P L D 1966 (W (PLP)

WAHIDUDDIN AHMED, J.‑--This writ petition is directed against the order of the Central Board of Revenue dated 24th December 1959, in Central Excise Appeal No. 6/1959. By this order the learned Appellate Authority rejected the appeal of the petitioners on the ground that they had not deposited the amount of Duty demanded from them in terms of section 189 of the Sea Customs Act.

2. The material facts leading to this petition may be shortly stated. The petitioners are a Textile Mill manufacturing yarn and cloth. From March 1957 to September 1957, they had manufactured grey cloth bearing Mark No. "Kora 6666" and "Kora 1111" and had cleared it as "Coarse cloth" on payment of Excise Duty at six pies per sq. yard. The Inspector, Central Excise, Incharge, Ghafoor Textile Mills Ltd., being suspicious of the quality of the goods, drew the sample of the cloth in dispute and sent it to the Government Laboratory for analysis and test. It was found that the average count of yarn used in the production of the above‑mentioned cloth was about

17. Consequently, the Excise Inspector concerned served a demand notice on the Mill management on 20th September 1957, for the payment of the difference in the amount of Duty on the cloth cleared during the said period alleging that the cloth in question was of grey medium quality and was wrongly cleared as "Coarse cloth". Upon the petitioners' failure a show‑cause notice was issued to them by the Deputy Collector of Central Excise and Land Customs, Karachi on 1st November 1958, in respect of certain alleged offences, which was replied by the petitioners on 18th November 1958. The matter was considered at length by the learned officer. He found that the charges against the petitioners that they had wilfully given false or mis leading declaration was not established. He, however, directed the Department to recover from the petitioners the differential Duty for which a demand had been made on the following observations: "I, therefore, hold that `Kora 6666' and `Kora 1111' which were actually Medium cloth were declared as `Coarse Cloth' by the factory and declare as such. I, accordingly, order that the differential duty for which demand notice has already been issued and which is not time‑barred should be recovered immediately. As there is no evidence on record to establish that lower counts of yarn were declared knowingly no penalty is imposed." The petitioner challenged this order both on facts and law before the Central Board of Revenue, but their appeal was rejected on the ground that they had not paid the amount of the duty due from them as required under the relevant rules. The petitioners have challenged the above orders in this writ petition.

3. In support of the petition Mr. Abdus Sattar Pirzada, the learned counsel appearing for the petitioners has urged the following grounds:‑ (1) That the average count of the cloth produced during the above‑mentioned period was less than 17 and the cloth was rightly cleared and charged as "Coarse cloth" by the Excise Department. (2) That the demand notice was illegal. The Excise Department was not competent to claim any differential duty from the petitioners under Rule 10 of the Central Excise Rules, 1944, which was not applicable to the facts of the petitioners case. (3) That the Deputy Collector was not justified in relying on the result arrived at by the Government Weaving and Finishing Centre, Shahdara, which was done behind the back of the petitioners and offended the principles of natural justice. (4) That the Central Board of Revenue has acted illegally in rejecting the appeal filed by the petitioners on the ground of non‑payment of Duty.

4. After hearing the learned counsel for the parties, we have come to the conclusion that it is not necessary in this matter for us to express any opinion on the points raised in grounds Nos. 1 to

3. In our opinion, this petition can be disposed of on ground No. 4 alone. It is conceded by Mr. Muzaffar Hussain, the learned counsel for the Department that in the present case rules 213 and 215 of the Central Excise Rules, 1944 are applicable. In order to appreciate the contention of the petitioners that the Central Board of Revenue was not justified in rejecting the appeal on the ground of not depositing the amount of the Duty in dispute it will be useful to reproduce the above‑mentioned rules which are in the following terms:‑ "213 Appeals.‑(1) An appeal against an order or decision of an officer not above the rank of a Deputy Collector shall lie to the Collector to whom such officer is subordinate: Provided that if, between the date of the order of decision and the date of the hearing of the appeal the officer who passed the order or decision is promoted to be the Collector, the appeal shall lie to the Central Board of Revenue. (2) An appeal against an original order passed by a Collector shall lie to the Central Board of Revenue.

