P L D 1984 Karachi 522 (PLP)

NASIR ASLAM ZAHID, J.-This judgment will dispose of the following Constitutional Petitions :- No. of Petition Name of Petitioner

1. D-35/83 Firdaus Spinning and Weaving Mills Ltd.

2. D-38/83 Naveed Textile Mills Ltd.

3. D-1.27/83 Central Cotton Mills Ltd.

4. D-128/83 Fatima Textile Mills Ltd.

5. D-225/83 Central Cotton Mills Ltd.

6. D-305/83 Shahryar Textile Mills Ltd.

7. D-329/83 Naveed Textile Mills Ltd.

8. D-446/83 Mohib Textile Mills Ltd.

9. D-562/83 Jamhoor Textile Mills Ltd.

10. D-840/83 Nishat Mills Ltd.

11. D-8/84 Rashid Textile Mills Ltd.

12. D-101/84 M. F. M. Y. Industries Ltd.

2. The point involved in these constitutional petitions is the inter pretation and vires of Explanation (ii) in Notification No. S. R. O. 702(1)/ 80, dated 26-6-1980 issued by the Government of Pakistan, Ministry of Finance and Economic Co-ordination, in exercise of the powers conferred by section 19 of the Customs Act, 1969. The petitioners in these cases are carrying on business inter alia as manufacturers of cotton yarn. According to the petitioners, the yarn produced by the petitioners is sold on cones around which the yarn is wound and this winding process can be manual or mechanical. It is further the case of the petitioners that the yarn produced by them and which is wound mechanically around cones fetches a higher price in the local market as well as in the international market as compared to yarn which is wound manually. For the purpose of mechanical winding of yarn around the cones, the mills use automatic cone-winders also known as auto-cone-winders or autoconers. According to the petitioners, auto-cone-winders are not locally manufactured and are, therefore, to be imported from abroad. According to the petitioners auto cone-winders have been and are exempt from import duties under notifications issued from time to time by the Government of Pakistan under section 19 of the Customs Act, 1969. The petitioners in these constitutional petitions placed orders for auto-cone-winders after obtaining import licences under the Balancing, Modernisation and Replacement Scheme (known as the industrial circles as the "B. M. R. Scheme") and established letters-of-credit in favour of the foreign suppliers. Bills-of-entry were filed by the petitioners in respe6t of these imported auto-cone-winders with the Collectorate-of-Customs at Karachi and claimed that these goods were exempt from duties. However, the Customs authorities directed payment of 40 % import duty on auto-cone-winders imported by the petitioners. The -petitioners have challenged the action of the Customs authorities requiring the petitioners to pay duty as being without lawful authority. Reference here may be made to certain notifications which are relevant. First is the Notification No. S. R. O. 695 (1)/77, dated 4-8-1977 issued by the Govern ment of Pakistan which is reproduced here "GOVERNMENT OF PAKISTAN MINISTRY OF FINANCE, PLANNING AND DEVELOPMENT NOTIFICATION Islamabad, the 4th August, 1977 CUSTOMS S. R. O. 695 (1)/77.-.-In exercise of the powers conferred by section 19 of the Customs Act, 1969 (IV of 1969), and in supersession of this Ministry's Notification No. S. R. O. 372 (1)/72, dated the 8th June, 1972, the Federal Government is pleased to direct that articles falling within beading numbers of the First Schedule to the said Act, specified in the table below, which are machinery or articles for use with machinery or as component parts or spare parts of machinery as defined herein, shall be exempt from so much of the Customs duties leviable thereon as are in excess of 40 % ad valorem. Provided that articles are identifiable as intended for use only with machinery and the case of imports, have been imported for the projects approved by the Government for initial installation or for balancing, modernization, replacement or extension of the exist ing units. Definition of Machinery (i) Machinery, operated by power of any description, such as is used in any industrial process, including the generation, transmission and distribution of power, or used in process directly connected with the extraction of minerals and timber, construction of buildings roads, dams, bridges and similar structures and the manufacture of goods. (ii) Apparatus and appliances, including metering and testing apparatus and appliances specially adapted for use in conjunction with machinery specified in item (i) above. (iii) Mechanical and electrical control and transmission gear adapted for use in conjunction with machinery specified it item (i) above. (vi) Component parts, including spare parts of machinery as specified m items (i), (ii) and (iii) above, identifiable as for use in or with such machinery: TABLE Heading numbers and sub-heads in the First Schedule to the Custom; Act, 1969 (IV of 1969). ' Then there is the Notification S, R. O. No. 820 (1)/78, dated 29-6-1978 which reads as follows :- "GOVERNMENT OF PAKISTAN MINISTRY OF FINANCE, PLANNING AND DEVELOPMENT Islamabad, the 29th June, 1978 NOTIFICATION (CUSTOMS) S. R. O. 820 (1)/78.-In exercise of the powers conferred by section .1,9 of the Customs Act, 1969 (IV of 1909), the Federal Government is pleased to direct that the plant and machinery as defined in this Ministry's Notification No. S. R. O. 695 (1)/77, dated the 4th August, 1977, shall be exempt from the whole of the customs duties chargeable thereon if imported for the projects approved by the Government, for balancing, modernisation or replacement of the existing textile, made up garments, hosiery and towels and for finishing of the textile fabrics units or for initial installation of factories for manufacture of made-up garments, hosiery and towels and for finishing of textile fabrics subject to the condition that it is certified by the Ministry of the Industries, the Textile Commissioner or an Officer authorised by him in this behalf that such machinery is not being manufactured locally.

