1990CLC838 (PLP)

SAEEDUZZAMAN SIDDIQUI, J.‑‑The petitioner has challenged the recovery of Re.75,563 as excise duty on stock of cotton yarn weighing 75,563 Kg. at the rate of Re.] Kg. produced during the period July to December, 1979, as without lawful authority. The petitioner is engaged in the business of manufacture of Cotton Textile, Cotton Yarn and Man Made yarn. The petitioner claims that on 28‑6‑1979 they had in stock Cotton yarn weighing 75,563 Kg. which was manufactured/produced during the period July, 1978 to 28th of June, 1979. It is also alleged that vide S.R.O. No.810(1)/78 dated 29‑6‑1978 the cotton yarn was exempted from payment of excise duty. The respondent, it is alleged, in spite of above exemption available to petitioner, recovered from them a sum of Rs.75,563 by way of excise duty on the above stock of cotton yarn between the period July, 1979 to December, 1979. The petitioner through their counsel served a notice dated 7‑6‑1980 on the respondent calling upon him to refund the amount of Rs.75,563 recovered illegally from them by way of excise duty on the stock of cotton yarn which was in existence on 28‑6‑1979. The respondent replied the above notice of petitioner on 11‑6‑1980 which is as follows:‑ To Mr. Rashida Patel, Advocate, 13‑B, Moulvi Tamizuddin Khan Road, (now Queens Road),, Lalazar Road No.2, Karachi‑

2. COTTON YARN HELD ON 28‑6‑1979 Please refer to your letter dated 7th June 1980 on the subject quoted above. It is brought to your notice that the judgment of Lahore High Court referred to in your letter under reply cannot be said to be generally applicable for all factories. As such the above judgment was passed in a particular case on filing Const. Petition in the Lahore High Court. Therefore, your plea is not feasible under the circumstances and is rejected. After receipt of the letter produced above, the petitioner filed the above petition in this Court challenging the levy and recovery of excise duty by the respondent on the above stock of cotton yarn held by the petitioner as on 28‑6 1979. The respondent to the above petition has filed no counter‑affidavit nor any one is present on its behalf today. From the reply dated 11‑6‑1980 sent by the respondent to the notice of the petitioner dated 7‑6‑1980, it is quite clear that the assertion made by the petitioner that on 28‑6‑1979 they had in stock manufactured cotton yarn weighing 75,563 Kg. was not disputed. However, the refund of the amount claimed by the petitioner was denied by the respondent on the sole ground that the judgment in the case of Colony Thal Textile Mills Ltd., Mianwali v. Assistant Collector, Central Excise and Land Customs, Faisalabad and others reported in PLD 1980 Lah. 377 was not applicable generally to all the cases. In the above referred case a learned Single Judge of Lahore High Court while dealing with a similar case held that by virtue of S.R.O. 810(1)/78 dated 29‑6‑197'7; no excise duty was payable on cotton yarn, twist and thread or yarn of man‑made fibres. It is further observed in the above case that notification No.SRO 810(1)/78 was subsequently superseded by the Central Government by SRO No.555(1)/79 dated 28‑6‑1979 and under the letter S.R.O. excise duty at the rate of Rs.1 per Kg. was made payable on the cotton yarn. It was accordingly held in the above‑cited case that on the stock of cotton yarn which was produced before coming into force of SRO.No.555(1)/79 dated 28‑6‑1979 no excise duty was payable. We are in agreement with the view expressed in the above case. In A the case before us the petitioner claimed that they had in stock on 28‑6‑1979, 75,563 Kg. of cotton yarn which was produced by them before S.R.O. 555(1)/79 dated 28‑6‑1979 became operative. This position is not disputed by the respondent as would appear from its reply dated 11‑6‑1980. We, accordingly accept this petition and declare that the demand and recovery of the sum of Rs.75,563 by the respondent from the petitioner by way of excise duty on the stock cotton which was produced before 28‑6‑1979, as without lawful authority and of no legal effect. The respondents are directed to refund the amount of excise duty to petitioner illegally recovered by them. There will be no order as to costs. M.Y.H./J‑82/K Petition allowed.