1989 PLP 694 (CLC)

Federation of Pakistan v. M/s. Charsadda Sugar Mills 1978 SCMR 428 rel. Khalilur Rehman for Petitioner. A . Sattar for Respondent. Date of hearing: 27th October, 1988. SAEEDUZZAM.AN SIDDIQUI, J.‑‑This case came up for regular hearing before us on 15‑9‑1988 when a request was made on behalf of respondent by Mr. S.M. Abbas Advocate for adjournment on the ground that the Deputy Attorney‑General who was conducting this case has been elevated to the Bench and some time is required for assigning this case to another counsel We accordingly adjourned this case to a date in office to be fixed after a fortnight. Thereafter, this case came up for hearing before us on 6‑10‑1988 but no one appeared for the respondent and once again we adjourned it. Today it is again fixed for regular hearing but none appeared for respondent. We have accordingly heard Mr. Khalilur Rahman, the learned counsel for the Petitioner. The Petitioner has challenged the order of Central Board of Revenue dated 12‑2‑1979 passed under Rule 5 of the Excise Duty on Production Capacity (Cotton Fabrics) Rules, 1968 (hereinafter referred to as 'the said Rules'), partly, allowing the Petitioner's claim in respect of abatement in Excise Duty on account of shortfall in production. The learned counsel for the Petitioner contends that the respondent has passed the impugned order mechanically on the basis of a set formula without taking into consideration various grounds urged by the Petitioner in support of his claim of abatement of excise duty. The claim of abatement of excise duty before respondent related to the assessment years 1967‑68, 1968‑69, 1969‑70, 1970‑71 and a part period of 1971‑72 (upto 31‑10‑1971) as the Petitioner had opted out of the capacity system from 1‑11‑1972. The Petitioner originally applied for abatement of excise duty on the ground of shortfall in the production capacity of Mill before the Review Board. The Review Board allowed for a period of 14 months beginning from 1‑5‑1968 a reduction in the tax burden by 30~

1. It also allowed similar reduction of 15$ on the tax burden for the year 1969‑

70. Subsequently on the representation of the Petitioner, the Review Board, further decided that the 15$ reduction in tax burden allowed by it for the year 1969‑70 is raised to 20%. And this increased 20$ reduction in tax burden was also made applicable to the period beginning from 1‑7‑1970 to 30‑10‑1971. The Review Board, however while allowing the above relief in the Excise duty observed that even the above relief granted by it would not meet the ends of justice in the Petitioner's case as the condition of the Petitioner's mill was very poor and accordingly advised the Petitioner to approach the respondent under Rule‑ 5 of the said Rules for seeking further relief by way of reduction in the tax liability as the Review Board was not competent under the law to allow further relief in excise duty. The Petitioner accordingly approached the respondent seeking further reduction in their tax liability on account of reduced production capacity of mill, for 2 months of the assessment year 1967‑68 (May and June, 1968), 1968‑69, 1969‑70, 1970‑71 and upto 30th October, 1971 of the assessment year 1971‑

72. The grounds on which the Petitioner sought relief of further reduction of their tax liability are summarised in pars. 5 of the impugned order as follows:‑ "

5. The reasons for shortfall in production, as common to all the years of abatement claim, have been given as under:‑ (i)???????? The mills actually worked with 21,400 Spindles, as verified by Excise authorities, against 22, 400 Spindles, of which the capacity was fixed. Two frames (with capacity for 1000 Spindles) were without Spindles, parts or accessories. They, therefore, worked below capacity permanently. (ii) The mills worked for 2 shifts only instead of the usual 3, for? which the capacity was fixed, due to load‑shedding by WAPDA in the evening. Otherwise also, there were frequent break‑downs and stoppages of electricity which affected production. (iii) Low efficiency of the machinery which was more than 18 years? old. (iv) Occasional short‑supply of raw‑materials due to financial position of the mills." It is evident from the impugned order that the above grounds advanced by the Petitioner in support of their claim for abatement of tax on account of reduced production capacity of mill were found genuine by the respondent; however, while allowing the claim of abatement of excise duty of the Petitioner, the respondent adopted a uniform formula for all the assessment years on the basis of actual shift worked by the mill. The grievance of the Petitioner is that this uniform formula adopted by the respondent for allowing abatement of excise duty has resulted in grave injustice to Petitioner as the formula of actual shifts worked by the Petitioner's mill applied by the respondent was only one of the several grounds urged by them in support of their claim of abatement in excise duty. It is also contended that application of this uniform an(] predetermined formula for reducing the production capacity of Petitioner's mill and allowing abatement in excise duty on that basis is contrary to the rule laid down in the case of Federation of Pakistan v. M/s. Charsadda Sugar Mills 1978 SCMR

428. The contentions of the learned counsel for the Petitioner are not without force. The grounds urged by the Petitioner before the respondent in support of their claim of abatement of excise duty on account of reduction of the production capacity of mill were manifold including the ground that the mill worked only two shifts instead of three shifts during the above period. These grounds were, (1) that the mill did not work with its actual number of spindles; (ii) that there were frequent break‑downs and stoppages of electric supply even during the shifts when the mill worked which necessitated stoppage of work; (iii) that the production was low due to low efficiency of the machinery which was more than 18 years old; and (iv) above all there was occasional short‑supply of raw materials due to stringent financial condition of the mills. All the above grounds advanced by the Petitioner in support of their claim for abatement of excise duty were found to be genuine by the respondent but while allowing abatement of excise duty, only one ground namely, that the mill worked only two shifts in place of three was considered. We, are, therefore, of the view that the impugned order did not take into account all the grounds on which the reduction in production capacity of mill and abatement in excise duty was claimed by the Petitioner. We accordingly allow this petition and declare that the order dated 12‑2‑1979 passed by the respondent is without lawful authority. The respondent is directed to re‑hear the case and determine the claim of abatement of excise duty for the above period taking into account all the grounds mentioned in the impugned order in accordance with the law. After we dictated the above order Mr. Abdus Sattar appeared for the respondent and stated that he has no objection to the remand of the case to respondent for reconsideration on merit. There will be no order as to costs in the circumstances of the case. M.Y.H./M‑610/K??????? Case remanded.