2. This notification shall take effect on the first day of July, 1978. Explanation.-For the purpose of this notification "textile units" means units manufacturing goods made of cotton, wool, silk and art silk only." The aforesaid Notification S. R. O. No. 802 (1)/78, dated 29-6-1978 was superseded by the Notification S. R. O. No. 702(1)/80, dated 26-6-1980 and this notification is reproduced here GOVERNMENT OF PAKISAN MINISTRY OF FINANCE AND ECONOMIC CO-ORDINATION NOTIFICATION Islamabad, the 26th June, 1980 CUSTOMS S. R. O. 702 (1)/80.-In exercise of powers conferred by section 19 of the Customs Act, 1969 (IV of 1969), and in supersession of this Ministry's Notification No. S.R.O. 820 (1)/78, dated the 29th June, 1978, the Federal Government is pleased to direct that plant and machinery as defined in this Ministry's Notification No. S.R.O. 695 (1)/77, dated the 4th August, 1977, shall be exempt from the whole of the Customs duties leviable thereon if imported by the approved industrial projects of the type specified in column 2 of the-table below for the purposes indicated in column 3 of the said table subject to the condition that it is certified by the Textile Commissioner or an Officer authorised by him in this behalf that such machinery is not being manufactured locally. TABLE S. No. The type of approved projects s~ Purpose for which exemp tion shall be admissible Textile industry ^^~ For balancing, modernization or replacement. 2 Made-up garments, hosiery and For . initial installation towel industry, balancing, modernization replacement or extension. 3 Textile processing industry for - initial installation, modernization, replacement or extension. Explanation (i) For the purposes of this notification `textile industry' means units manufacturing goods made of cotton, wool, silk or art-silk only. (ii) Automatic-cone-winders being a substitute for locally manufactured cone-winders shall not be eligible for the concession under this notification." It is Explanation (ii) of this notification under which the Customs authori ties have claimed that auto-cone-winders are eligible for exemption and are liable to payment of import duty. On the other hand, according to the petitioners, this Explanation does not take away the concession and in any case the said Explanation is invalid. There is another Notification S. R. O. No. 1147 (1)/82, dated 21-11-1982 which reads as follows :- "Islamabad, the 21st November, 1982 S. R. O. 1147 (1)/82.--In exercise of the powers conferred by section 19 of the Customs Act, 1969 (IV of 1969), the Federal Government is pleased to exempt cone-winding machinos imported for balancing, modernisation and replacement of approved textile industries for which letters-of-credit were opened prior to the 26th June, 1980, from the whole of the customs duties subject to the conditions set out in the Central Board of Revenue's Notification No. S. R. O. 702 (1)/80, dated 26th June, 1980."

3. There can be no dispute that under the notification, dated 4-8-1977 auto-cone-winders if imported for balancing, modernisation, replacement or extension of the existing textile units were entitled to exemption from so much of the Customs duties as were excess of 40% ad valorem. There is also no dispute that under the Notification S. R. O. 820 (1)/77, auto-cone. winders if imported under the B. M. R. Scheme were totally exempt from payment of Customs duties. The Notification No. S. R. O. 1147 (1)/82, dated 21-11-1982 had also made clear that in cases where letters-of-credit had been opened prior of 26-6-1980 (the date of Notification No. S.R.O. 702 (1)/8Q) auto-cone-winders imported were exempt from payment of the Customs duties. Howzver, the parties are at issue on the question whether the petitioners are liable to pay Customs duties on the import of auto-cone windere where letters-of-credit had been opened by the petitioners on or after 26-6-1980. In all these petitions, the petitioners had opened letters-of-credit much after 26-6-1980. We have heard Messrs Noor Muhammad, Muhammad Ali Sayeed, Rashid A. Akhund and H..A. Rahmani, Advocates for the petitioners and Mr. Abdul Aziz Munshi, Deputy Attorney-General and Mr. S. Inayat Ali, Advocate on behalf of the respondents.

