PAKISTAN TOBACCO COMPANY LIMITED, ISLAMABAD VS ADDITIONAL COLLECTOR, CENTRAL EXCISE, GUJRANWALA, 2007 PTD-SUPREME-COURT 1454 (2007)

(On appeal from the judgment of the Lahore High Court, Rawalpindi Bench, Rawalpindi, dated 21-7-2005, passed in Civil Appeal No.17 of 1995).

Central Excise Act (I of 1944)---

----S. 3---Central Excise Rules, 1944, Rr.9 & 200---Payment of excise duty after removing cigarettes from factory---Validity---Liability of manufacturer to pay excise duty would be created at the time of removal of excisable goods from factory---Such liability would be determined on the basis of record of goods so removed---Board of Revenue could extend time for payment of excise duty, the liability' of which had already been created---Such payment would not exonerate manufacturer from charge of evasion of duty, which took place when goods were removed from factory in violation of Central Excise Rules, 1944---Principles.

Farrukh Jawad Panni, Advocate Supreme Court for Petitioner.

Nemo for Respondent.

Date of hearing: 9th February, 2007.

JUDGMENT

NASIR-UL-MULK, J.--- The Pakistan Tobacco Company Limited has through this petition for leave to appeal assailed the judgment of the Lahore High Court whereby the appellants appeal against the judgment of the Customs, Central Excise and Sales Tax Appellate Tribunal, Islamabad was dismissed with the result that the order in appeal dated 4-5-2000 of the Collector of Sales Tax and Central Excise (Appeals) and the order-in-original dated 17-4-1989 of the Additional Collector were upheld. The Additional Collector had found that the appellant had removed from its factory situated in Jhelum a certain number of packages of cigarettes without payment of excise duty and sales taxes in contravention of the relevant provision of Central Excise Rules and Sales Tax Act, 1990, and thereby ordered the appellant to pay Rs.8,80,716 as central excise duty and Rs.2,11,948 as sales tax along with additional taxes and penalties.

2. The contravention for which the appellant was penalized was detected by the staff of the Intelligence and Investigation (Customs Central Excise and Sales Tax) Gujranwala, when it detained Truck No.AJKA-1983 carrying cigarettes manufactured by the appellant for verification of the documents pertaining to central excise duty and sales tax. Upon examination it came to light that the Gate Pass No.2611 dated 8-6-1994 was issued for another truck bearing Registration No.PRJ-7373, and the same neither showed serial number of the packages nor the time of departure of the vehicle from the factory. Some other discrepancies between the information record in the documents and the consignment in the truck were also detected. It was found that whereas the gate pass mentioned 200 cartons of "Wills King" brand cigarettes, only 190 cartons were available in the truck. Further that out of the 250 cartons of "Gold Flake" cigarettes, 59 did not carry any serial number and serial Nos. of 171 cartons were not legible. The truck and the goods were therefore, seized under section 168 and 157 of the Customs Act, 1969 read with Rule 200 of the Central Excise Rules, 1944 (hereinafter called the Central Excise Rules) and section 39 of the Sales Tax Act, 1990. After issuing show-cause notice to the appellant and upon receiving reply thereto the Additional Collector levied duty and taxes and imposed penalty as stated above.

3. Mr. Farrukh Jawad Panni, Advocate Supreme Court entered appearance for the petitioner and made mainly two submissions, Firstly, that mere contravention of certain rules of the Central Excise Rules would not per se amount to evasion of duties and taxes and may only attract the imposition of penalty prescribed for contravention of the Rules in question. That none of the forums, including the High Court, had examined the record from the point of view of determining as to whether the .evidence produced by the department was sufficient to establish evasion. The learned counsel further argued that all the duties and taxes had been paid for the cigarettes removed from the factory and in this context he referred to Form No.32-A, a challan of cash paid into the Government Treasury, Jhelum, showing payment of Rs.31,338,031.30 on 22-6-1994 as duty and taxes in respect of ARI Nos.436 to 439 dated 8-6-1994. Referring to S.R.O. No.603(I)/96, dated 14-7-1996, the learned counsel submitted that the manufacturer of cigarettes have been allowed 15 days within which to make payments of the central excise duty after removal of the cigarettes from the factory and thus, the payment of duty and taxes on 22-6-1994 leviable on cigarettes removed from the factory on 8-6-1994 were within the permissible period.

