section 3-A(3) of the Petroleum Products (Development Surcharge) Ordinance, 1961, as amended by Ordinance No.XXII of 1971, envisaged that "the provisions of the Central Excises and Salt Act, 1944 (I of 1944) shall, so far as may be applied to the levy, collection and refund of the development surcharge". The term "levy" would here mean that though development surcharge was leviable under section 3 of the aforementioned Petroleum Products (Development Surcharge) Ordinance but the same was to be taken as if it was a levy of central excise duty under the Central Excise Act, 1944. In that sense, it was to be collected as if it was a central excise duty. Accordingly, it would mean that all the provisions of Central Excise Act, 1944 and the rules and thereunder as those relates to levy and collection of central excise duty would also be "so far as may be", applicable to the levy and collection of development surcharge under the Petroleum Products (Development Surcharge) Ordinance. There is no ambiguity in the aforementioned legal position on the subject. Central excise duties are levied under section 3 of the Central Excise Act, 1944 and in terms of section 3-B a person who fails to pay the duty within the prescribed time, he is required, in addition to the duty payable under section 3 ibid, also to pay additional duty @ 2% per month. For the purposes of development surcharge, it would mean that if the same is not paid within the prescribed time, the person who fails to pay the same, has to pay additional duty @ % in terms of section 3-B of the Central Excise Act, 1944 since levy of development surcharge is to be treated as a levy of central excise duty under the Central Excise Act, 1944 and is to be collected as if it was a central excise duty under the said Act of 1944. Late payment of development surcharge, which is treated as a levy of central excise duty under the Central Excise Act, 1944, is to suffer additional duty in terms of section 3-B ibid. The contentions of the learned counsel in this regard are not tenable.".
7. As we have noticed above that there is no provision at all in the Ordinance, 1961 as amended up to date for levying additional duty/ surcharge in case, the due development surcharge is not paid within the prescribed time, so, the provision of any other enactment cannot be made applicable with reference to the same and interpretation/reasons of the learned Tribunal, reproduced above, is too far away from a true import of section 3-A(3) of the Ordinance, 1961 and section 3-13 of the Act and the same are also in utter disregard of the well-settled principles of interpretation of a Statute. This is also pertinent to note that section 3(3) of the Ordinance, 1961 also takes notice of a situation when the due development surcharge is not paid within the prescribed time. This provision has already been reproduced above within underlining. To support it, reliance may also be placed on 2004 PTD 901 (Messrs Hashwani Hotel Limited through Executive Director v. Government of Pakistan through Secretary Finance and 5 others), 2004 PTD 801 Messrs AI-Haj Industrial Corporation (Pvt.) Ltd. Peshawar v. Collector of Customs (Appraisement), Customs House, Karachi), and PLD 2004 Lahore 351) (Messrs Metropole Cinema Pvt. Ltd. through Managing Director and others v. Government of Punjab through Secretary Excise and Taxation Department, Lahore and 4 others).
8. For what has been stated above, we are constrained to hold that the learned Appellate Tribunal has not passed the impugned judgment on a due appreciation of law and facts, hence, the same is hereby set aside by allowing the instant appeals by declaring that the levy of additional duty/surcharge with reference to alleged late payment of development surcharge (leviable under the Ordinance, 1961), is without lawful authority. No order as to costs.
M.B.A./P-84/LAppeals allowed.