1988 PLP 377 (CLC)

in which the average count of yarn is less than 17s; (2) Medium cotton fabrics‑that is to Nineteen paisa say all fabrics, other than the per square yard. fabrics mentioned in sub‑item (4) in which the average count of yarn is 17s or more but is less than 35s; (3) Fine cotton fabrics‑‑that is to Thirty one paisa say fabrics, other than the per square yard fabrics mentioned in sub‑item (4), in which the average count of yarn is 35s or more; (4) Tapestry, curtain fabrics, bed Thirty‑one paisa covers and table covers, per square yard. regardless of the count of yarn of which they are made. The Explanations appearing under item 15‑A have not been reproduced above. It is admitted between the parties that the cotton cloth and cut fabrics printed by the petitioner company come in the category of "Fine cotton fabrics" i.e. in which the average count of yarn is 35s or more. From the classification given above, "cotton fabrics" means fabrics of any description "manufactured" either wholly or partly from cotton. The definition of the word "manufacture" under section 2(f) of the said Act includes "any process incidental or ancillary to the completion of a manufactured product". It is, therefore, clear that if a second party completes any one or more processes incidental or ancillary to the manufactured product not completed by the first, both parties would be strictly liable to duty. What would be the effect as regards double taxation would depend upon the law or rules on the subject, as pointed out by the Supreme Court in Superintendent of Central Excise, Lyallpur v. Ch. Faqir Muhammad P L D 1959 S C 103, or on principle of pure law which bars double taxation. In the instant case, the cloth and cut pieces woven in the powerloom factory of Muhammad Shafi and Muhammad Rafiq were initially exempt from duty. The said cloth and cut pieces went through the process of printing at the Mills of the petitioner company. The word "manufacture" includes any process incidental or ancillary to the completion of the manufactured product. Thus, the petitioner company was liable under item 15‑A(ii) of the First Schedule to the Central Excises and Salt Act, 1944, in respect of excise duty. If any authority is required for this view, the two cases of the Chanab Woollen and Textile Mills Limited P L D 1968 Lah. 1116 and 1969 S C M R 974 may be cited.

6. However, the above does not complete the picture. The Central Board of Revenue's Press Note dated 16‑9‑1963 has been pressed into service by the petitioner company, which requires examination. But before doing so, the said Press Note and some of the relevant examption notifications issued under rule 8 require to be stated:

7. Under Notification No. 2 dated 29‑4‑1949, the Central Government exempted: "Cloth of handloom origin sent to factories for calendering, dyeing and bleaching from the duty leviable under item 15 of the First Schedule to the Central Excises and Salt Act, 1944, as amended by the Pakistan Finance Act, 1948" Under Notification No. 3 dated 15‑3‑1954, the Central Government exempted: "from the whole of the duty leviable under the Central Excises and Salt Act, 1944, cloth which undergoes any textile printing, dyeing, bleaching or sizing process in factories in which less than twenty persons are working on any one day". Under Notification S.R.O. 905(k), dated 23‑7‑1960, the Central Government exempted: "Fabrics, other than fabrics of man made fibres, manufactured by or on behalf of the same person in one or more factories commonly known as powerloom factories, which are equipped with not more than four powerlooms in all, and have no spinning plant or warp knitting machine". On 16‑9‑1963, the Central Board of Revenue issued a Press Note reading as follows: "No. NML ‑ 8245/63 E.No.3684 K "EXCISE DUTY ON CLOTH CLEARED FROM PROCESSING FACTORIES CONFUSION REGARDING EXEMPTION CLARIFIED There appears to be some confusion in certain quarters regarding liability to Excise duty on cloth cleared from processing factories. It is hereby clarified that exemption has been granted in respect of cloth which undergoes any bleaching, printing, dyeing, or calendering process in factories which employe less than twenty workers in one shift. In the case of larger processing factories, Excise duty shall not be charged on the value added by processing in respect of the following categories of cloth:‑‑ (i) Handloom Cloth (both cotton and Art Silk). (11) Cotton cloth woven in powerloom factories equipped with not more than four power‑looms and, (iii) Cotton and art silk cloth woven in factories equipped with not more than twenty power‑looms which pay excise duty on the number of power looms installed. While all processing factories have to take out the prescribed Excise Licence, no excise accounts have to be maintained by such processing factories as are entitled to exemption. Nor any such factories required to execute a bond or deposit any security. Central Board of Revenue Government of Pakistan Karachi, September 16, 1963." This Press Note has been admitted by the Central Excise Department as having been issued by it, in its parawise comments.

