COLLECTOR OF SALES TAX AND FEDERAL EXCISE (RTO) VS ZEAL PAK CEMENT FACTORY, HYDERABAD, 2010 PTD-KARACHI-HIGH-COURT-SINDH 147 (2009)

Sales Tax Act (VII of 1990)---

----S.47---Central Excise Rules, 1944, Rr.197 & 226(2)---Central Excise Act (I of 1944), S.33---References to High Court---Application for---Main contention of counsel for applicant was that Appellate Tribunal while relying on the judgment of Supreme Court (1987 SCMR 571) had held that since jurisdiction was wrongly assumed by the Senior Intelligence Officer, which according to the Tribunal, was not warranted by law, impugned action was without jurisdiction and on that basis set aside the order-in-original---Matter of jurisdiction under R.226(2) of Central Excise Rules, 1944 was neither raised in the show-cause notice nor in order-in-original and the Tribunal had failed to point out as to how it had based its judgment on said facts---Even otherwise it had not given proper reasons for holding that the case fell within the ambit of said judgment of the Supreme Court---It would be in the interest of justice, if the matter was remanded to the Tribunal to be decided de novo after giving both the parties an opportunity of being heard; and to present all their arguments, legal as well as factual including arguments on the jurisdiction of the officer and then decide the case on merits.

Government of Pakistan v. Shahi Bottlers Ltd. 1987 SCMR 571 ref.

Mohsin Imam for Applicant.

Abid H. Shahban for Respondent.

ORDER

By this Special Federal Excise Reference Application filed against the order of the Tribunal dated 3-4-2008 in Central Excise Appeal No.H-142 of 2005 the following questions said to have .arisen from that order have been proposed for the opinion of this Court:--

(i) Whether the learned Appellate Tribunal Bench-I, Karachi has seriously erred in law to conclude that the Honouable Supreme Court of Pakistan in the case of Messrs Shahi Bottlers 1987 SCMR 571 has very categorically ruled that powers conferred under Rule 226(2) of the Central Excise Rules, 1944 can only be exercised by an officers so designated in the Central Excise rules and no one else can either initiate or take action. Whereas it is pertinent to place on record that no such ruling with regard to exercise of powers under Rule 226(2) of the Central Excise Rules, 1944 was given by the Honourable Supreme Court of Pakistan in the said judgment.

(ii) Whether the Honourable Customs, Excise and Sales Tax Appellate Tribunal Bench-I, Karachi has seriously erred in law to appreciate that the Senior intelligence Officer of the Directorate General has only submitted contravention report to the Competent Authority i.e. the Director, Directorate General of Intelligence and Investigation-FBR, Regional Office Karachi, who then forwarded the same to the Competent Adjudicating Authority for issuance of demand/show-cause notice. Consequently the Collector, Collectorate of Customs, Sales Tax and Central Excise (Adjudication), Quetta/Hyderabad issued demand/show-cause notice No.02/CE/Cont/Adj/Coll/Intt-Kar/03-04/1916 dated 13-5-2004 in exercise of the powers conferred upon him under section 33 of Central Excise Act, 1944.

(iii) Whether the respondent (Messrs Zeal Pak. Cement, Hyderabad), have violated the provisions of Rules 9, 47, 52, 53, 226, 237 and 238 of Central Excise Rules, 1944 and sections 3, 6, 22 and 23 of Sales Tax Act, 1990, keeping in view the fact that they failed to prove the physical existence of stocks i.e. clinker/ cement in the factory premises in accordance with entries made in the prescribed Central Excise record-i.e. RG-I Register.

(iv) Whether the judgment passed by the Honourable Supreme Court of Pakistan reported as 1987 SCMR 571 fully support the case made out by the Appellant?

(v) Whether in terms of Rule, 197 of. Central Excise Rules, 1944, Senior Intelligence Officer of the Directorate General have free access to the premises, equipment, stocks and accounts relating to excisable goods and excisable services?

2. We have heard Mr. Mohsin Imam learned counsel for the applicant and Mr. Abid H. Shahban learned counsel for the respondent.

3. The main contention of the learned counsel for the applicant is that the Tribunal while relying on the judgment of the Honourable Supreme Court of Pakistan in the case of Government of Pakistan v. Shahi Bottlers Ltd. 1987 SCMR 571 has held that since jurisdiction was wrongly assumed by the Senior Intelligent Officer which, according to the Tribunal, was not warranted by law, therefore, the impugned action is without jurisdiction and .on this basis set aside the order-in-original. The learned counsel took us through the relevant portion of the judgment of the Honourable Supreme Court to point out that in this judgment the Honourable Supreme Court has not discussed the jurisdiction of the officers but has only held that officer concerned can exercise his authority only when two preconditions are satisfied and this according to the learned counsel has wrongly been interpreted by the Tribunal to hold that those powers can be exercised by officer so designated in the Central Excise Rules and that no one else can either initiate or take action.

4. Mr. Abid H. Shahban has supported the arguments of the Tribunal but when we reviewed and examined the show-cause notice and the impugned order-in-original and the impugned order of the Tribunal we find that the matter of jurisdiction under rule 226(2) was neither raised in the show-cause notice nor in the order-in-original and the Tribunal has failed to point out as to how they have based their judgment on the above facts. Even otherwise, in our opinion, they have not given proper reasons for holding that the case fell within the ambit of the judgment of the Honourable Supreme Court in the case of Shahi Bottlers Ltd. quoted supra. We are, therefore, of the considered opinion that it will be in the interest of justice if the matter is remanded back to the Tribunal to be decided de novo after giving both the parties an opportunity of being heard and to present all their arguments legal as well as factual including arguments on the jurisdiction of the officer and then decide the case on merits. This exercise may preferably be concluded within a period of three months.

H.B.T./C-22/KCase remanded.