2001 PLP 141 (YLR)

"Although under section 3‑A of the Income Tax Ordinance, 1979 the Central Board of Revenue has the power to administer the law but it certainly has no jurisdiction, power or authority to issue a Circular in respect of a contentious issue, it would tantamount to whittling down the discretion vesting in the adjudicating officer and authorities under the Income Tax Ordinance." It was further observed that any Circular issued by C.B.R. taking away completely the power of adjudicating officer to decide as to whether or not the exemption claimed was valid is void and of no legal effect. Although under section 3‑A of the Income Tax Ordinance, 1979 the Central Board of Revenue has the power to administer the law but it certainly has no jurisdiction, power or authority to issue a circular in respect of a contentious issue which would tantamount to whittling down the discretion vesting in the adjudicating officers and authorities under the Income Tax Ordinance. On the strength of the aforesaid contentions the learned counsel for the appellant vehemently urged that the order under appeal being violative of law may be set aside.

5. In reply Mr. Umar Mehmood Kasuri, the learned Counsel for respondents, contended that the strips are capable of being sold, hence are liable to excise duty irrespective of the fact whether they are end products or not and as to whether they are sold or not. The learned counsel also contended that the strips fall in the First Schedule under Heading 54.04 and the classification made by the department is unexceptionable. It is further contended that polypropylene strips are capable of being sold, therefore, the mere fact that they are not end products is not enough to save them from the excise duty and there is no prohibition against the levying of duty at the same material at more than one stages during the course of its manufacture. The learned counsel for respondents in support of his contentions relied on a reported judgment of Peshawar High Court titled Adil Polypropylene v. The Federation of Pakistan and others 1997 MLD 2189 wherein it was observed as under:‑‑ "Polypropylene strips are capable of being sold, therefore, the mere fact that they are not end products is not enough to save them from the excise duty. It was contended that the demand was made without making a factual inquiry as to whether the strips were marketable or not. Had a factual inquiry been held it would have transpired that neither the product was known to market nor the petitioners had sold it to anyone. The polypropylene strips are capable of being sold, therefore, the mere fact that they are not an end product is not enough to save them from the excise duty. Besides there is no prohibition in the Excise Law against the levying of duty on the same material on more than one stages during the course of its manufacture as observed in Sh. Fazal Elahi v. Federation of Pakistan and 3 others 1988 MLD

524. Thus, it was observed that rule 96‑ZZL is not ultra vires of the provisions of sections 3, 3‑C and 4 of the Central Excise Act, 1944. It was also observed that section 3 is the charging section and states the excisable goods and services which are liable to duty. Section 3‑C highlights various stages in regard to determination of tariff value and rate of duty applicable to excisable goods or services and section 4 provides the manner of valuation of excisable goods and excisable services. According to section 2(19) the expression ' excisable goods' means goods specified in the First Schedule and includes goods manufactured or produced in non‑tariff area and brought for consumption to tariff area. Plastic yarn and strips of less than 5 mm. were held liable to central excise duty under the old CE No.08.03 B of the First Schedule vide Central Excise General Order No.3 of 1988, dated 8‑5‑1988 which is worded as follows : Classification of Plastic Yarn and Strips ‑‑ The width of which does not exceed 5 nun. used for weaving of fabrics ...... It is clarified that such plastic yarns and strips of a width (upto) 5 mm. are classifiable under item No.08.03 B of the First Schedule to the Central Excise and Salt Act, 1944 and are liable to central excise duty. " In another case titled Nazim Poly Sack Limited and 5 others v. The Federation of Pakistan and others PLD 2000 Lah. 302 while relying on judgment of Peshawar High Court, referred to above, it was observed as under:‑‑ "The plea that rule 96‑ZZL was violative of sections 3‑CC and 4 of the Central Excises and Salt Act, 1944 was rejected as being untenable. On a comparison of the new Schedule with the old Schedule, it was found that Item No.08.03 in the old Schedule has been substituted by Heading 54.04 in the new Schedule. It was observed that the polyproplyene strips were capable of being sold, therefore, the mere fact that they are not an end product is not enough to save them from the excise duty. The learned Judges relying upon Sh. Fazal Elahi v. Federation of Pakistan and 3 others 1988 MLD 524 went on to hold that there was no prohibition of law against the levy of excise duty on the same material at more than one stage during the course of its manufacture. "

6. To have a proper perception of the matter involved, we deem it expedient to reproduce rule 96‑ZZL of Central Excise Rules, 1944, which reads as follows:‑‑ "Special Procedure for collection of central excise duty on Polypropylene stress (Heading 5404.0000).‑‑‑ (1) A manufacturer may remove polypropylene strips within the factory, without immediate payment of duty, for consumption, within the same factory, in the manufacture of woven fabrics or for the manufacture of polypropylene bags subjected to duties of excise. (2) Central excise duty involved on the polypropylene strips, so removed, shall be assessed and paid on the net weight of such woven fabric plus five percent. in case the manufacturer removes such woven fabric from the factory and does not consume the same within the same premises for manufacture of bags. (3) If woven fabric is used within the same premises for manufacture of bags, the duty leviable on polypropylene strips shall be assessed and paid on the net weight of bags plus seven percent. of the weight thereof. (4)

(5)

(6)

(7)

(8)

(9) The provisions of the Central Excise Rules, 1944, in so far as they are no inconsistent with this rule, shall mutatis mutandis, apply to the manufacturers opting, to pay duty under this rule. "

7. In a case reported as Adil Polypropylene v. The Federation of Pakistan and others 1997 MLD 2189 the Supreme Court of Pakistan observed that the granules/chips by their own are goods within the meaning of "excisable goods" and so also the bags, which are manufactured through a process from said granules, strips of polypropylene claimed to be an "intermediary product" being vendible and having a distinct entity fall within the scope of excisable goods. At the end of report it was also observed that it is not disputed that granules/chips by their own are goods within the meaning of "excisable goods" and so also the bags, which are manufactured through a process from said granules. The strips which are claimed to be an "intermediary product" being vendible and having a distinct entity fall within the scope of excisable goods. It was further observed that under section 10(3) of the Central Excise General Order of 1988 it is clear that excise duty could be charged on any class or classes of goods at the rates specified by a notification in official gazette and determined on the basis of rate, quantity, number, volume and measurement. Consequently, it was held, and rightly so, that rule 96‑ZZL was neither outside the scope of the Act nor in conflict with it nor transgressed the limit circumscribed by it. Since the above finding of the High Court is correct, therefore, excise duty could beg charged and recovered as a consequence of S.R.O. 710(1)/94, dated 13‑7‑1994.

8. The perusal of the judgments passed by the Peshawar High Court, Lahore High Court and the Supreme Court of Pakistan shows that the plea that rule 96‑ZZL was violative of sections 3‑CC and 4 of the Central Excise and Salt Act, 1944 was rejected as being untenable. It was found that Item No.08‑03 in the said Schedule has been substituted by Heading 54.04 in the new Schedule. It was observed that polypropylene strips were capable of being sold, therefore, the mere fact that they are not end products is not enough to save them from excise duty.

9. In view of the aforesaid observations made by the superior Courts of Pakistan, we do not dilate upon the question as to whether in presence of alternate remedy available to the appellant, the writ petition was at all competent. Since the appeal is being dismissed even otherwise, therefore, we need not make any observation on the point of alternate remedy available to the appellant.

10. In the light of what has been stated above, finding no force in this appeal, the same stands dismissed with costs. H.B.T./186/SC(AJ&K) Appeal dismissed.