1988 PLP 410 (SCMR)

FAZL-E-AKBAR, J.--The only question raised in this appeal by special leave is: Whether the operation of an exemption from excise duty for a period of four years, granted by the Central Government could be regulated by a subsequent notification before expiry of the said period. This question arises under the following circumstances:

2. In exercise of the powers conferred by subsection (1) of section 12-A of the Central Excises and Salt Act, 1944 (I of 1944) the Central Government by Notification No. S.R.O. 35 (R), dated 30th June, 1961 exempted for a period of 4 years from 1st July, 1961 all excisable goods produced or manufactured in the Tribal Areas, from excise duty leviable thereon.

3. On 23rd February, 1962 the Director of Industries, Planning and Investment Promotion Wing, West Pakistan, Lahore granted permission for the establishment of a new industrial undertaking at Shakhakot, Malakand Agency, Dargai under the name of Mardan Cigarette Industries. Subsequently the name of the said firm was changed to 'Messrs Mardan Industries Limited.' and it went into production in April, 1964. In the first week of May, 1964 it sent a consignment of 20 lacs of 'K-2' cigarettes to Messrs Premier Tobacco Company, Karachi and it reached its destination without payment of any excise duty. On 7th May, 1964 it despatched a second consignment of 17 lacs 'K-2' cigarettes to the said Company but when the consignment reached Shergarh, the Central Excise and Land Customs Department, District Mardan apprehended the said cigarettes and demanded payment of the excise duty.

4. On 8th May, 1964 the Superintendent Central Excise and Land Customs Department, Mardan wrote as follows:-- "To M/s.Mardan Industries Limited, Shakhakot. Subject: MANUFACTURE OF CIGARETTES IN THE CIGARETTES FACTORY AT SHAKHAKOT. I have come to know that you are manufacturing at Shakhakot 'K-2' Cigarettes-Karachi. You are therefore, informed that according to the latest Government instructions, you cannot avail of the concession of exemption from duty in respect of 'K-2' cigarettes or any other identical brand already being produced in the settled areas. Hence such identical brand will not be permitted to enter the settled areas without payment of duty involved or prior approval of the Collector of Central Excise and Land Customs Lahore".

5. On 12th May, 1964 M/s. Mardan Industries Limited and Messrs Premier Tobacco Company Limited, filed a writ petition in the High Court for cancellation of the said order dated 8th May, 1964 and for release of 17 lacs cigarettes seized by the Excise Department and for a direction on them not to levy any excise duty till 30th June, 1965 on the cigarettes manufactured by the petitioner No.1, M/s. Mardan Industries Limited, in the Tribal Area. On the 13th of May the writ petition was admitted and an ad interim stay was granted and the Superintendent Central Excise and land Customs, Mardan was directed to release 17 lacs of cigarettes on the petitioner's furnishing security bond and to allow further consignments on furnishing similar security bond to the extent of the excise duty leviable on such consignments.

6. On 17th May, 1963 the Central Government issued the following Notification; "S.R.O No. 363 (K)/63, Karachi the 17th May, 1963.--In exercise o the powers conferred by subsection (1) o section 12A of the Central Excises and Salt Act, 1944 (I of 1944) and in supersession of the Ministry of Finance Notification S.R.0 35(R), dated the 30th June, 1961 the Central Government is pleased to exempt, till the 30th June, 1965 all excisable goods produced or manufactured in the Tribal Areas mentioned in the schedule below from the whole of the duty of excise leviable thereon: Provided that the exemption herein granted shall not apply to un-manufactured products removed from the said tribal Areas to any other area in Pakistan. Provided further that the exemption herein granted shall not apply to any excisable goods manufactured with the assistance of any plant or machinery which was previously installed in any area of Pakistan other than the said Tribal areas, if such goods are removed from the Tribal areas to any other area in Pakistan. (1) Malakand, Mohomand, Khyber and Kurram Agency North Waziristan and South Waziristan. (2) Amb, Chitral, Dir and Swat. (3) The Tribal areas under the D.C. Hazara, Peshawar, Kohat, D.I. Khan and Bannu. (4) The District of Chittagong Hill Tracts excluding the area falling within the jurisdiction of Chandragona Police Station."

