1990 PLP 1022 (CLC)

Muhammad Ali Sayeed for Petitioner. Abul Khair Ansari for Respondents. Date of hearing: 28th November, 1989. WAJIHUDDIN AHMED, J.‑‑The facts giving rise to this petition, briefly stated, are that the petitioners import Aluminium stock, pass it through re‑rollers, again and again, till the resultant foil reaches a fine thickness of.007MM, where after such foil, together with cut to size imported paper, is again passed through re‑rollers, bringing forth finished product, termed as paper backed Aluminium foil. Such product is said to be used as wrapping material for cigarettes, tea, biscuits and numerous other commodities. Case of the petitioners is that under notification No.9, dated 27‑6‑1951, products of re‑rolling Mills, pursuant to section 7 (1) of the Sales Tax Act, 1951, were exempted from the payment of Sales Tax. As from the year 1981, Sales Tax administration was transferred from the Income Tax Department to the Central Excise Department, which development was followed by a Notification bearing No. SRO 666 (1)/81, dated 25‑6‑1981, where under the exemption was re‑notified but, this time, only as regards "products of re‑rolling Mills" falling under Chapter

73. However, Chapter 73 of the Pakistan Customs Tariff (PCT) deals only with iron and steel and articles thereof and, evidently, Aluminium foil no longer remained qualified for exemption. Petitioners made representations and through SRO 484 (1)/85 dated 23‑5‑1985, the aforesaid notification dated 25‑6‑1981 was amended, and resultantly, heading No. 58 in the First Shedule to Customs Act, for the purposes of Sales Tax, was to be read as "Ferrous and non‑ferrous metal products of re rolling Mills". Such substitution was deemed always to have been so made.

2. Since the foregoing amendment was retrospectively applied, a notice addressed to the petitioners on 26‑10‑1982 to show cause as to why recovery of Rs. 15,02,295 be not made, on account of Sales Tax, was discharged, on the basis of such notification, per order dated 28‑11‑1985 of Deputy Collector, Central Excise and Land Customs, Karachi. According to the petitioners, the Chapter of incidence and impact of notification dated 25‑6‑1981 thus stood closed at such point of time.

3. On the other hand, petitioners also rely on a course practice, as purportedly, also borne out by proceedings, reflected in notice dated 23‑8‑1981, pertaining to their sister concern, Aluminium Processing Industries (Private) Limited, in the context of which, an Assistant Collector had found, on 6‑10‑1981, the disputed product to be "paper backed with Aluminium foil" and thus a paper product falling under item No.07‑O1 of the First Schedule to the Central Excises and Salt Act of 1944 but such order, on appeal, was set aside, on 30‑3‑1982, by the Collector of Central Excise, finding that the product was "Aluminum foil paper backed" and could not be considered as a paper product in view of its express exclusion in Note 1 (k) of Chapter 48 of the P.C.I. and that it was properly classifiable under head 76.04‑A of the PCT. Such officer further observed that even for the purposes of Excise Duty "Aluminium foil paper backed" was not a paper product nor was it internationally so considered.

4. Petitioners maintain that some competitive forces were at work since the cost of petitioners' product was less than the cost of similar imported item. Thus motivated, it is said, Central Excise General Order No.5/1987, dated 5‑7‑1987, was issued, ruling that "Aluminium foils" backed or re‑enforced with paper or paper‑board" were classifiable under item 07‑01 of the First Schedule to the Central Excises and Salt Act, 1944, in terms of section 3‑B of the said Act read with S.R.O. 1351 (K)/69, dated 26‑4‑1969. Soon after with, allegedly, similar motivations show‑cause notice dated 12‑8‑1987, was addressed to the petitioners for recovery of Rs. 3,18,508 on account of Excise Duty and a further sum of Rs.62,10,036 by way of Sales Tax. From the annexures to the petition, to which Mr. Sayeed referred, it would appear that, in the meantime, on 2‑8‑1987, S.R.O. 6 (1)/87 was issued whereby, from the purview of S.R.O. 666 (1)/81, dated 25‑6 1981, which exempted "ferreous and non‑ferreous metal products of re‑rolling Mills", "Aluminium foils and brass rods bars" were excluded. In the result, but without assailing the notification dated 2‑8‑1987, this petition has been filed wherein declaration has been claimed to the effect that Aluminium foils backed or re‑enforced with paper are not chargeable either to Excise Duty or Sales Tax and restraint is sought against the respondents from charging or collecting any such duty or tax.

5. In the counter‑affidavit, filed by Syed Iqbal Hussain, Superintendent, Central Excise and Land Customs in the Collectorate of Central Excise and Land Customs, Karachi, it is urged that the petition is premature, having been filed without exhausting due remedies, that Aluminium foil backed with paper is covered by the category "paper all sorts" and, that, finally, the product is not one of re‑rolling Mills at all, as the petitioners' factory itself cannot be classified as a re‑rolling Mills.

