P L D 1976 Karachi 855 (PLP)

MUHAMMAD HALEEM. J.-By this petition the levy of additional excise duty amounting to Rs. 2.88,519.97 on 98,117 pounds of cotton yarn waste sold during March, April, June and July, 1972 for Rs. 38,757 is assailed. It is the case of the petitioner that the above quantity of cotton yarn waste was cleared by the Inspector, Central Excise, Paracha Taxtile Mills Limited, Shershah, Karachi, as "coarse cotton yarn waste" on which 15 % ad velorem excise duty was charged which amounted to Rs. 5,

831. Such declaration is evidenced by the certificates dated 30th of March, 1972, 5th of April, 1972, 23rd of June, 1972, 5th of July, 1972 and 22nd of July, 1972 duly signed by the Inspector which are on record. Thereafter by notice dated 24th of August, 1972, the Deputy Superintendent, Central Excise, Karachi, demanded Rs. 2,88,519.79 as having been short levied at the rate of Rs. 3 per pound on the aforestated quantity of the cotton yarn waste as per sub-clause (d) of sub-item No. 1 of Item No. 38 of the first schedule to the Central Excise and Salt Act read with section 3B of the said Act. It is this levy which is challenged before us. The case of the respondent is that irrespective of the certificates giving out the description of the goods as "coarse cotton yarn waste", the waste sold was a mixture of coarse, medium and superfine cotton yarn in which case the highest amount of duty is leviable on the excise article in terms of the second part of section 3B of the Act. Since the superfine cotton waste is a residue of the yarn of 48 counts or more, the levy will be in terms of clause (d) of sub-item No. 1 of Item 38 which prescribes the duty of Rs. 3 per pound and is the highest amount of duty leviable having regard to the second part of section 3B. In the context of this contention it will be necessary to refer to the second part of section 3B which reads : "or, if composed of more than one article liable to duty, then with the fall duty which would be payable on such goods if they were entirely composed of the article on which the highest amount of duty would be payable." The implication of the above provision is that if a commodity is made from two or more exeiseable materials such commodity should be assessed to duty at the rate applicable to the exciseable material which will bring in the highest amount of duty. Therefore it was for the respondents to establish that the cotton yarn waste sold was a mixture of coarse, medium and superfine cotton yarn before such duty could be levied. The learned counsel for the respondents filed a chart to show that the cotton yarn waste which was described as 'coarse' was not in fact so but it was a mixture of superfine, medium and coarse cotton yarn. Looking to the figures in the chart the medium cotton yarn waste produced is 3,421 pounds while superfine is only 86 pounds and the balance is made up of coarse cotton yarn waste which is 1,19,027 pounds. These figures were taken from the register of the Mill. It has been candidly conceded that there has been no physical examination by any officer of the department of the cotton yarn waste sold by the petitioner and the short levy of duty is being demanded only on the basis of the figures available in record of the production of the different counts of cotton yarn waste in the registers of the petitioner. In the circumstances it is not possible to hold as a fact that any quantity of medium or superfine cotton yarn waste was mixed with the coarse cotton yarn waste and the only material then upon which excise duty could be levied was the cotton yarn waste which was described as 'coarse' as per certificates issued by the Inspector Central Excise, Paracha Textile Mills, Shersbah, Karachi. This is however not the end of the matter. It is not denied by the counsel for the petitioner that cotton yarn waste is covered by item No.

38. If then sub ?item No. 1 is not applicable then as conceded by the counsel for the petitioner, coarse cotton yarn waste would be covered by the second sub-item No. 2 A which covers goods other than those enumerated in sub-item No.

1. Under sub-item No. 2 the excise duty leviable is 200 % ad valorem on the value of the goods sold, which works out to Rs. 77,749.32 and deducting the amount already paid the amount which is now legally recoverable is Rs. 71,918.11. The learned counsel for the petitioner states that the amount short levied was deposited in the departmental account but since no direction is sought for its refund, it will be for the petitioner to approach the department for the return of the balance amount. In the context of the above finding the demand in excess of Rs. 71,918.11 is without lawful authority and of no effect. Subject to the above the petition is allowed but with no order as to costs. S. Q.? ???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????? ????????????????? Petition allowed.