7. On 19th May, 1964, that is, after admission of the Writ Petition the Central Government issued another notification to the following effect: "S.R.O. No.31(K)/64.--In exercise of the powers conferred by subsection (1) of section 12A of the Central Excises and Salt Act, 1944 (1 of 1944) the Central Government is pleased to direct that the following further amendments shall be made in the Ministry of Finance Notification No. S.R.0 363(K)/63, dated the 17th May, 1963, namely: In the aforesaid Notification, for the full stop at the end of the second proviso a colon shall be substituted and thereafter the following new proviso shall be added, namely Provided further that the exemption herein granted shall not apply to any excisable goods, manufactured in the tribal area which bear brand, or trade name, or trade marks under which similar goods manufactured in any area of Pakistan other than the said tribal areas are also marketed if such goods are removed from the tribal areas to any other area in Pakistan". After the last notification the petitioners filed a petition to amend their writ petition by adding an additional prayer that the impugned notification was unjust and of no legal effect and this prayer was granted.

8. The only question raised before the High Court was as to the legality of the Notification dated 19th May, 1964. The High Court upheld the contention that the petitioners "having acquired a vested right in regard to the exemption of the whole of excise duty when the industrial undertaking was completed and went into operation, could not be deprived of the said right by the aforesaid Notification" and therefore, accepted the writ petition.

9. The learned Deputy Attorney-General has been candid enough to say that the impugned Notification is not retrospective in its operation. We may, however, observe that there is nothing in the Notification to connote retrospection. If retrospection was intended, the words to that effect would have been clearly mentioned. It well settled that no statute shall be construed so as to have retrospective operation unless its language is such as plainly to require such construction. We understand that 17 lacs cigarettes which ha been seized before issue of the impugned notification, have been released and the Excise Department do not claim any excise duty in respect, of the said cigarettes.

10. The principal question therefore, for our consideration is the validity of the second proviso in the Notification dated 19th May, 1964.

11. The learned Deputy Attorney-General has contended that the impugned proviso in the said Notification is not ultra vires. The argument which was advanced on behalf of the respondent and which appears to have found favour with the High Court was that the respondent had acquired a vested right in regard to the exemption of the whole excise duty as soon as the industrial undertaking was completed and went into operation and the said right could not be taken away by the impugned proviso.

12. Under the first notification dated 30th June, 1961 the Central Government 'exempted for a period of four years with effect from 1st July,' 1961 all excisable goods produced or manufactured in the tribal area from the whole of the excise duty leviable thereon'.

13. No doubt the power to take advantage of a Notification can be termed as right. But the only right which it appears to us, can be said to have been conferred by the said Notification, was that the new industrial undertaking should enjoy exemption from excise duty in respect of goods manufactured in tribal areas. That does not mean that a right had also been conferred on them to despatch free of excise duty out of the tribal areas, goods with such brands and trade marks, under which similar goods were marketed in other parts of Pakistan. In other words, it cannot be said that the respon dents were also given the right to take advantage of the brand of a cigarette that were already in the market in other parts of Pakistan. The High Court failed to notice the effect of the impugned proviso. By the said proviso the right to manufacture cigarettes was not taken away. It even did not disturb the right to manufacture such brands of cigarettes which were Already in the market in other part of Pakistan. It merely stopped them from despatching out of the tribal area without paying excise duty such cigarettes "which bear brand, or trade name, or trade marks under which similar goods manufactured in any area of Pakistan other than the said tribal areas." Thus the proviso does not destroy their right to manufacture cigarette out side the tribal areas. Hence no question of taking away any vested right acquired by the respondent No.1 under notification o 1961 arises in this case. At the most it could be said that the said proviso could not have retrospective operation. In other words should not apply to the past and closed transactions. As already stated the Government is not claiming excise duty in respect of the cigarettes which had been despatched outside the tribal areas prior to the issue of the impugned proviso. It will be therefore, fallacious to say that the proviso interfered with their vested rights.

14. Lastly it may be mentioned that the concession granted to the respondent belonged to the class of 'privilegia favourabilia' and as such the same could be regulated by a subsequent notification. In other words by the notification granting exemption the Government had not stripped itself of its essential powers to regulate the said exemption. Furthermore, in view of section 21 of the General Clause Act the power of the Government to issue such a notification cannot also be challenged.

15. For the reasons stated above we hold that the impugned proviso is not ultra vires and that the respondent No.1 Messrs Mardan Industries Limited, are not entitled to despatch 'K-2' Cigarettes outside the tribal areas without payment of excise duty. In case the result we allow this appeal and recall the writ issue by the High Court. In view of the facts and circumstances of the case, we make no order as to costs. M.B.A/G-58/S Appeal allowed.