COLLECTOR OF CUSTOMS VS Messrs MULTAN BEVERAGE (PVT.) LTD.
2006 P T D 54
[Lahore High Court]
Before Ijaz Ahmad Chaudhry, J
COLLECTOR OF CUSTOMS
Versus
Messrs MULTAN BEVERAGE (PVT.) LTD. and others
Writ Petitions Nos.1445 and 1449 of 2004, heard on /01/.
th
October, 2004. (a) Central Excise Act (I of 1944)---
----S.3-D---Constitution of Pakistan (1973), Art. 199---Constitutional petition---Maintainability---Preliminary objection had been raised by respondent companies that petitioner/the department being a subordinate, could not challenge orders of his superior and in circumstances constitutional petitions were not maintainable---Validity---Impugned decisions were passed pursuant to orders passed by High Court in constitutional petition which were maintained by Supreme Court whereby matter was remanded to Central Board of Revenue to determine specific question after hearing parties concerned---In the beginning of impugned orders, it had been specifically provided that it could be appealed against before Authority which had remanded the case---Even otherwise petitioner-department was custodian of public exchequer and on its move, the vires of impugned orders could be looked into by High Court to determine whether same had been passed fully in line with parameters given by High Court and Supreme Court while remanding case to it---Preliminary objection, about maintainability of constitutional petition was repelled, in circumstances.
(b) Central Excise Act (I of 1944)---
----Ss. 3, 3-D & 12-A---Constitution of Pakistan (1973), Art.199---Constitutional petition---Levy of Excise Duty---Exemption---Respondent companies had been allowed through the impugned order, refund claim on sole ground that they did not raise prices of beverage goods at the juncture of withdrawal of capacity system and had suffered losses by absorbing excess burden of duties on account of supervised clearance system in their existing prices---Prices of beverage goods, in certain Divisions were increased by different companies after introduction of supervised clearance system, while case of respondent-companies themselves was that they did not raise price of their goods to achieve their targets and had themselves borne the excess of duties and taxes deliberately but impugned orders were silent on the said aspect of case---Sole ground furnished was that there was no price hike of beverage goods after issuance of impugned notification, and thus same could not be made basis to opine that incidence of excise duty on beverage goods was not passed on to purchasers/consumers of said goods, if they had suffered loss by not increasing price of goods in order to promote their business---Impugned orders, in circumstances appeared to have been passed in arbitrary manner and did not reflect findings on each and every aspect of case, rather same were against the decision of Supreme Court that actual controversy was not whether beverage companies had suffered any financial losses which were set aside---Matter was remanded with direction to decide appeals of respondent-companies afresh after affording opportunities of hearing to both parties and definite findings would be given on said aspects of the case within specified period.
Ch. Saghir Ahmed for Petitioner.
Syed Mansoor Ali Shah for Respondent.
Date of hearing: 27th October, 2004.
JUDGMENT
IJAZ AHMED CHAUDHRY, J.---(1) Through this single judgment, the following writ petitions:---
(1) W.P. No. 1445-2004(The Collector of Customs v. Messrs Multan Beverage (Pvt.) Ltd. etc.); and
(2) W.P. No. 1449-2004(The Collector of Customs v. Messrs Leghari Beverage, Rahimyar Khan etc.)
Involving the same questions of facts and law regarding refund of excise duty are being disposed of together.
2. Precisely, the facts are that on 7-6-1990 the C.B.R. promulgated Excise Duty on Production Capacity (Aerated Water) Rules, 1990 and respondent No. 1 Beverage Companies in both the writ petitions opted for payment of excise duty on production capacity till the financial year 1993-94 ending on 30-6-1994. In the meanwhile on 22-3-1994 the Federal Government issued S.R.O. No.243(I)/94 whereby concession of capacity duty was withdrawn and specific rate of central duty on beverage @ Re.1 per bottle on actual clearance under supervised clearance system was imposed. Thereafter, vide S.R.O. No.257(I)/94 dated 30-3-1994 Sales Tax @ 15% ad valorem was also levied.