6. The first question to be considered is whether this petition is not maintainable, having been preferred without exhausting the remedies provided in the Central Excises and Salt Act, 1944, and the Sales Tax Act, 1951. As a rule, an aggrieved party is required to exhaust all remedies of an alternative nature, if adequate, before approaching this Court in its Constitutional jurisdiction. However, such remedies, in order to qualify, have to be convenient, speedy and equally efficacious. Besides, where there is want of jurisdiction or the exercise of power is colourable or interpretation of a serious question of law, touching the statute. under which jurisdiction ,is exercised, is involved the statutory remedy can neither be adequate nor alternative and a person may approach this Court directly. Reference, in regard to such direct re‑course under Article 199 of the Constitution, in situations of absence of jurisdiction, may be made to Mohammad Tufail v. Abdul Ghafoor and others (P L D 1958 SC 201), Lt. Colonel Nawabzada Mohammad Ameer Khan v. The Controller of Estate Duty and others (P L D 1961 SC 119), Burma Oil Company v. The Trustees of the Port of Chittagong (P L D 1962 S.C 113), Pakistan v. Ziauddin (P L D 1962 SC 440), Nageena Silk Mills, Lyallpur v. The Income Tax Officer `A' Ward Lyallpur and another (P L D 1963 SC 322), Abdul Ghani v. Shoedar Khan (P L D 1968 SC 131), Usmania Glass Sheet Factory v. Sales Tax Officer (P L D 1971 SC 205) and Sindh Industrial Trading Estate v. Central Board of Revenue (P L D 1975 Kar. 128). Where direct interference may be made on account of a statutory functionary, acting mala fide or in a partial, unjust and oppressive manner the well‑documented view of Naimuddin, J., as he then was, in a Division Bench case of this Court, reported as Kassam Haji Abbas Patel v. Income Tax Officer 1982 P T D 361 may be cited. As regards the question of interpretation of statutory law, requiring authoritative pronouncement, or where remedy by way of appeal is to be pursued before the very person, who is already found to have expressed an adverse view, reference may advantageously be made to the opinion of the same learned Judge in the Division Bench case of Sky Rooms Limited v. Assistant Collector of Central Excise and Land CustqMs, Karachi (P L D 1982 Karachi 244).

7. The contention here is that the Excise Authorities are acting in a partisan manner motivated to benefit importers of similar goods, whose costs are higher and the ulterior object is to deprive a local manufacturer of the edge which the local product enjoys in a competitive market over similar imported commodity. It is also urged that the Excise General Order No.5/1987, dated 5‑7 1987, being a ruling of the Central Board of Revenue, has been expressly taken recourse to in issuing the show‑cause notice dated 12‑8‑1987 and that, in these B circumstances, allegedly, it is not likely that the petitioners would get a fair deal, if they were pushed to pursue their remedies at the level of the subordinate Central Excise and Sales Tax Authorities. It would appear that such questions did arise in this petition to warrant petitioners' direct re‑course to the Constitutional jurisdiction of this Court. The petition, therefore, is maintainable.

8. Turning now to the question of the validity of the Central Excise General Order No.5 of 1987, it is to be observed that such order can be issued under the provision of section 41 of the Central Excises and Salt Act, 1944, which provision is more or less similar and may be considered to be even in pari materia with section 223 of the Customs Act, 1969. For facility of reference these provisions are hereunder reproduced. Central Excises and Salt Act, 1944.

41. Observance of Board's Orders. directions and instructions.‑‑All officersand persons employed in the execution of this Act and the rules made thereunder shall observe and follow the orders, directions and instructions of the Central Board of Revenue: Provided that no such instructions shall be given by the Central Board of Revenue so as to interfere with the discretion of an officer in the performance of his duties under sections 33 and 35.

223. Officers of Customs to follow Board's Orders, etc.‑‑All officers of customs and other persons employed in the execution observe and follow the orders, instructions and directions of the Board: Provided that no such orders, instructions or directions shall be given so as to interfere with the discretion of the appropriate officers of customs in the exercise of their quasi‑judicial functions. There is consensus in the judicial pronouncement in the context of section 223 of the Customs Act, 1969 that whereas such provision makes it ' obligatory upon the officers to observe and follow the orders, instructions and directions, issued by the Central Board of Revenue, the powers of the Board are, restricted, through the proviso appended to such section, and no such orders, instructions or directions of the Board can be given or operate in any way to interfere with the discretion vesting in the relevant officers, when called upon to exercise their quasi‑judicial functions under the statute. This has to be so and a degree of latitude, in confirmity with judicial independence, has to be allowed to the quasi‑judicial authorities, for if that was not the rule, relevant matter, involving fiscal rights, would stand foreclosed before it was even allowed to take off: In support, may be cited the dicta in MA. Rehman v. Federation of Pakistan and others (1988 S C M R 691), M/s. Hussain Sons Importers v. The Federal Government of Pakistan (1988 M L D 2507) and M/s. Commercial Pipe Limited v. Federal Government of Pakistan (P L D 1989 I:ah. 89). As said, the provisions in the two enactments being similar there is no reason why similar interpretation may not be made in relation thereto. This being so, we have no doubt that the referred Central Excise Order cannot be taken as binding or conclusive by the Central Excise functionaries in the context of the exercise of their quasi‑judicial E powers, as and when they are called upon to exercise such powers. Mere subsistence, therefore, of such Central Excise Order would not offord a ground to the petitioners to totally bypass the jurisdiction under statutory law and the observations herein should suffice to allay any apprehensions or fears that the petitioners may have had on such score.