4. According to Mr. Noor Muhammad, who appeared for the petitioners in Constitutional Petitions D-38/83 and D-329/83, very high quality of yarn is required if it is to be exported as it has to compete in the International market with foreign manufacturers from various countries of the world and auto-cone-winders are not very important components of the yarn-making machinery. It was submitted that for better quality and increased production, auto-cone-winders have become a necessity for the textile machinery. Previously, according to the learned counsel, cone winding was done manually or with the help of manual cone-winders but as in other fields, there has been great improvement in the textile machinery and the manufacture of auto-cone-winders is one of the important improve ments that has been made in the textile machinery for giving better quality and increased production. It was argued that when the Notification, dated 26-6-1980 was made, automatic-cone-winders were not being manufactured in Pakistan and at present only assembly of automatic-cone-winders is being done and even these locally assembled automatic-cone-winders cannot compete in quality with the imported Automatic-cone-winders and in any case the locally assembled automatic-cone-winders cannot be considered as "substitutes" for foreign manufactured automatic-cone-winders. Accord ing to Mr. Noor Muhammad, the Government had been contemplating to start manufacture of automatic-cone-winders in Pakistan in the public sector but when the notification was made on 26-6-1980 that stage had not reached. It was argued that tax statutes and instruments are to be strictly construed and Explanation (ii) in the Notification, dated 26-6-1980 should be interpret ed to mean that only such automatic-cone-winders are subject to customs duties for which there exists a substitute. It was contended that if the intention had been to exempt automatic-cone winders completely, the Notification would have been worded differently and the words "being a substitute for locally manufactured cone-winders" would not have been used in the Notification, dated 26-6-1980. According to the learned counsel, prior to the issuance of the Notification, dated 26-6-1980, automatic-cone-winders imported from the abroad for the purposes of modernisation, balancing or replacement of an existing textile unit were already exempt from payment of Customs duties and if this exemption, which was favourable to the citizens, was sought to be taken away by the Government, clear and un ambiguous words should have been employed in the Notification. Reliance was placed on the following passage at pages 610 and 611 of Crawford on the Construction of Statutes (1940 Edition) :- "Unlike that of the proviso, however, it is apparent that the position of the exception in the statute, is unimportant. But the exception is also subject to the rule of strict construction, that in any doubt will be resolved in favour of the general provision and against the exception, and anyone claiming to be relieved from the statute's operation must establish that he comes within the exception. Indeed, the liberal construction of the statute would, in many instances, seem to require that the exception, by which the operation of the statute is limited or abridged, should receive a restrictive construction. Where, however, a criminal or penal statute is involved, the exception must receive a liberal construction in favour of the defendant. Similarly, an exception appearing in a statute which imposes a burden on the public, must also be given a liberal construction in favour of the public. It was also argued by Mr. Noor Muhammad that so far as his clients were concerned (in Constitutional Petitions Nos. D-38/83 and D-329/ 83) the contracts for import of the automatic-cone-winders were entered into some time in March, 1982 by the petitioners with the foreigner suppliers and that is the date on which the right bad vested in the petitioners, that is if in March, 1982 the petitioners were entitled to exemption from payment of Customs duties, such right vested in them then, and it could not be taken away by issuance of a subse quent notification. Reliance was placed on a Division Bench judgment of Peshawar High Court in the case of Mardan Industries Ltd. v. Govt. of Pakistan (P L D 1965 Pesh. 47) It was observed in that judgment that the subordinate delegat ed Legislature by way of notification is under constitutional disabilty to make notification which is retrospective in operation so as to take away or impair vested rights. Para. 18 of the judgment of the Peshawar High Court may be reproduced here :- "

18. A question may arise as to what is `vested right'. The term `vested right' has not been defined by any statute. The learned counsel for the petitioners invited our attention to the discussion by A. S. Chaudbry, the learned author of Constitutional Rights and Limitations. Among other detinitions at page 587 he defined the terra thus :- `It is an immediate fixed right of present or future enjoyment, and rights are vested in contradistinction to being expectant or contingent.' Continuing further on the same page it is observed :- `It must be a title to the present or future enjoyment of property, or to the present or future enforcement of a demand, or a legal exemption from a demand made by another.' It follows from the above discussion that the petitioners acquired vested rights of exemption of the whole of excise duty when on the faith of the first notification they placed the order for the mach inery of the industrial undertaking. At any rate the petitioners could not be denied of having acquired a vested right in regard to the exemption of the whole of excise duty when the industrial undertaking was completed and went into operation." It was then argued that under the constitutional jurisdiction, the High Court is empowered to order refund of duty already paid under protest which duty is found to be illegal, and even if the duty had been paid, without protest, if it was found by the Court that the duty was ille gally recovered, its refund could be ordered under the constitutional jurisdiction of this Court. Reliance had been placed on the following reported judgments :- (i) Azizuddin Industries Ltd. v. Collector of Central Excise and Land Customs P L D 1967 Dacca

58. It was held that where refund of amount illegally realized by an authority from a petitioner can be claimed on the basis of a. statute such refund can be directed in exercise of the Court's writ jurisdiction. (ii) Collector of Central Excise and Land Customs v. Azizuddin Industries Ltd. P L D 1970 S C 439. - This is the judgment of the Supreme Court in the appeal against the judgment of Dacca High Court reported in P L D 1967 Dacca

58. The correctness of the principle about refund of duty illegally recovered in writ jurisdiction laid down by the Dacca High Court was challenged in the Supreme Court but it was not upset by the Supreme Court. (iii) Dada Steel Mills v. Baluchistan Government 1983 C L C

571. In this case which was a constitutional petition under Article 199 of the Constitution, a Division Bench of the Baluchistan High Court gave a direction to the Government to refund the amount found to have been illegally recovered from the petitioner. Reliance was placed on P L D 1970 S C 439 and P L D 1975 S C 244 Salahuddin v. Frontier Sugar Mills and Distillery Ltd.