3. Both respondent-companies along with various other Beverage Units challenged S.R.O. No.243(I)/94 dated 22-3-1994 whereby the scheme of excise duty on production capacity was rescinded and the matter went upto the level of the Hon'ble Supreme Court of Pakistan. During the pendency of writ petitions before this Court interim order dated 2-5-1994 was passed and thereby it was directed that till 30-6-1994 excise duty should be collected on the basis of fixed capacity as before subject to deposit of bank guarantees under the fixed capacity scheme for the last quarter ending on 30-6-1994 and further bank guarantees in addition thereto for an amount being 70% of the amount of the said bank guarantees within 10 days before the Collector, Central Excise and Sales Tax concerned. It was further directed that although the clearance of goods would be allowed without recovery of duty, but all the formalities as regards to the supervised clearance scheme should be fulfilled and in the requisite forms the rate of duty and the amount recoverable should be mentioned. Both respondents companies instead of furnishing bank guarantees started clearance of beverages on payment of fixed central excise duty and sales tax @ 15 %. Again in the Federal Budget 1994-95 on 9-6-1994 the specific rate of central excise duty for beverages was changed from Re. l per bottle to 12.5 % of retail price. Finally, the writ petitions filed before this Court were disposed of and the matter was remanded to the Federal Government, which order was maintained by the august Supreme Court of Pakistan vide judgment dated 11-3-1994 with the modification that the C.B.R. would decide, whether the Beverage Companies after issuance of impugned notification dated 22-3-1994 had passed on the burden of excise duty payable on actual production to the purchasers/consumers and in case the answer was in affirmative, then to decide as to what extent the above burden was passed on. It was also directed that the Beverage Companies would be liable to pay the amount recovered by them from the purchasers/consumers after issuance of the impugned notification dated 22-3-1994 on the basis of actual production, subject to above condition, they would be entitled to the payment of excise duty on the production capacity upto the period expiring on 30-6-1994.
4. In consequence of above, the matter was put up before the Member (Central Excise) C.B.R., who vide order dated 21-7-2000 rejected refund claims of both the respondent-companies while holding that the incidence of excise duty had been passed on to the purchasers/ consumers. The said order was set aside by this Court in writ jurisdiction on the ground that the concerned parties were not heard by the C.B.R. and it was directed that the respondent-companies i.e. affected Beverage Units should be afforded opportunity of hearing before taking a final decision. Thereafter, vide two separate orders dated 1-11-2003, the Member (Central Excise)/respondent No.2 has concluded as under:---
"In view of the above and also in the light of the apex Court judgment it has not been proved that there was any price escalation on the beverage, nor the department did bring any evidence of price hike. It thus stands proved that no additional burden beyond the incidence built in the capacity system has been passed on to the consumers and the party is entitled to the refund to the extent of additional incidence borne by the company in consequence of withdrawal of capacity notification and introduction of supervised clearance system during the period commencing from 22nd March, 1994 and ending on 8th June, 1994.
Which are impugned in both the above writ petitions.
5. I have heard the learned counsel for the parties and perused the relevant documents referred to during the course of arguments.
6. The preliminary objection has been taken by the learned counsel for the respondent-companies that the petitioner being a, subordinate could not challenge the orders of his superiors and as such these writ petitions are not maintainable. It is an admitted position that the impugned decisions were passed pursuant to orders passed by this Court in writ jurisdiction and maintained by the Hon'ble Supreme Court of Pakistan whereby the matter was remanded to the C.B.R. to determine specific questions after hearing the parties concerned, i.e. the respondent-companies on the one hand and the petitioner-department on the other. Moreover, in the beginning of the impugned orders it has been specifically provided that it can be appealed against before the Authority which remanded the case. Even otherwise, the petitioner-department is custodian of public exchequer and on its move the vires of the impugned orders can be looked into by this Court to determine whether the same have been passed fully in line with the parameters given by this Court and the Hon'ble Supreme Court while remanding the case to it. As such the preliminary objection about maintainability of these writ petitions is overruled.
