P L D 1988 Lahore 320 (PLP)

This is a constitutional petition filed by Asif Amin Silk Mills, petitioner, challenging the order of the Deputy Collector of Central Excise, Lahore, dated 2‑11‑1972, that of the Collector of Central Excise (Appeal) dated 17‑5‑1973 and that of the Joint Secretary to the Government of Pakistan dated 22‑9‑1973. 2 The case in brief is that on 15‑5‑1969, the Superintendent, Central Excise, Lyallpur, visited the Asif Amin Silk Mills at Lyallpur. where, on inspection of registers, he found that the petitioner's mill had been evading excise duty. Accordingly, he took into possession the RG‑1 register (which showed the goods manufactured), the E13‑4 register (which showed the goods deposited in the stores) and the wages register (which showed the wages of workmen). All these three registers were taken into possession by the Superintendent,

3. On 1‑4‑1970, the Deputy Collector, Central Excise, issued a show‑cause notice to the petitioner mill stating that on 15‑5‑1969, when the Superintendent, Central Excise Circle No.11, Lyallpur, paid a surprise visit to its premises, he had found, on checking three registers referred to above, difference in the production figures of the man made fabrics during the period January, 1969 to May, 1969. It was stated that 78493 yards of art silk cloth was produced in addition to what was shown by them in their RG1 Register and as the same quantity did not appear in the factory premises, it had been removed from the factory illegally and without payment of excise duty in contravention of rules 9, 52‑A(I) and 210 of the Central Excise Rules, 1944, and the petitioner was asked to show cause within ten days of the receipt of the notice as to why action should not be taken against them under rules 52‑A(6), 210 and 226 of the Central Excise Rules, 1944, and why the duty involved should not be recovered from them under rule 7 of the said Rules. On 22‑4‑1970, the petitioner mill submitted its reply stating that the allegations contained in the show‑cause notice were incorrect, that there was no difference in the Wages registers and the RG‑1 register, that the Wages register maintained by the petitioner mill bearing signatures of the employees tallied with the RG‑1 register, that their counsel would submit the Wages register on the date of hearing and that the case had been made against them on the basis of some misunderstanding.

4. On 2‑11‑1972 the Deputy Collector, Central Excise, Lahore, rejected the explanation of the petitioner mill and held them guilty of the offences mentioned in the notice and ordered that excise duty on 78493 yards of art silk cloth removed from the mill illegally without payment of duty should be recovered from the party under rule 3 of the Central Excise Rules, 1944 and personal penalty of Rupees Fifty Thousand (Rs.50,000) should be imposed on the mill under rules 52‑A(6), 210 and 226 of the said rules.

5. Being aggrieved by the above order, the petitioner mill preferred an appeal before the Collector, Central Excise (Appeals), which was rejected on 17‑5‑1973.

6. The petitioner mill thereupon filed a revision petition before the Central Board of Revenue, which was dismissed by a Joint Secretary to the Government of Pakistan on 22‑9‑1973.

7. Being aggrieved by the above three orders of respondents Nos. 1 to 3, the petitioner mill filed a writ petition in the High Court . which is now before me for disposal.

8. On behalf of the petitioner mill it is submitted that actually no Wages register was taken by the Superintendent, Central Excise, from the petitioner mill on 15‑5‑1969, when he purported to take away the three books, but that actually he had left behind the Wage register, was taken petitioner later submitted to the department. It is submitted that the respondents prepared another bogus Wages register at a latte; stage in order to frame the petitioner mill with the false charge of having illegally produced extra art silk cloth. It is submitted that the true Wages register which are the signature of the mills workers shows the time production., mentioned in, RG-I register. It is further submitted that before taking into consideration the fake register, the respondent should have examined some worker! or some body so that corroborative evidence was on the record from which it could be stated that this was the actual Wages register which the Superintendent had taken into custody with the other two registers on 15‑5‑1961. It is next contended that neither the show‑cause notice issued on 1‑4‑1970 nor any of the three impugned orders of respondents Nos.1 to 3 clearly state the amount due and payable by the petitioner mill as excise duty. It is next contended that the value of the goods had to be worked out under sections 3 and 4 of the Central Excises and Salt Act, 1944, and the order does not show what was the value of the goods on the day they were removed and what was the rate of Central Excise duty leviable an that day, with the result that the petitioner had been deprived of the knowledge of both the value of the goods and the rate of duty, so that in case they wanted to object to the same they could have done so.

9. On behalf of the respondents it is submitted that on 15‑5‑1969, the Superintendent, Central Excise, Lyallpur, who visited the premises of the petitioner, did take possession of three registers from the premises, one of which was the Wages register maintained by the petitioner, but in order to show that the same was not taken into possession, the petitioner mill had tried to create circumstances and evidence to show that the same was not taken into possession, but, left behind and they thereafter produced another Wages register all duly made up, with entries therein to confirm with the RG‑1 register maintained by the petitioner mill. It is submitted that on 15‑5‑1969 a Wages register was taken into possession by the Superintendent, Central Excise, Lyallpur, which is apparent from the memo of Mr. Fazal Mahmood dated 15‑5‑1969 under his own hand, which confirms that such register was taken into possession by the Superintendent. It is further submitted that though the show cause notice and the three impugned orders of respondents Nos.1 to 3 had not shown the total amount of the Central Excise duty evaded by the petitioner on the art silk cloth produced by It during the period 15‑1‑1969 to 15‑5‑1969, it was clear from the said notice and the impugned orders that the art silk cloth clandestinely removed by the petitioner without gate pass was 78493 yards, that the Central Excise duty under item 15‑B of Schedule I of the Central Excises and Salt Act, 1944, was 5% ad valorem and that the value of the goods was determined according to the values earlier determined in respect of the same cloth during the same period January 1969 to May 1969. it is submitted that according to this method, the Central Excise duty evaded by the petitioner mill was Rs.10,237 and‑ that though it was not stated in the three impugned orders, it was deducible therefrom.

