FEDERATION OF PAKISTAN through Secretary, Revenue Division, Central Board of Revenue, Islamabad VS Messrs BALOCHISTAN MINERALS & OIL (PVT.) LTD., QUETTA
2006 P T D 1389
[Supreme Court of Pakistan]
Present Rana Bhagwandas, ACJ, Khalil-ur-Rehman Ramday and Nasir-ul-Mulk, JJ
FEDERATION OF PAKISTAN through Secretary, Revenue Division, Central Board of Revenue, Islamabad and another
Versus
Messrs BALOCHISTAN MINERALS & OIL (PVT.) LTD., QUETTA
Civil Appeal No. 728 of 2002, decided on 14/02/2006.
(On appeal from the judgment of the Balochistan High Court, Quetta, dated 28-2-2002 passed in C.P. No. 634 of 2001).
(a) Central Excise Act (I of 1944)---
---Ss. 2(f) & 3---S.R.O. No. 456(I)/96, dated 13-6-1996---S.R.O. No.685(I)/2001, dated 27-9-2001---Constitution of Pakistan (1973), Art.185(3)---Leave to appeal was granted by Supreme Court to consider; whether lubricating oil supplied in excess of 10 litres would not be covered by Item No.271.0081 of S.R.O. No.456(I)/96, dated 13-6-1996; and whether levy of central excise duty on bulk by S.R.O. No.685(I)/2001, dated 27-9-2001, was not meant to clarify that the duty thereon was also payable under S.R.O. No.456(I)/96, dated 13-6-1996.
(b) Central Excise Act (I of 1944)---
---Ss. 2(f) & 3---S.R.O. No. 456(I)/96, dated 13-6-1996---S.R.O. No.685 (I)/2001, dated 27-9-2001---Central excise duty, levy of---Mobil oil and lubricating oil packed in bulk---Company was manufacturing and supplying Mobil oil and lubricating oil in bulk---High Court in exercise of constitutional jurisdiction declared such supply exempted from central excise duty---Contention of authorities was that lubricating oil in excess of 10 litres supplied by the company would fall under Item No.2710.0082 of S.R.O. No.456(I)/96, dated, 13-6-1996 and that S.R.O. No.685(I)/2001, dated 27-9-2001, was intended to be a clarification necessitated by an earlier decision of another High Court similar to the one under appeal---Validity---By not challenging the judgments of other High Courts and instead adding another such heading to bring into the regime lubricating oil in bulk, the authorities had accepted the interpretation placed by the other High Court on the relevant provisions of S.R.O. No.456 (I)/96, dated 13-6-1996---Contention of the authorities based on addition of subheading No.2710.0083 rather supported the case of the Company---Such addition became necessary after the Central Board of Revenue had realized that existing provisions of S.R.O. No.456(I)/96, dated 13-6-1996 did not cover the supply of oil in bulk---If object of new provision was simply to clarify situation already in existence, the same would have been incorporated as explanation to the existing Item No. 2710.0082---Addition of separate Item No.2710.0083 by S.R.O. No.685 (I)/2001, dated 27-9-2001, in S.R.O. 456 (I)/96, dated 13-6-1996 amounted to acknowledgement by legislature that supply of oil in bulk was not covered by the existing items---Supreme Court declined to interfere with the judgment passed by High Court---Appeal was dismissed.
Adam Lubricants Limited v. Federation of Pakistan and others (Suit No. 840 of 2001) and Punjab Petroleum Industries (Pvt.) Limited v. Collector Central Excise (Writ Petition No. 14312 of 2001) ref.
Raja M. Irshad, Deputy Attorney-General and Sh. Mumtaz Ahmed, Member Legal C.B.R. for Appellants.
Fakharuddin G. Ebrahim, Senior Advocate Supreme Court with Shehanshah Hussain, Advocate Supreme Court and Raja Abdul Ghafoor, Advocate-on-Record for Respondents.
Date of hearing: 14th February, 2006.
JUDGMENT
NASIR-UL-MULK, J.---The Federation of Pakistan through Secretary Revenue Division Central Board of Revenue, Islamabad and another, have filed this appeal by leave of the Court from the judgment of the Balochistan High Court of 28-2-2002, allowing the writ petition of the respondent, Messrs Balochistan Minerals and Oil Private Limited, Quetta, by holding that the respondent was not liable to pay Central Excise Duty (CED) on Mobil Oil and Lubricating Oil, manufactured by it and transported for sale to different parts of the country, as the same, being supplied in bulk, was exempted from the Duty, for it was leviable on such oils only if supplied in packs under S.R.O. No.456(I)/96, dated 13-6-1996, which reads:--
| "Heading/sub-heading number | Conditions | Rate of duty |
| (1) | (2) | (3) |
| | Lubricating Oil, i.e. Oil such as is not ordinarily used for any other purpose than lubrication which has flash point at or above 200 F by Abel's Close Test. | |
| 2710.0081 | In packs not exceeding 10 litres???? | 10 per cent of the retail price of or seven rupees and fifteen paisa per litre whichever is higher. |
| 2710.0082 | In packs exceeding 10 Litres?? | Ten per cent of the retail price , or seven rupees and fifteen paisa per litre, whichever is higher" |
By Finance Ordinance, 2001, the schedule to the" Customs Act was replaced and under Heading No.271'0.0083, another item was introduced namely, Lubricating Oil etc. in bulk (vessels, bowzers and lorries etc.). By S.R.O. No.. 685(I)/2001, dated 27-9-2001, this additional items was incorporated, by amendment, in S.R.O. No.456 levying Central Excise Duty at the rate of Rs.7.15 per litre. Leave to appeal was granted to consider whether lubricating oil supplied in excess of 10 litres would not be covered by Item No. 271.0081 of S.R.O. No.456. Further that A whether the levy of Central Excise Duty on bulk by S.R.O. No.685 was not meant to clarify that the duty thereon was also payable under S.R.O. No.456.