7. On merits the main emphasis of the learned counsel for respondent-companies is that since after the issuance of impugned notification imposing fixed excise duty per beverage bottle, the rates thereof to be purchased by the consumers were not raised, therefore, it was a sufficient proof that the burden of excise duty payable on actual production was not passed on to the purchasers /consumers and it was suffered by the Companies itself, which has rightly been directed to be refunded to the respondent-companies through the impugned orders as no proof was furnished by the petitioner-Department that the burden was passed on the purchasers/consumers.
8. On the other hand the arguments of the learned counsel for the petitioner are that sufficient material was produced before respondent No.2 to show that after issuance of S.R.O. No.243(I)/94 dated 22-3-1994 burden of duty on the basis of actual clearance was passed on to the consumers and according to the declaration submitted by the respondent-companies on 17-4-1994 available on the file, central excise duty @ Re.1 per bottle was included in the consumer price/duty paid value, but the same has not been considered while passing the impugned orders. According to the learned counsel for the petitioner only the reason that there was no increase in the prices of beverage goods after the issuance of impugned notification could not be made basis to accept the refund claims of the respondent-companies while declaring that the burden of fixed excise duty was not passed on to the purchasers/consumers, when their own record negates the said version. The learned counsel has further pointed out that only due to competition in the area, the prices of the beverage goods were not increased by the respondent-companies apprehending floppage of their business and as such the prices of goods were not dependent upon change in rates of central excise duty.
9. I have given my anxious consideration to the arguments of learned counsel for the parties. It is noticed that through the impugned orders the respondent-companies have been allowed refund claim on the sole reason that they did not raise the prices of the beverage goods at the juncture of withdrawal of capacity system and suffered the losses of their own account by absorbing the excess burden of duties on account of supervised clearance system in their existing prices. It is admitted position that in the other divisions like Lahore and Faisalabad, the prices of the beverage goods were increased by the different companies after introduction of supervised clearance system and according to clauses (viii) and (ix) of para. 14 of the impugned orders, which are reproduced here for ready reference:---
"(viii) The appellant was entrusted challenging Quarterly Sale Targets set by Messrs Coca Cola Export Corporation and hence to achieve its targets the appellant had to deliberately bear the excess burden of Duties and Taxes.
(ix) The area of franchise of Messrs Leghari Beverage (Pvt.) Ltd. is spread over Punjab, Sindh and Baluchistan. The area under the Company Franchise is inhabited by people of different social strata and is generally with rural background. Therefore, it was a prudent business decision to defer the increase in price to maintain the Sales Levels".
The case of respondent-companies itself was that they did not raise the prices of their goods to achieve their sale targets and had itself borne the excess burden of duties and taxes deliberately, but the impugned orders are silent on the above aspects of the case. In para. No. 14 of its judgment dated 11-3-1999 the Hon'ble Supreme Court of Pakistan clearly held that:---
" ..The actual controversy is not whether the appellants (beverage companies) had suffered any financial loss, but whether the appellants had passed on the incidence of excise duty on the goods involved to the purchasers/consumers. "
As such the sole ground that there was no price hike of beverage goods after the issuance of S.R.O. dated 22-3-1994 could not be made basis to opine that the incidence of excise duty on the beverage goods was not passed on to the purchasers /consumers, if they had suffered loss by not increasing the prices of goods in order to promote their business. As such the impugned orders appear to have been passed in an arbitrary manner and do not reflect findings on each and every aspect of the case, rather these are against the decision of the Hon'ble Supreme Court that the actual controversy is not whether the beverage companies had suffered any financial loss, which are set aside. Without further commenting upon the merits of the case lest it may prejudice the case of either party, the matter is remanded to respondent No.2 with direction to decide the appeals of respondent-companies afresh after affording opportunities of hearing to both the parties and definite findings shall be given on the above aspects of the case as well, which ,shall be concluded within three months after receipt of copy of this judgment without being influenced by any findings on this Court on merits.
10. Both the writ petitions are, therefore, allowed in the above terms.
H.B.T./C-133/LOrder accordingly.