2009 PLP (Trib (PTD)

MUHAMMAD RAMZAN, MEMBER (TECHNICAL).

Messrs Khyber Chemical Corporation Near Ghani Glass, Hattar Haripur (hereinafter called the appellants) have assailed through this Appeal No.133/ST/IB/2008 the vires of Order-in-Appeal No.254,of 2008, dated 23-4-2008 passed by the Collector of Customs, Sales Tax and Federal Excise (Appeals), Rawalpindi, Camp Office Custom House, Jamrud Road, Peshawar (hereinafter called the Appellate authority).

2. Mr. Danish Ali Qazi, Advocate along with Mr. Sikandar Nawaz, Manager appeared on behalf of the appellants and stated that the Order?in-Original No.377 of 2005, dated 20-6-2005 had been passed ex parte and the appellants obtained copy of the show-cause notice and Order-in-Original after the receipt of recovery notice. The appellate authority also failed to appreciate the point of view of the appellants and upheld the impugned order without examining the facts of the case. They claimed that basically four allegations i.e. (i) separation of Sales from February, 2003 to June; 2003 and evasion of sales tax of Rs.58590; (ii) claim of inadmissible input tax adjustment of Rs.37479 during the period February to June, 2003 in violation of section 7; (iii) violation of the provisions of section 73 for the same period for an amount of Rs.331000 and (iv) violation of section 23 for issuance of sales tax invoices for sales tax amount of Rs.14550 for the period March, 2003 have been levied against the appellants without any legal substance. The appellants contended that as per their record, they were manufacturing and supplying two grades/types of sodium silicate with different contents/ consumption of soda ash and had also charged different prices showing value addition higher than any other manufacturer of identical goods in the jurisdiction of the respondents. They had also claimed adjustments after receipt of invoices and had made payments through bank cheques without any violation of sections 7 and 73 of the Sales Tax Act, 1990. The registration number on their sui gas bills was not mentioned by the Sui Northern Gas Authorities for the period February to June, 2003 as .the condition for mentioning of the registration number was imposed through the Finance Act, 2003 effective from 1st July, 2003. Similarly, the application of section 73 also remained suspended till 30th June, 2004. They also maintained that the compliance of section 73 by the appellants stands admitted by the respondents who had not instituted any case against the suppliers of soda ash .to the appellants. They requested that the impugned orders being against the facts and records produced by them may be quashed and their appeal may be accepted.

3. Syed Mir Ghais Ali Shah, Senior Auditor appeared on behalf of the respondents and stated that the appellants had neither supplied any manufacturing formula or records showing production of two types of sodium silicate at the time of audit. The price difference i.e. Rs.4.93/5.17 per k.g. from soap industries and Rs.5.50/kg from packing industry did not justify the consumption of soda ash @ 26.67% and 50% respectively. The Senior Auditor also claimed that the suppliers of soda ash namely Messrs Ali Brothers Peshawar to the appellants were situated outside the jurisdiction of the respondents and therefore, it was not possible to confirm as to whether or not the appellants had made payments through the bank instruments. He requested that the impugned orders may be maintained because the value addition shown by the appellants was only 7.38% which was nominal and did not justify the economic/financial feasibility of the appellants who had also failed- to produce bank statement or copies of bank cheques/instruments to prove that conditions of section 73 of the Sales Tax Act, 1990 had been complied.

4. I have heard both the parties at length and perused the case record in detail. The appellants have provided evidence in support of their contention that they were' engaged in manufacturing of two categories of sodium silicate and had charged different price for each category. The perusal of Invoice No.264, dated 7-2-2003 also confirms that they had supplied sodium silicate in a tanker to Messrs HMC, Taxila and the quantity of sodium silicate in drums also varied from 100 kg to 110 kg. The respondents have also admitted in writing that the value addition (7.38%) made by the appellants was higher than the value addition of 3.5% worked out in case of Messrs Bismallah Chemical Corporation (Pvt.) Ltd. and that of minus 15% worked out in case of Messrs Prime Chromium (Pvt.) Ltd. engaged in the manufacturing and supply of identical goods. The respondents have also admitted that no case for the violations of section 73. had been instituted against the suppliers of sodium ash to the appellants which leads to the conclusion that the appellants had made payments of over Rs.50000 through bank cheques as has been confirmed by the suppliers namely Messrs Ali Brothers, Peshawar in the instant case. However tax profile of the appellants produced by the respondents shows that the input tax as well as output tax had not been correctly shown with reference to sales tax charged/paid @ 15% on supplies/purchases. The appellants have not been able to rebut this documentary evidence. In view of these facts, the impugned order is set aside and the case is remanded to the adjudicating authority for de novo consideration in the light of findings of a fresh audit of the records of the appellants and passing of a speaking order after affording opportunity of hearing to both parties.

5. Announced.

6. Parties may be informed accordingly. H.B.T./114/Tax(Trib.)????????????????????????????????????????????????????????????? Case remanded.