215. Application of certain provisions of Sea Customs Act, 1878.‑ The provisions of sections 168, 189 and 192 of the Sea Customs Act, 1878, shall, mutatis mutandis, be applicable in regard to procedure relating to offences in respect of the duties imposed on goods under section 3 of the Act." It is to be observed that under rule, 213 an appeal against an order passed by an officer, who is promoted as Collector lies to the Central Board of Revenue. Further under rule 215, the provisions Of sections 1.68, 189 and 192 of the Sea Customs Act, 1878, apply mutatis mutandis in regard to procedure relating to offences in respect of the Duties imposed on goods under section 3 of the Act. Admittedly, in the present case the question before the Central Board of Revenue was not in respect of any alleged offence committed by the petitioners. In fact, from the order of the Deputy Collector, dated 25th August 1959, it is perfectly clear that the petitioners have been exonerated of all the charges which were levelled against them. The learned officer, therefore, only directed the Department to recover immediately the amount of differential Duty for which a demand notice had already been issued and which was not time‑barred. It is, therefore, quite clear that the appeal before the Central Board of Revenue was simply on the question whether the Department on the facts of the case was justified in calling upon the petitioners to pay the differential Duty. The point raised in the appeal had nothing to do with any offence alleged to have been committed by the petitioners. In order to demonstrate that the Central Board of Revenue was misled by the provisions of the Sea Customs Act, 1878, it will be useful to reproduce section 189 of the said enactment which it had in mind while rejecting the appeal filed by the petitioners. It is in the following terms:‑ "189.

Deposit, pending appeal, of duty demanded.

Where the decision or order appealed against related to any duty or penalty leviable in respect of any goods, the owner of such goods, if desirous of appealing against such decision or order, shall pending the appeal, deposit in the hands of the Customs‑Collector at the port where the dispute arises the amount demanded by the officer passing such decision or order. When delivery of such goods to the owner thereof is withheld merely by reason of such amount not being paid, the Customs‑Collector shall, upon such deposit being made, cause such goods to be delivered to such owner. If upon any such appeal it is decided that the whole or any portion of such amount was not leviable in respect of such goods, the Customs‑Collector shall return such amount or portion (as the case may be) to the owner of such goods on demand by such owner." It is no doubt correct that under the above‑mentioned provision of law the Central Board of Revenue could reject an appeal, if pending the appeal, the Duty has not been paid. But the learned Appellate Authority failed to notice that under rule 215 of the Central Excise Rules, 1944 this provision of law has been made applicable only to those appeals which relate to offences arising out of the Duties imposed under section 3 of the Central Excise and Salt Act of 1944. Rule 215 clearly says that the procedure laid down in the above‑mentioned provisions would only be followed in cases where any offence is involved If the appeal before the Central Board of Revenue had been in respect of any offence committed by the petitioners, the Central Board of Revenue might have been justified in rejecting the appeal for not depositing the differential Duty. But in the present case, no such situation arises. We are, therefore, of the view that the Central Board of Revenue fell into an error in rejecting the appeal of the petitioners on the ground of the petitioners failure to deposit the differential Duty. This position has also been conceded by Muzaffar Hassan, the learned counsel for the Department. In view of this, we are of the view that the Central Board of Revenue was not justified in rejecting the appeal of the petitioners filed with them for this faulty reason. In that view of the matter, it is not necessary for us to dispose of the other points raised in the petition. It will be open for the petitioners to raise them before the competent Appellate Authority.

5. In the result, subject to the above remarks, the petition is allowed. The Central Board of Revenue, respondent No. 3, is directed to treat the appeal filed by the petitioners referred to above as still pending and to dispose it of on merits after notice to the parties at a very early date. In the circumstances of the present case we would direct the parties to bear their own costs. K.B.A. Petition accepted. Case remanded.