5. Mr. Muhammad Ali Sayeed appeared for the petitioners in Constitu tional Petition Nos. D-35/83, D-127/83, D-128/83, D-225/83, D-305/83 and D-840/83. Learned counsel referred to a book by Peter Lord on the Econo mics, Science and Technology of Yam Manufacture to explain what is an automatic-cone-winder. According to the learned counsel, automate cone-winder performs the following three jobs :-- (l) It winds yarn ; (2) It is equipped with a robot which finds loose ends in the yarn under process and automatically knots them ; (3) It also performs the job of packaging. According to Mr. Muhammad Ali Sayeed, the relevant Explanation in the Notification, dated 26-6-1980 proceeds on the assumption that the automatic-cone-winders are being locally manufactured, which assumption, according to the learned counsel, is found to be incorrect on the basis of the documents of the department itself. It was argued that from the notifi cation it is obvious that there is no intention to give absolute exception from exemption to all types of automatic-cone-widders. According to the learned counsel, if the Explanation was capable of two meanings, the interpretation favourable to the citizen is to be preferred. Reliance was also placed on Ismail Bros. v. Pakistan (N L R 1983 Tax 46) for the proposition that tax cannot be levied except by clear and unambiguous language. According to Mr. Muhammad Ali Sayeed, there are two parts of the notification, dated 26-6-1980, that it, the substantive part and the Ex planation. According to the learned counsel Explanation is not included in the substantive part. Reference was made to the case of Colony Sarhad Textile Mills Ltd. v. Collector Central Excise and Land Customs (P L D 1969 Lah. 228) for emphasizing the difference between the substantive part of a statutory instrument and an explanation to such instrument. It was observed in that case that the object of adding an Explanation to a statutory pro vision is only to facilitate its proper interpretation and to remove any possible confusion or misunderstanding and it does not per se create or extinguish a liability which is to be spelt out only from the main pro vision sought to be interpreted with the assistance of the Explanation. It was further observed that an Explanation is to be relied upon only as a useful guide or an aid to the construction of the main provision. Reliance was also placed by Mr. Muhammad Ali Sayeed on P L D 1970 S C 439.

6. Mr. Rashid Akhund .appeared on behalf of the petitioners in Constitutional Petition No. D-446 of 1983 and he also argued on be half of Mr. Hasan Inamullah Advocate, who had filed vakalatnama on behalf of the petitioners in Constitutional Petition No. 562 of 1983. Mr. Rashid A. Akhund emphasized the significance of the words "being a substitute for locally, manufactured cone-winders" used in Explanation (ii) of the notification, dated 26-6-1980. According to the learned counsel, these words have to be given some meaning. It was contended that if the intention was to exempt from exception all kinds of imported automatic cone-winders, the aforesaid words would not have been employed and Explanation (ii) would have read as follows :- "Automatic-cone-winders shall not be eligible for the concession under this notification " According to learned counsel the words "being a substitute for locally manufactured cone-winders" being in the nature of a condition, the interpretation should be that such automatic-cone-winders, which are being manufactured locally also and, therefore, are substitutes for locally manufactured cone-winders would not be eligible for the concession under the notification, dated 26-6-1980. It was also argued by Mr. Rashid. Akhund that a legal provision which imposes a tax on a citizen should be in clear and unambiguous language and if there was any ambiguity in the sense that there was a doubt whether from the language employed the law-maker wanted or did not want to impose a tax, the interpretation should be such as would favour the citizen. It was also argued that where two interpretations were possible of a taxing statute, one favourable to the tax-payer is to be adopted. Reliance was placed in support of the aforesaid contentions by the learned counsel on the following :- (a) Federation of Pakistan v. Charsadda Sugar Mills Ltd. 1978 S C M R

428. In this judgment the Supreme Court held that the Central Board of Revenue did not consider the case set up by the respondent-Company under rule 4 of the Excise Duty on Production Capacity (Sugur) Rules, 1972 and acted almost mechanically and failed to exercise its discretion vested in it under the law. It was further observed that it was the duty of Central Board of Revenue to have acted justly, fairly and reasonably having full regard to the facts and circumstances of the case before it. The facts and points involved in this decision of the Supreme Court are not relevant as far as the present petitions are concerned. (b) Highway Petroleum Service v. Islamic Republic of Pakistan P L D 1977 Lah. 797 In this judgment it was held that the law relating to imposition of tax is to be construed strictly and if two interpretations are equally pos sible, the one that favours the tax-payer should be adopted. (c) State v. Ghazi P L D 1978 Quetta 191 In this case it was held by a Division Bench of the Baluchistan High Court that if a statute is capable of two constructions, one working manifest injustice and other working no injustice, an assumption is to be made that the Legislature intended such construction as would work no injustice. It was further observed that if a penal statute was capable of being interpreted either in favour of or against the accused, the former interpretation is to prevail and benefit of ambiguity is to go to the accused. (d) Muhammad Bashir Butt v. M. V. Taheri P L D 1980 Kar.