8. Under section 2(c) of the Central Excises and Salt Act, 1944, a factory means any premises wherein or in any part of which excisable goods are manufactured, or wherein or in any part of which any' manufacturing process connected with the production of such goods is being carried on or is ordinarily carried on. In law, therefore, a, mill or factory which is a composite one, that is to say, which conducts spinning, weaving or processing operations, or which conducts only one operation, such as spinning, weaving or processing, is a "factory". The law does not distinguish "spinning factories" from "weaving factories" or "processing factories". For all 'intent's and purposes they are "factories", though they may be referred distinctly as "spinning factories", "weaving factories" or "processing factories", in order to denote the operation which may be the subject of discussion. The Press Note of 16‑9‑1963, clearly states that in the case of large processing factories, excise duty shall not be charged on the value added by processing in respect of (i) handloom cloth (both cotton and art silk), (11) cotton cloth woven in power loom factories equipped with not more than four power looms and (iii) cotton and art silk cloth woven in factories equipped with not more than twenty power looms which pay excise duty on the number of power looms installed. The words "large processing factories" should not be taken therefore, as confined only to processing factories, but also to composite mills as well which conduct processing operations. The Press Note obviously exempts factories employing more than twenty workers in one shift or having more than four powerlooms from excise duty in respect of cloth processed by ft, if the same has earlier been woven in power‑loom factories equipped with not more than four power looms.

9. Under para 56 of the Secretariat Instructions" issued by the Establishment Division, President's Secretariat, Government of Pakistan, a Press Note is issued 'when it is sought to give publicity to a decision of Government". It is ordinarily prepared in consultation with and issued through the Press Information Department. Obviously, a Press Note can only be issued on administrative instructions issued by the department concerned.

10. The administrative department in this case was the Central Board of Revenue. The Press Note, therefore, had the effect of administrative instructions issued by the Central Board of Revenue. Since the Central Board of Revenue is competent to alter or amend rules, the said Press Note can be treated as effective and binding as statutory instruction issued under section 233 of the Central Excises and Salt Act, 1944. (See the Province of West Pakistan v. Zafar Ali Shah P L D 1964 S C 21, where administrative instructions contained in a Inemorandum issued by the authority competent to alter or amend the rules, were treated as effective and binding as statutory rules). Depatmental construction placed on the provision of a statute or rules by the administrative authority concerned, charged with the execution of the statute or the rules, has to be respected and given effect. (See Nazir Ahmad v. Pakistan and 11 others P L D 1970 S C 453). In these circumstances, it cannot be ignored that the Press Note of 16‑9‑1963 had the force of statutory instructions issued by the Central Board of Revenue in respect of the subject in hand. However, the only difficulty in the way of the petitioner is that it cannot be applied with retrospective effect. The Press Note was issued in the financial year 1963‑64, whereas the case of the petitioner falls in the financial year 1962‑

63. Subordinate legislation cannot be considered retrospectively. See Government of West Pakistan v. Nasir M. Khan P L D 1965 S C

106. The Press Note is not applicable to the case of[ the petitioner company.

11. With respect to the submission of the learned counsel for the petitioner company that sales tax in any case was not due and payable in respect of the printing operation, by virtue of the exemption granted to cotton fabrics under item No. 54 of Central Government's Notification No. 9, dated 27‑6‑1951, I am afraid the same is not tenable, in view of the fact that item Nos. 54 to 56 were actually added to the said notification in June, 1967, and were non‑existant in the financial year 1962‑63.

12. The upshot of the above discussion is that the petitioner company was liable to pay the excise duty and the sales tax, as demanded by the Government, on the printing operations conducted by it. There being no merit in this petition, the same is dismissed with costs.

13. I am informed by the learned counsel for the Customs Department that though the petitioner company has alleged in its writ petition that the excise duty and sales tax were paid by it, but actually they were not so. In case the same have not been paid, the department shall be entitled to realise the same, in accordance with law. M . B . A . / N‑86 Petition dismissed.