2. Mr. Raja Muhammad Irshad, learned Deputy Attorney General, ably assisted by Sh. Mumtaz Ahmed, Member Legal (C.B.R.), mainly pressed the argument that the terms `pack' and in `bulk' are terms not mutually exclusive and that even oils in bulk, that is in large quantities, can still be packed in big packs for transportation. It was thus contended that lubricating oil in excess of 10 litres supplied by the respondent would fall under Item No.2710.0082 of S.R.O. No.456. It was further pointed out that S.R.O. No.685 issued on 27-9-2001 was intended to be a clarification, necessitated by an earlier decision of the Sindh High Court similar to the one impugned in this appeal.
3. Mr. Fakharuddin G. Ebrahim, Senior Advocate Supreme Court and Mr. Shehanshah Hussain, Advocate Supreme Court, appearing for the respondent, argued that the Sindh High Court as well as the Lahore High Court had earlier held that lubricating oil supplied in bulk was not amenable to levy of Central Excise Duty as under S.R.O. No. 456 only the oil supplied in packs was subject to such levy. That the Central Board of Revenue has not assailed the said judgments before this Court and therefore, the declaration given therein has attained finality. As to the connotation of `pack' appearing in S.R.O. No.456, the learned counsel submitted that it would not cover supply in bulks. Elaborating, it was argued that the supply in packs means supplying the contents along with packing whereas the respondent was simply supplying the oil in bulk even if it was to be transported in some containers to the retailers.
4. The dispute relates to the payment of Central Excise Duty by the respondent already made between 13-6-1996, the date of S.R.O. No.456 and 27-9-2001 on which S.R.O. No.685 was issued, as after that admittedly the lubricating oil even supplied in bulks by the respondent is validly subjected to payment of the Duty. Though extensive arguments were advanced at the bar by both sides on the exact connotation of the term `pack' appearing in S.R.O. No.456, there is no finding by the High Court as to the mode of transportation used by the respondent for supplying the oil, and quite obviously, as there was no such controversy raised before the Court. The respondent in his writ petition had simply averred in para. 5 that "it purchases raw material for manufacturing all lubricating oils from Karachi and after processing the same through plant, the same is transported to various parts of the country". The mode of this transportation was not specified but it was stated elsewhere that the supply was being made in bulks. The appellants in their parawise comments before the High_ Court did not make any assertion that the respondent transported the oil in any form of packs, small or large, but defended the levy by pleading that bulk consignments would fall under Item No.2710.008 as the same exceeded 10 litres. In the absence of any factual foundation it would be nothing more that fruitless academic exercise to try to give meaning to `pack' in the context used in S.R.O. No. 456.
5. The second column of S.R.O. No.456 lays down the conditions for levy of Central Excise Duty on lubricating oil. The levy is on the oil `in pack'. Thus, there is no levy on supply of the oil on any mode other than in packs. It was in this view of the matter that the Sindh High Court in the case "Adam Lubricants Limited v. Federation of Pakistan and others" (Suit No.840 of 2001) held on 27-6-2001 that S.R.O. No.456 imposed Central Excise Duty on lubricating oil only when supplied in packs. This view was followed by the Lahore High Court in "Punjab Petroleum Industries (Pvt.) Limited v. Collector Central Excise (Writ Petition No.14312 of 2001, decided on 6-8-2001)". Neither of the two ,decisions have, been questioned before this Court and it seems that it was on account of the judgment of the Sindh High Court that in the following Finance Ordinance of 2001, a provision was made for levy of Duty on bulk supplies of lubricating oil, and the Central Excise Duty. was. imposed by S.R.O. No.685, dated 27-9-2001 by the addition of Heading No.2710.0083. by not challenging the judgments of the Sindh High Court and the Lahore High Court and instead adding another such heading to bring into the regime lubricating oil in bulk, the appellants have accepted the interpretation placed by the two High Courts on the relevant provisions of S.R.O. No.456.
6. The contention on behalf of the appellants based on the addition of Sub-heading No.2710.0083 rather supports the case of the respondent. The addition, it seems, became necessary after the Central Board of Revenue, had released that the existing provisions of S.R.O. No.456 did not cover the supply of oil in bulks. If the object of this new provision was simply to clarify the situation already in existence, the same would have been incorporated as an explanation to the existing Item No. 2710.0082. The addition of a separate Item (No. 2710.0083) by S.R.O. No.685 in S.R.O. No.456 amounts to acknowledgement by the legislature that supply of the oil in bulk was not covered by the existing items.
7. In the light of the above, we would maintain the judgment of the Balochistan High Court and subsequently, dismiss the appeal with no order as to costs.
M.H./F-8/SC?????????????????????????????????????????????????????????????????????????????????????? Appeal dismissed.