10. I have given my anxious consideration to the arguments , of the learned counsel for the petitioner and the respondents. The first question that arises is whether the Wages register of the petitioner mill was taken Into possession by the Superintendent, Central Excise, Lyallpur, on 15‑5‑1969, when he visited that mill, It is the case of the respondents that it was. It is the case of the petitioner mill that it was not and that they had actually produced the real Wages register, later before the Excise Authorities, but that in the meantime another had been manufactured by the Central Excise officers who were trying to use it as the one originally taken into possession by them. The Deputy Collector, Lahore, who took evidence in the matter, held that the Wages register which was originally being maintained by the petitioner mill was taken Into possession by the Superintendent, Central Excise, from the premises of the petitioner mill on 15‑5‑1969 and that the second Wages register which was produced by the petitioner mill later was a fabricated one and could not be accepted as valid piece of evidence. In this connection, he took into account two strong pieces of evidence in favour of the department. First. the statement of the Superintendent, Central Excise, who was a Gazetted Officer and who had seized the three registers from the factory. Second, the fact that Mr. Fazal Mahmood, owner of the (Ijaz Nisar, J) petitioner mill, in his memorandum dated 1.5‑5‑1969, had admitted that three registers had been taken into possession by the Superintendent, Central Excise, one of which was the Wages register. Both these items of evidence are strong incriminatory pieces of evidence to show that the Superintendent, Central Excise, did take the original Wages register belonging to the petitioner mill from the premises of the said mill on 15‑5‑1969. The respondents were, therefore, within their rights to take into consideration entries therein showing production of excess quantities of art silk cloth produced by the petitioner mill during the period 15‑1‑1969 to 15‑5‑1969, as opposed to that declared by them and shown in their other registers R.G.1 and EB‑

4. It is clear that the second Wages register produced by the petitioner mill was fabricated one to cover their mis‑deed and I have no hesitation in holding that the same was rightly treated as fabricated register and not accepted in evidence.

11. The only question that now remains is the legal effect arising out of the three impugned decisions of respondents Nos.1 to 3, in which the value of the goods, and the rate of duty applied and the total amount of the excise duty due and payable by the petitioner mill has not been given. Under section 3(1) of the Central Excises and Salt Act, 1944, central excise duty is levied and collected in the manner prescribed on all excisable goods produced or manufactured in Pakistan as and at the rates set forth in the First Schedule thereto. Section 4 of the said Act provides the manner of valuation of excisable goods, subsection (1) deals with the determination of the value for ad valorem assessment, subsection (2) provides for determination of retail price and subsection (3) lays down the manner in which "charges" have t6 be determined in respect of excisable services specified in Part (11) of the First Schedule to the Act. In this view of the matter, it was necessary for respondents Nos.1 to 3, when passing their orders, not only to have merely stated that the petitioner mill have evaded central excise duty on 78493 yards of art silk cloth illegally removed from the mill premises without payment of central excise duty, which should be recovered from the petitioner mill, but to have also stated the manner in which the value of the goods was assessed, the rate of duty leviable and the total central excise duty that was to be recovered from them. On the same being stated, the petitioner mill could have objected to the same in appeal or revision, in case they found that the value had been improperly worked out, or that the rate of duty applied was excessive. The imposition of personal penalty of Rs.50,000 on the petitioner mill without working out the actual duty recoverable from the petitioner mill is not in keeping with the tenor of rules 52‑A(6), 210 and 226 of the Central Excise Rules, where penalty is leviable at a fixed amount or by a number of times the duty is chargeable on goods, whichever is greater. It is not until the total duty recovered is worked out by an officer that he can really decide whether the fixed amount of penalty should be imposed or the same amount or twice the amount or ten times the amount of the duty chargeable on such goods, whichever is greater, should be imposed. In Manzoor Glass and Ceramics Ltd., Karachi v. Government of Pakistan P L D 1976 Kar. 410, where the Central Board of Revenue had remanded the case to the Collector to assess the goods and to fix the central excise duty on it payable in respect of glass bottles manufactured by it, but maintained the penalty of Rs.75,000 as order by the Collector, Central Excise, the Supreme Court set aside the order of imposition of penalty on the ground that as the case ha been remanded for assessment of duty and as penalty was relateable to the actual evasion of duty, the order of the Central Board Revenue confirming the penalty, whilst remanding the case, was without lawful authority and of no legal effect. The impugned order of respondents Nos.1 to 3 to the extent that they have not work out the value of the goods, or shown the rate ,of excise duty leviable or the total amount of the central excise duty recoverable from the petitioner mill in respect of the art silk cloth illegally removed b them from the premises, the case requires to be remanded for determination of all these matters.

12. For the foregoing reasons, this petition is accepted and the orders of respondents Nos.1 to 3 dated 2‑11‑1972, 17‑5‑1973 an 22‑9‑1973 are declared to having been passed without lawful authority and as having no legal effect and are, therefore, set aside. The case is remanded back to the Deputy Collector, Lahore, for determiner the value of the 78493 yards of art silk cloth illegally removed b the petitioner mill from their premises without payment of duty, the rate of date leviable thereon and the total amount of duty to b recovered from the petitioner mill, together with any penalty to b imposed. There shall be no order as to costs. A.A./A-300/L Case remanded