1982 PLP 247 (PTD)

The petitioner is a registered firm and is engaged in the manufacture of laundry soap. For this purpose it has two factories situate on Sillanwali Road and Railway Road Sargodha. It employs two different processes for the manufacture of the laundry soap at the two factories. Thus, in its factory at Railway Road it manufactures soap without the aid of power, steam or gas whereas in its factory at Sillanwali Road it uses such aids.

2. The manufacture of laundry soap is ordinarily subject to the levy of excise duty. By a notification dated 12‑6‑1964 the Central Govern ment exempted the manufacture of laundry soap from this liability under certain circumstances. The notification in question reads as follows :‑ "In exercise of the power conferred by subsection (1) of section 12‑A of the Central Excises and Salt Act, 1944 (1 of 1944), and in super session of Ministry of Finance Notification No. S. R. O. 13 (R), dated the 8th June, 1963, the Central Government is pleased to exempt with effect from the 13th June, 1964 laundry soap produced without the aid of power, steam or gas from the whole of the excise duty leviable thereon under the said Act." Despite the exemption granted by the Central Government the Ins pector, Central Excises served a demand notice upon the petitioner to pay excise duty in respect of the laundry soap which it had manufactured at its Railway Road factory. The petitioner challenged the legality of this notice through a writ petition (W. P. No. 1502 of 1964) in this Court. This petition was admitted to a regular hearing but before it could be decided the demand notice was withdrawn.

3. On 21‑11-1964 the Central Government amended the above mentioned notification. After the amendment the notification reads as follows :‑ "In exercise of the powers conferred by subsection (1) of section 12‑A of the Central Excises and Salt Act, 1944 (l of 1944), and in super session of the Ministry of Finance Notification No. S. R. O. 13 (R), dated 8th June, 1963, the Central' Government is pleased to exempt with effect, from 13th June 1964 laundry soap produced without aid of power, steam or gas by a manufacturer who does not manufacture any other kind of soap, from the whole of the excise duty leviable thereon under the said Act." It will be noticed that after the amendment the exemption from the levy of excise duty became restricted to only such manufacturers who did not make any other kind of soap. On 1‑2‑1965 the Inspector, Central Excises, served another demand notice upon the petitioner in respect of the laundry soap, manufactured at the Railway Road factory subsequent to the amendment. The petitioner protested against the levy with the Collector of Central Excises on the ground that as it did not prepare any other kind of soap in any of its two factories the laundry soap manufactured by it continued to remain exempt even after the amendment. Its representation was rejected by the Collector on the ground "Under Ministry of Finance Notification S. R. O. 38(R)/64, dated 12‑6‑1964 as amended by Notification S. R. O. 116 (R)/64, dated 21‑11‑1964 laundry soap produced without the aid of power, steam or gas is exempt from duty provided the manufacturer does not produce any other kind of soap. The words `other kind' occurring in the above notification does not specifically mean other variety (whether laundry or toilet) produced by the manufacturer with the aid of power." Upon this the petitioner filed this writ petition to challenge the legality of the demand notice.

4. The petitioner states that it does not produce any kind of soap except the laundry soap in any of the factories owned by it. Its asser tion in this regard has not been challenged by the respondents. This being so the main question for consideration is if under the amended notification the petitioner has lost the exemption which it had earlier enjoyed. In this context it is to be noticed that under the amended noti fication the exemption has been taken away in respect of only those manufacturers' who produce apart from the laundry soap other kind of soaps as well. As it is not disputed that the petitioner does not manu facture any other kind of soap it is difficult to see how it can be said to have lost the exemption on account of the amendment brought in the notification.

5. The contention on behalf of the respondents is that the words any other kind of soap occurring in the amended notification referred to and included any other kind of process used by the manufacturer for the preparation of laundry soap. In support of this contention reliance has been placed upon a decision of the Supreme Court reported as Amin Soap Factory v. Government of Pakistan (P L D 1976 S C 277) which affirmed a decision of the High Court in Amin Soap Factory v. Government of Pakistan (P L D 1968 Lah. 1103). It may at once be stated that these decisions have no relevance to the case before me as there the Supreme Court was considering the question whether while issuing a notification of exemption under section .12‑A of the Central Excises and Salt Act the Government was competent to draw a distinc tion between one manufacturer and another. On the other hand in the case before me the competence of the Government is not in dispute and I am concerned entirely with the construction of the amended notification.

6. The contention of the respondents 'that the words `any other kind of soap' should be taken to include and refer to any other kind of process as well cannot be accepted without reading more words in the notification than have been inserted by the amendment. In my opinion the said words refer only, o the finished product and not to the process by which it is prepared."' If the intention had been to exclude manufacturers who made laundry soap through other processes as well the notification would have plainly said so; as it stands, the exemption continues to available to manufacturers who do not make any other kind of soap in respect of laundry soap so long as they do not take the aid of power, steam or gas in its preparation. I should therefore think/ that even under the amended notification no demand for excise duty could be raised in respect of the laundry soap manufactured by .the petitioner at its Railway Road factory. Consequently, the demand notice sent by the Inspector, ‑Central Excise upon the petitioner and the com pulsory exactions made for the period from 19‑2‑1965 to 16‑4‑196: were entirely illegal. I would therefore direct the respondents to refund the, amount Rs. 34,409.11 which bad been compulsorily recovered from the petitioner as excise duty despite the notification of exemption.

7. The petitioner has also challenged the levy of sales tax and rehabili tation tax on the ground that these demands had already been paid by it. This is a matter of accounts and checking of its receipts. The petitioner should take up this matter with the relevant authorities I have no doubt whatsoever that if these taxes. have been twice paid the said authorities will make appropriate funds.

8. For the reasons stated above this writ petition is accepted in the above terms with costs. Writ petition accepted.