4. The first argument of the learned counsel pertains to pure question of fact and three forums as well as the Division Bench of the High Court had found the petitioner guilty of evading payment of excise duty and sales tax. The learned counsel also did not dispute the discrepancies in the official record of the Department maintained at the appellant's factory and the facts revealed by physical verification of the consignment in the truck. In addition to these discrepancies even the gate pass accompanying the detained Truck bearing Registration No.AJKA-1983, was issued for another Truck No.PRJ-7373. The explanation furnished to the Collector by the representative of the appellant that since the truck for which the gate pass was issued had broken down and the cigarettes were then loaded by the contractor on to another truck was also found false. It was noticed that according to the "Bitty" and Zila Council Exit receipt dated 13-6-1994 (and not dated 8-6-1994) showed that the consignment was loaded on to Truck No.AJKA-1983 from Jhelum and not from Sarai Alamgir as claimed by the appellant's representative. The factual determination by four forums based on record does not call for interference by this Court.

5. The second contention regarding payment by the appellant of all the duties and taxes through challan dated 22-6-1994 also does not carry much force for two reasons. Firstly, the plea was not taken up before any of the forums, including the High Court, and therefore, was not examined. The learned counsel had referred to an application dated 4-5-2005 moved before the Appellate Tribunal, after the judgment in the appeal was reserved, for placing on record three documents: Form No.32-A. Form No.AR-1 and Sales Tax Invoices gate pass. The application is signed by the counsel but there is nothing recorded thereon to show that it was received by the Tribunal. It also came to our notice that the Collector Appeals had once remanded the case to the Additional Collector for re-examining the case afresh after providing opportunity to the appellant to produce documents. Even then the documents now being pressed into service were not brought to the notice of the Adjudicating Officer. We are not inclined to consider these documents at this stage not only because of the legal impediment but the same required a factual examination as to whether the duty paid related to the cigarettes packages in question.

6. Be that as it may, the payment of excise duty on 22-6-1994 will not be an answer to the contravention already made on 8-6-1994. Section 3 of the Central Excise Act provides for the levy and collection of duty on excisable goods in such manner as may be prescribed. The time and manner of payment of duty is prescribed in Rule 9 of the Central Excise Rules, which prohibits the removal of excisable goods from the place of its production or manufacture until excise duty leviable thereon is paid and after obtaining permission of the proper officer on the prescribed form. The fourth proviso to the Rules, however, empowers the Central Board of Revenue to allow manufactures of any goods to pay Central Excise duty within a specified period after removing the goods. In exercise of this power the Board issued S.R.O. No.603(1)/96, dated 14-7-1996 permitted the manufacturers of cigarettes to pay the duty within 15 days of their removal. Rule 53-A obligates the manufacturer to maintain proper account and record particulars of each removal in accordance with the prescribed form before the goods are removed from the factory. The combined reading of the above provisions shows that the liability of the manufacturer to pay excise duty is created at the time of removal of the excisable goods from the factory and that such liability is determined on the basis of the record of the goods so removed. The power of the Board allowing the manufacturer of cigarettes under the fourth proviso to Rule 9 is only to extend the time for payment of the duty the liability of which has already been created. Thus, the payment of duty later would not exonerate the manufacturer from the charge of evasion of duty which takes place when the excisable goods are removed from the factory in violation of the rules prescribed for maintaining proper account and obtaining authorization from the proper officer prior to removing the goods. Admittedly such rules were violated and the sales tax invoice as well as the ARI (Application for Removal ....) did not carry the signature and authentication of the Central Excise Officer, a mandatory requirement of Rule 9.

7. Since neither of the two contentions raised on behalf of the petitioner have persuaded us to interfere with the concurrent findings of the forums we decline to grant leave and thus, dismiss the petition.

S.A.K./P-9/SCLeave refused.