9. Grievance of the petitioners is that, as reflected in the show‑cause notice, dated 12‑8‑1987, recoveries are being sought to be made retroactively, when the latest notification, dated 2‑8‑1987, which has followed upon the Central Excise General Order No. 5/87, dated 5‑7‑1987, can only be prospective and not retrospective. It is now well‑settled that a notification, issued in the exercise of delegated statutory power or by way of subordinate legislation, can only be I prospective and rarely, if ever, retrospective. This must be so with the notification dated 2‑8‑1987 as well.

10. However, the broader question on which this case should hinge seems to be whether the Notification No. SRO 484 (1)/85 dated 23‑5‑1985 whereby "non ferrous" products also were exempted could be retrospective, as envisaged therein. On that question, while we would prefer to refrain from expressing any firm opinion, at this stage, we were not a little concerned, as to how a subordinate delegated power could come to be exercised ex post facto without there being any express mandate in the statute for so doing. Not only that the power was exercised retroactively, by insertion of a deeming provision, but curiously enough, even a copy of such outcome (the notification) was forwarded to the petitioners. Besides, one of the results of such action may have been that those who had already been taxed may stand to suffer and quite in equitably, defaulters may benefit. Mr. Sayeed countered such observation by saying that those who were taxed may be entitled to refunds. He may or may not be right. Indeed, in M/s. Bisvil Spinners Ltd. v. Superintendent Central and Land Customs (P L D 1988 S.C. 370) Shafi‑ur‑Rehman, J., who spoke for the Court, was pleased to observe that, as a general rule, grounds of tax exemptions are given d rigid interpretation against the assertion of the tax‑payer and in favour of the taxing power and that there must be no doubt or ambiguity in the language upon which the exemption is founded, for a well‑founded doubt is fatal to the claim. Since, however, such question is not before us, directly, we leave it open to be dealt with as and when it arises and is in issue..

11. Still, as from 23‑5‑1985, when S.R.O. 484 (1)/85 was issued till 2‑8‑1987, when SRO 6 (1)/87 took the field the operation can only be prospective, and the claim for exemption cannot be disputed on grounds of retroactively. But here too, the contention of the respondents is that the product of the petitioners is not one of a re‑rolling Mills and that thus the exemption does not extend to the petitioners. This, obviously, is a question of fact and disputed at that. We cannot determine the same.

12. Next, it is urged for the petitioners that even pursuant to S R O 6 (1) 87, dated 2‑8‑1987, petitioners cannot be taxed because the excluded item of Aluminium foils is not the same thing as "Aluminium foils backed or re‑enforced with paper or paper board." What such product is and where it falls are all questions, which, in the view we take, must go back and be determined by the departmental authorities.

13. Lastly, it is contended that the doctrine of Promissory Estoppel would apply as the department had taken a definite and positive position which they cannot unilaterally alter and besides, the rule of locus poenitentiae is equally attracted as there is no retracting after a decisive step is taken. We are afraid that none of these principles are applicable. In the context of the back and forth events of this case doctrine of Promissory Estoppel is not attracted. Likewise, no decisive unretractable step was taken in the petitioner's case. This ground, thus, must fail.

14. In the overall context of this controversy, however, it would be proper to observe that the concept of a tax, on principle, requires strict construction. Wherever, on a fair interpretation of a tax measure, more than one views of the matter can be taken, an interpretation more favourable to the tax‑payer is to be adopted. Similarly, in a free country of a developing nature, as ours, special attention must be paid to see that no strained interpretation is accorded to a tax so as to place a local industry at a disadvantage, as against similar products of imported origin. Indeed, the ‑petitioners have gone to the extent of maintaining that patently an allegedly perverse construction is being adopted, solely, to victimize the local industry. Even if there is an iota of truth in such behalf every effort ought to be made to allay any apprehensions or fears on that score whether the same be justly based or otherwise.

15. With the foregoing observations, we would, for the present, dismiss this petition and leave the petitioners to pursue the matter at the level of the Central Excise and Sales Tax Authorities who shall, we have no doubt, ensure a fair examination of the matter and deal with the problem absolutely impartially and in a detached manner not feeling themselves bound, in any manner whatsoever, with the contents or substance of the Central Excise General Order No.5/87 aforesaid. There will be no costs against the petitioners. AA./P‑135/K Petition dismissed.