459. In this judgment, Justice Naimuddin of this Court observed that if two possible meanings could be attributed to provision of a fiscal statute, meaning which is more favourable to the subject is to be adopted. (e) Reliance was also placed on page 112 of Craies on Statute Law 7th Edition. The other main contention of Rashid Akhund was that interpretation must be reasonable that is it should be such interpretation which takes into consideration the realities and facts. For this proposition learned counsel relied upon the following reported judgments :- (a) Muhammad Hassan v. Muhammad Murad P L D 1977 Quetta

84. In this judgment it was observed that the language of an enactment should be construed in such a manner as to be most agreeable to justice and reason. (b) Eastern Industrial Agencies Ltd. v. Sir E. H. Jaffer &-Sons Ltd. 1981 CI,C

601. In this judgment it was observed as follows :-- "The rule of strict construction of a provision of law, in our opinion, only means that it shall be so construed that no cases shall be held to fall within it which do not fall both within the reasonable meaning of its term and within the spirit and scope of the enactment." It was also argued by Mr. Rashid Akhund that if a delegated legislation is found to be unreasonable it can be struck down by the Courts and for coming to the conclusion whether a particular delegated legislation is reasonable or not, the Court has to go into the facts. Reliance was placed by the learned counsel on the following :.-- (a) Zebtun Textile Mills Ltd. v. Central Board of Reveuue P L D 1971 Kar. 333. (b) Zebtun Textile Mills Ltd. v. Central Board of Revenue P L D 1983 S C 368. (c) Reliance was also placed on the following passage from pages 334 355 of de Smitu's Judicial Review of Administrative Action, 4th Edition :- "It has commonly been assumed that no criterion of reasonableness governs the- validity of statutory instruments made by Ministers or Her Majesty-in-Council. If a statutory instrument or other departmental regulation appears to a Court to be outrageous it may be held to be ultra vires, but its invalidity will probably not be attributed to unreasonableness per se. But there is no reason of principle why a manifestly unreasonable statutory instrument should not be held to be ultra vires on that ground alone, provided that the subject matter of the grant of power is not so pregnant with `policy' considerations as to render the application of such a standard inappropriate. Judicial review of the validity of bye-laws has always encompassed review for manifest unreasonableness. In the leading case of Kruse v. Johnson, Lord Russell of Killowen, C.J. speaking of bye-laws made by local authorities, said If, for instance, they were found to be partial and unequal in their operation between different classes : If they were manifestly unjust ; if they disclosed bad faith ; if they involved such oppressive or gratuitous interference with rights of those subject to them as could find no justification in the minds of reasonable men, the Court might well say, "Parliament never intended to give authority to make such rules ; they are unreasonable and ultra vires". Local bye-laws were to be benevolently construed, and were not to be held void for unreasonableness merely because Judges thought they went further than was "prudent or necessary or convenient". But the fact that this test of unreasonableness, cautiouly though it has been formulated, is not purely perfunctory is shown by subsequent cases in which bye-laws (and; more recently, conditions attached to grants of planning permission and caravan site licences) have been held invalid on this ground." Mr. Rashid Akhund had also argued that the notification being analogous to a bye-law can be declared to be ultra vires on the ground of unreasonableness and reliance .vas placed on the following reported judg ments :- (i) Kruse v. Johnson (1898) 2 Q B

91. It was observed in this case that in determining the validity of bye-laws made by public representative bodies, such as country councils, the Court ought to be slow to hold that a bye-law is void for unreasonableness and a bye-law so made ought to be supported unless it is manifestly partial and unequal in its operation between different classes, or unjust or made in bad faith or clearly involving an unjustiable interference with the liberty of those subject to it. (ii) Mewa Rant v. Municipal Board, Muttra A I R 1939 All.

466. It was observed in this case that there are certain essentials for the validity of a bye-law and these are ; (i) it must be intra vires of the authority who makes it ; (ii) it is not repugnant to the law of the country ; (iii) it is certain in its terms and positive and (iv) it is reasonable. It was further observed that what is reasonable in this context is in many cases a question of opinion. It was then observed :-- "The Court of law has to be very cautious in interfering with the authority of a local body on the ground of unreasonableness. There are means provided in the Act for preventing abuse of power of local bodies and it is the duty of the aggrieved party to have recourse to such remedies as are provided in the Act, for rectifying mistakes of the local bodies. But when the Court is called upon to consider the bye-laws of public representative bodies clothed with the ample authority the consideration of such bye-law ought to be approached from a different standpoint. They ought to be supported if possible. They ought to be `benevolently' interpreted and credit ought to be given to those who have to administer them that they will be reason- able administered .. But, if they are found to be partial and unequal in the operation as between different clauses, if they are manifestly unjust ; if they disclose bad faith or if they involve such oppressive or gratuitous interfere. We with the rights of those subject to them as could find no justification in the minds of reasonable men, the Court might well say that such bye-laws are unreasonable and ultra vires. But it is in this sense, and in this sense only that the question of unreasonable ness can properly be regarded. A bye-law is not unreasonable merely because particular Judges may think that it goes further than is prudent or necessary or convenient or it is not accompanied by a qualification or an exception which some Judges may think ought to be. there." (iii) Saleh Muhammad v. Traffic Manager Port Trust, Karachi P L D 1961 Kar.

