1989 PLP 4578 (MLD)

SAJJAD ALI SHAH, J.--This petition is filed under Article 199 of the Constitution of Islamic Republic of Pakistan, in which grievance of the petitioners is that action of respondents in declaring subject goods namely white spirit (solvent 30/40) xylene and toluene to be covered by heading 03.14 and 03.16 and as such excluded from exemption claimed in respect of them under notification dated 28th June, 1979, is illegal and without lawful authority. After hearing counsel for both parties, on 30th August, 1988 by a short order, we had set aside impugned orders and allowed petition by remanding the case to respondent No. 1 for fresh decision in Revision application. Reasons m support of that short order are as under:-- Petitioners are manufacturers of Paints and its ancillaries and further claim that their products are classifiable under item 04.03 of the First Schedule of the Central Excises and Salt Act, 1944 (hereinafter to be referred as the said Act) for the purpose of payment of excise duty at the rate mentioned therein. On 28th June, 1979, respondent No. 1 namely Ministry of Finance, Government of Pakistan issued Notification S.R.O. 555(1)/79 granting exemption as contemplated under section 12-A of the said Act from payment of excise duty in respect of goods classified under item 04.03, which arc described in detail including "thinners'". According to the petitioners, exemption was allowed to he availed subject to observance of procedure in rule 96-TT of the Central & Excise Rules, 1944 (hereinafter to be referred as the said rules). Rule 96-TT requires manufacturer to execute a bond for removal of goods without duty. Petitioners claim exemption from payment of duty in respect of white spirit, xylene and toluene, which are according to them "thinners" as they are liquids to be added to Paints and varnishes to facilitate application. It is admitted by the Petitioners that they procure aforementioned three items from Pakistan State Oil Company, in respect of which they had applied to respondent No.3 Assistant Collector in form AR-3 through their letter dated 2nd May, 1983 for receipt of the said duty free "thinners". In the process Petitioners were required to produce approved caliberation charts for the storage tanks, which they did and executed bond. Subsequently they were allowed to receive white spirit (solvent 30/40), xylene and toluene on Form AR-3 in terms of Notification dated 29th June, 1979 without payment of duty. On 15th December, 1983. Petitioners were served with show- cause notice by respondent No.3 Assistant Collector, in which it was alleged that three items mentioned above were not ancillaries of goods falling under heading 04.03, hence there was evasion of excise duty amounting to Rs.9,80,547.88 paisas. It is stated that this notice was not acted upon and subsequently on 9th February, 1984 another similar notice was issued. Hearing took place before respondent No. 2(Deputy Collector-11) and in order dated 22nd March, 1984 it was held by him that subject goods mentioned above were not covered by the exemption sought through procedure under rule 96-TT for the reason that these goods are classified in the excise schedule under heading 03.14 and 03.16 and are being claimed by manufacturers as petroleum products. Amount of duly mentioned in the Show -Cause Notice was ordered to be recovered alongwith penalty of Rs.10,

000. Petitioners filed appeal, which was dismissed by respondent No.5 (Collector Appeals) vide order dated 26th May, 1984. Against decision in appeal, Petitioners filed Revision before respondent No. 1 (Ministry of Finance, Government of Pakistan), which was dismissed vide order dated 9th January, 1986. Having lost in all the forums provided in the frame work of the said Act, Petitioners have invoked constitutional jurisdiction of the High Court by this petition in which orders passed by respondents mentioned above, have been impugned. During the hearing of Petition before us, on behalf of Petitioners several contentions were raised and we do not propose to go into them at present for the reason that main controversy between the parties appeared to be about the meaning or definition of "thinners" mentioned in the notification of exemption dated 28th June, 1979. In the said notification under heading 04.03 goods are described as all sorts of Paints including products known or used as cement paints, pigments, distempers, colours, dyes, enamels, varnishes, glazes, lusters, thinners, blacks, cellulose lacquers and polishes .Now according to the Petitioners three subject items or goods namely white spirit (solvent 30/40), xylene and toluene are thinners and used in Paint, therefore, they are covered under exemption from payment of duty. On the other hand, stand taken by the respondents as reflected in the impugned orders as well as counter-affidavit of Mr. S.M. Younis Wasti, Superintendent (Law) of the Central Excise and Land Customs, filed in this petition, is that the three subject items mentioned above do not constitute as ancillaries of Paint and as such do not fall under heading 04.03 of the Central Excise Tariff but are classified in the Excise Schedule under heading 03.14 and 03.16 respectively. Reliance is placed on general rule of interpretation that heading providing specific description would take precedence over heading providing general description. In other words it is admitted by respondents that word "thinners" used in heading 04.03 is of general description and is open to many meanings. Mr. Imam Ali Kazi, Deputy Attorney-General Pakistan argued before us on behalf of respondents that subject items are Petroleum Products and that is why they are mentioned in headings 03.14 and 03.16 which are included in the chapter relating to Petroleum Products. It was further contended by him that subject items, as such having been purchased from Oil Company are not "thinners" as contemplated by heading 04.03 unless some other ingredients are mixed with subject items to make them "thinners". Without making any comment one way or the other on the contentions raised by the parties before us, we feel that the main controversy between the parties is as to what is the meaning or definition of word "thinners" used in description of goods in heading 04.03 in respect of which exemption is being claimed. Both parties put forward descriptions or meanings which are different from each other. What is the meaning or description of "thinner" mentioned under heading 04.03 is essentially a question of fact, which cannot be answered in a Writ Petition filed invoking constitutional jurisdiction of the High Court. All other contentions raised by the parties revolve round this controversy, which is to be resolved first. Even in the counter-affidavit filed on behalf of respondents in this petition, stand is taken in paragraph 19 that this petition as filed involves detailed examination of facts as such is liable to be dismissed. Like wise Petitioners themselves have stated in paragraph `F' of the ground in the memorandum of petition at page No. 33 of High Court record and typed page 17 of the Petition that as a matter of fact no effort has been made by any of the respondents to ascertain the real nature of products in dispute. For the facts and reasons mentioned above, we set aside the impugned orders and allow this Petition by remanding the case to respondent No. 1 for deciding the question of fact as to what is the meaning of "thinner" as described under heading 04.03 of the First Schedule to the Central Excises and Salt Act, 1944 and exemption notification dated 28-6-1979. It is further directed that this question of fact is to be decided after giving full opportunity to both parties to produce evidence in the revision application which is deemed to be pending before the Respondent No.

1. M.Y.H./B-111/K