349. It was observed in this cafe that bye-laws framed under a statute may be treated as ultra vires on the following main grounds :- (a) They are not made, sanctioned and published in the manner prescribed by the statute which authorises the making of them ; (b) They are repugnant to the laws of the country ; (c) They are repugnant to the statutes under which they are made ; (d) They are uncertain ; (e) They are unreasonable. It may be observed that it was also submitted by Mr. Muhammad Ali Sayeed, that factually the assumption made by the authority issuing the notification in question that foreign automatic-cone-winders are substitutes for locally manufactured cone-winders is wrong and that the Court can go into the question whether the factual assumption was wrong, and if the Court reaches the conclusion that the said assumption was wrong, the notification or the relevant part of. the notification can be declared to be ultra vires. For this proposition. the learned counsel had sought reliance on the following cases from the English jurisdiction :- (i) The Oueen v. The Inhabitants of Haughton ? 18 E R

523. In this case it was held that a recital in a Local and Personal Act that the highway in question was in a certain town was not conclusive and oral evidence was allowed to be given in the case to establish that in fact the road was not in that particular town but was located elsewhere. It was observed in the judgment that a mere recital in an Act of Parliament, either of fact or law is not conclusive and that Court is at liberty to consider the fact or the law to be different from the statement in the recital. (ii) Merttens v. Hill (1901) 1 Ch. 842 In this judgment the above case of Queen v. The Inhabitants of Haughton was approved and it was observed that a mere recital in a Local and Personal Act of Parliament, though admissible against persons claiming under the Act, is not conclusive and the Court is at liberty to consider the fact or the law to be different from the statement in the recital. (iii) Camille and Henry Dreyfus Foundation Inc. v. Inland Revenue Com missioners 1966 A C

39. It was also argued that statutory instruments, if they are found to be unreasonable, can be declared to be ultra vires of the statute which gives the power to the delegates to issue the instrument or notification. Reliance was placed by Mr. Muhammad Ali Sayeed on thi case of McEldowney v. Forde (1971 ,A C 632). It was urged that unreasonableness of Explanation (ii) in the notifica tion, dated 26-6-1980 is manifest.

7. Mr. H. A. Rahmani, Advocate, appeared on behalf of the peti tioners in Constitutional Petitions No. 8 of 1984 and D-101 of 1984. Learned counsel adopted the arguments of other counsel, as, according to him, the facts and the points of law involved in the two petitions he was appearing in are the same as in other petitions.

8. On behalf of the respondents, the main arguments were addressed by Mr. A. A. Munshi, learned Deputy Attorney-General. According to the learned Deputy Attorney-General, the words employed in the Explana tion (ii) of the Notification, dated 26-6-1980 are clear and unambiguous. * It was submitted that there is no ambiguity in the language employed and it is not a case where the language employed in the Notification was capable of more than one meaning. According to the learned Deputy Attorney General, the Government, which is the competent authority to issue the notification, had reached the conclusion that imported automatic-cone winders were substitutes for locally manufactured cone-winders and as such they shall not be eligible for the concession under the notification in question. It was argued that the wisdom behind the conclusion of the Government in this regard is not subject to challenge and cannot be gone in by the Court. It was also argued that no words are to be added or abstracted from the Explanation (ii) and no violence is to be done to the words employed. To be precise, the argument of the learned Deputy Attorney-General was that clear and unambiguous words had been used by the authority concerned and only one interpretation was possible of the Explanation and that was that automatic-cone-winders are substitutes for locally manufactured cone winders and they are not eligible for concession under the notification in question. This exception from the exemption granted by the notification in question, according to the learned Deputy Attorney-General, was made to protect the local industry and it was a policy decision. According to the learned Deputy Attorney-General, the policy decision being a conclusion of the authority concerned that automatic-cone-winders, are substitutes for locally manufactured cone-winders was not justiciable. It was contended that the motive behind the exception is not questionable in the Courts. Reliance was placed on the following Supreme Court judgments :-- (1) Collector of Central Excise and Land Customs v. Azizuddin Industries Limited P L D 1970 S C

439. This judgment was cited by the learned counsel for the petitioners also. In this case it was held by the Supreme Court that the, exercise of power under section 12-A of the Central Excises and Salt Act, 1944, to grant exemption as well as the power to withdraw the exemption under section 21 of the General Clauses Act is unconditional and it is, therefore, not open to the Courts to go behind the notification by Government on the ground that the exercise of powers by the Central Government was improper. It was further observed that if the grant of exemption was, however, subject to the existence of certain conditions and the withdrawal of exemption was also made conditional on the happening of certain eventuality then the Government could not withdraw the exemption unless the requirement of law was fulfilled and as no such conditions are provided in section 12-A of the Act of 1944, the High Court had no authority to make its own surmises as to the propriety of reasons which had motivated the issue of the notification by the Government. (2) Amin Soap Factory v. Government of Pakistan P L D 1976 S C

277. Section 12-A of the Central Excise and Salt Act, 1944, gives power to the Federal Government to exempt from excise duty any goods or class of goods from the whole or any part of the excise duty leviable under the Act of 1944. While considering this provision of the 1944 Act, the Supreme Court observed that there are no limitations or fetters placed on the very wide powers of the Government to exempt any goods or class of goods from the levy of the duty under the 144 Act and the Government may from time to time, by the notification published in the Official Gazette, exempt any goods or class of goods from the whole or any part of the duty leviable under the Act and it may or may not at all exempt the excisable goods from the levy and there is no compulsion on the Government to allow the exemp tion and that in this context and the very wide powers vesting in the Government it could also grant the exemption on any terms and conditions according to its own view of public policy and expediency. It was in the alternative argued that whether the imported automatic cone-winders are substitutes for locally manufactured cone-winders or not was a question of fact and such question of fact cannot be decided by this Court in its constitutional jurisdiction.

9. From the authorities cited the following principles can be enunciated :- (i) Taxing and penal statutes and instruments are to be strictly cons trued and if there is any ambiguity, the ambiguity is to be resolved in favour of the citizen or the subject. If two interpretations are possible of a taxing or penal statute or instrument, that interpreta tion which is favourable to the citizen or the subject is to be adopted :- P L D 1977 Lab. 797, P L. D 1978 Quetta 191 and P L D 1980 Kar. 458 (ii) A notification cannot have effect retrospectively so as to affect or` take away vested rights :- P L D 1965 Pesh. 47, P L D 1967 Dacca 53 and P L D 1970 S C 439 (iii) For taxing the citizen, clear and unambiguous language is to bed employed by the Legislature or the law-making authority:- N L R 1983 Tax. 46 (iv) If unconditional power is vested in an authority by a taxing orl fiscal statute to grant exemption from tax, under section 21 of the General Clauses Act, 1897, the said authority will also have uncon ditional power to withdraw the exemption :- PLD1970SC439andPLD1976SC277 (v) Motivation behind the issuance of a statutory provision is no questionable in Courts PLD1970SC439 (vi) Notifications and bye-laws can be struck down as invalid if found by the Courts to be unreasonable :- P L D 1961 Kar. 349, P L D 1971 Kar. 333, A I R 1939 All. 466 and 18982QB91 De Smith's Judicial Review of Administrative Action, 4th Edition pages 354-355. (vii) The High Court, in exercise of its Constitutional Jurisdiction can) direct refund of any amount found to have been illegally removed by an authority from the petitioner :- P L D 1967 Dacca 68, P L D 1970 S C 439 and 1983 C L C 571

10. The notification, dated 26-6-1980 grants exemption to certain kinds of goods from customs duties and has b.-en issued by the Government under powers vested in the Government by section 19 of the Customs Act, 1969. The power to grant exemption has been conferred upon the Government' and his power is unconditional as would be apparent from the language of section 19 of the Customs Act. This power to grant exemption necessarily implies that the Government has also the power to withdraw the exemption in view of section 21 of the General Clauses Act. And this power to withdraw the exemption is also unconditional, except that if in the mean time any rights have vested in any importer, such rights cannot be taken away by a subsequent notification withdrawing the exemption as the notifi cation of withdrawal will only have prospective and not retrospective operation. In fact it was not the case of any of the petitioners that the exemptions granted from time to time by the Government through notifica tions from payment of customs duties on imports of automatic-cone winder under the B. M. R. Scheme could not have been withdrawn by the Government. The power vesting in the Government under section 19 of the Customs Act, 1969 read with section 21 of the General-Clauses Act to withdraw the exemption previously granted by the Government itself, empowered the Federal Government to make an exception in the notifica tion, dated 26-6-1980 in respect of automatic-cone-winders. It was more or less conceded by all the learned counsel appearing for the petitioners that in case words "being a substitute for locally manufactured cone winders" had not been used in Explanation (ii) of the notification in ques tion and Explanation (ii) had read that automatic-cone-winders shall not be eligible for the concession under the notification in question, the peti tioners would have had no case to challenge the action of the Customs authorities in levying and collecting customs duties according to the prescribed rate in respect of automatic-cone-winders imported by the petitioners,

11. In the circumstances the question to be considered is the in terpretation of Explanation (i) as inserted in the notification in question. Explanation (ii) is to be considered as a provision which purports to impose customs duties on auto-cone-winders inasmuch as this Explanation makes an exception to the exemptions granted by the Notification dated 26-6-1980. The rules of interpretation to be applied for interpreting Explana tion (ii) are, therefore, the same as are applicable to interpretation of fiscal or taxing statutes and instruments. Explanation (ii) is, therefore, to be strictly construed and if two interpretations are possible of this Explanation, one favourable to the subject/importer and the other against him, the inter pretation which is favourable to the subject/importer is to be adopted. It is, therefore, to be considered whether Explanation (ii) is capable of more than one interpretation, One interpretation sought to be placed on Explanation (ii) on be half of the petitioners was that Explanation (fi) indicates that only such automatic-cone-winders shall be subject to customs duties for which there exists a substitute. In our view, from whatever angle Explana tion (if) is looked at and read, such interpretation does not appear to be possible. Had it been so, the words used then would have been that automatic-con-winders for which locally manufactured cone-winders are substitutes shall not be eligible for the concession under the notifica tion. The words `being a substitute for locally manufactured cone winders" cannot be substituted by the words "for which locally . manufactured cone-winders are substitutes" under any principle of interpretation of statutes.

12. Another argument raised on behalf of the petitioners was that if the intention of the Government, the competent authority, was that all kinds of automatic-cone-winders were not eligibie for the concession under the notification, Explanation (ii) would have read as "automatic cone-winders shall not be eligible for the concession under this notifi cation." No doubt if only such words had been employed in Explana tion (fi), there would have been no difficulty in the case and as obser ved earlier, even according to the petitioners they would have been out of Court as the Government, which is vested with powers under section 19 to grant exemption, has also all the powers to withdraw the entire exemption or to except some or more items from the list of exemptions. But by using the words "being a substitute for locally manufactured cone-winders" is the exception curtailed or restricted in any manner ? In our view, what the Government is stating by using the words "being a substitute for locally manufactured cone-winders" is that, according to the Government, automatic-cone-winders are a substitute for locally manu factured cone-winders. As submitted by the learned Deputy Attorney General, this is a decision or conclusion of the competent authority. It may be added that it is a policy decision made by the competent authority and the decision is that automatic-cone-winders, are a sub stitute for locally manufactured cone-winders. The only interpretation, therefore, that can be given to Explanation (ii) is that automatic-cone winders, which according to the policy decision or conclusion of they Federal Government are substitutes for locally manufactured cone winders shall not be eligible for the concession under Notification, dated) 26-6-1980. In our view Explanation (ii) is not possible of another interpretation. It is not a case where two interpretations of a taxing or fiscal statute or instrument are possible to which event the Court will apply the interpretation in favour of the subject or citizen.

13. Having reached the conclusion that Explanation (fi) is cap able of only one interpretation, we now proceed to consider whether the conclusion or statement of the competent authority that auto-cone-winders are substitutes for locally manufactured cone-winders is subject to chal lenge before the Courts. It had been argued on' behalf of the petitioners that such conclusion or decision of the Government was factually in correct. We have already interpreted Explanation (ii). According to our interpretation, Explanation (ii) provides that auto-cone-winders are sub stitutes for locally manufactured cone-winders and shall not be eligible. for concession under the Notification. It has come on record that Govern-1 merit had initiated the process of manufacture of auto-cone-winders in the public sector in Pakistan and apparently for protection of the local industry Explanation (ii) had been inserted in the Notification. It has already been observed that without making any statement or giving an explanation or reasons whatsoever, the Government, as the compe tent authority, could have withdrawn the exemption in relation to auto-cone-winders and in our view by stating that automatic-cone winders are substitutes for locally manufactured cone-winders the Government has not exceeded its powers or has acted illegally or incom petently. In our -view in the circumstances the Court will question the decision or conclusion of the Government whereby they have decided as a matter of policy decision that automatic-cone-winders are substitutes for locally manufactured cone-winders and shall not be eligi ble for the concession under the notification. Judgments from the Eng lish jurisdiction relied upon by Mr. Muhammad Ali Sayeed are of not avail to the petitioners as in those judgments, the laws involved were local and personal statutes and the statements under consideration were in the recitals to those Acts and not in the operative parts of the Act.

14. The other ground on which the vires of the Explanation (ii) has been challenged is the unreasonableness of the said Explanation. We agree with the contention raised on behalf of the petitioners that a notification or bye-law can be struck down by the Courts as ultra vires of the parent statute if it is found to be unreasonable but as has been held in several reported decisions, the Courts are allowed to declare a notification or bye-law to be bad on the ground of unreasonableness. We have already noted that the decision of the Government to withdraw the exemption was made apparently to protect the local industry. The decision of the Government does not appear to be unjust or unreasonable and we are not inclined to declare Explanation (ii) to be ultra vires of the powers conferred upon the Government by section 19 of the Customs Act, 1969. It cannot be said that section 19 did not give the Government the powers to except auto-cone winders from exemption or that the power vested in the Government by section 19 did not give the power to make the exception in the Notification, dated 26-6-1980 through Explaination (ii). Power of the Government to withdraw the exemption is not restricted to cases where substitutes are available in the local market. We are of the view that the Government did not exceed its powers vested through section 19 of the Customs Act in making the Notification, dated 26-6-1980 with Explanation (ii).

15. We may also refer here to an argument of Mr. Muhammad Ali Sayeed based on the distinction between the substantive part and an Explanation in a statute or statutory provision. The contention as raised and referred to earlier in this judgment is not relevant in the context of the Notification in question. Explanation (ii) in the Notification dated 26-6-1980 is clearly in the nature of an exception and is not an. "Explana tion" as normally used or employed by law-makers in statutory instruments. .

16. In some of these petitions an additional question had arisen in connection with 5 per cent surcharge imposed by section 2 of Finance Ordi nance, 1982. The said section is reproduced here :- "

2. Surcharge on imported goods.-(1) There shall be levied and collected an additional customs duty as surcharge on the importation of the goods specified in the First Schedule to the Customs Act, 196 (IV of 1969), at the rate of five per cent. of the value of the saic goods as determined under section 55 of the said Act Provided that for the purposes of the Sales Tax Act, 1951 (III of 1951) the additional customs duty shall not constitute a part of the duty paid value. (2) The Federal Government, subject to such conditions, limitations or restrictions, if any, as it thinks fit to impose, may, by notification in the official Gazette, exempt any goods imported into Pakistan, from the whole or any part of the additional customs duty leviable under subsection (1)." The contention raised on behalf of the petitioners was that as auto cone-winders were exempt from payment of all customs duties, the petitioners were not liable to pay the aforesaid surcharge on the import of auto-cone-winders as the surcharge is an additional customs duty. This contention is of no help to the petitioners as we have already taken the view that auto-cone-winders were excluded from the exemptions by the Notification, dated 26-6-1980 I.

17. As a result, all these petitions are dismissed but there will be no order as to costs. We, however, direct that if any bank guarantees have been furnished by the petitioners, the same will not be encashed by the respondents for a period of one month from today so as to give an opportunity to the petitioners to approach the Supreme Court of Pakistan. M. z. M. Petition dismissed.