' Vide this appeal, the assessee-appellant has assailed the order of the learned Commissioner Inland Revenue (Appeals), Multan Order-in-Appeal No,7/2010 dated 8-4-2010.
2. Both the learned representatives appearing at the bar have been heard and record perused.
3. Facts in short are that the appellant is a partnership concern and involved in the business of manufacturing of lubricating oil and in this regard the appellant, firm pays @ 7.15 per litre and charges @ 10% of retail price on the supplies in packing and @ 7.15 per litre on supplies in bulk and the appellant charges @ 2 per litre on the- supplies of reclaim oil. The appellant purchased base oil at the specified rate of Federal Excise Duty and after processing made the supplies of the lubricating oil at the specified rate of Federal Excise Duty during the period 1-10-2007 to 31-3-2008 and claimed refund of Rs,21,16,856 vide its application ref No,GLM/20/08 dated 20-9-2008.
Thereafter, the Additional Collector issued a show-cause notice vide C.No,IV-D(8)
(Refd/82/08/III/2328 dated 4-3-2009 intimating Messrs Golden Lubricants, 13-F 1st Floor, Usman Plaza, Old Sabzi Mandi Road, Multan as to why their refund claim amounting to Rs,21,16,856 for the period from 1-10-2007 to 31-3-2008 should not be rejected. It was also mentioned in the show- cause notice that hearing of the case of the appellant shall be fixed for 18-3-2009 before the Additional Collector, RTO, Multan. As the appellant could not satisfy the Additional Collector with any material evidence, therefore, he initiated the court proceedings against the appellant and rejected the refund claim vide Federal Excise Refund Order Nos.3 to 6 of 2009 dated 31-8-2009 with the finding that the claim is based on fabrication and not sustainable from any corner. Feeling aggrieved, the appellant filed appeal before the Commissioner Inland ,Revenue (Appeals), Multan who by virtue of his order dated 8-4-2010 directed the Inland Revenue Department to constitute a Valuation Committee under section 12(1) of the Federal Excise Act, 2005 and that Committee shall estimate the value of the supply and thereafter Federal Excise Duty would be determined and charged accordingly. This has forced the appellant to come up in appeal before the learned Appellate Tribunal Inland Revenue.
4. The learned counsel appearing on behalf of the assessee appellant contended that the appellant produces variety of automotive lubricating oil, industrial lubricating oil and reclaimed lubricating oil as well, and put the same into supplies and paid the duties and taxes on the same as per provision of federal excise and sales tax laws. Further contended that the words varieties and the brands both have been used in subsection (4) of section 12 of Federal Excise Act, 2005. The lubricating oil used in the trucks/buses is certainly different from that which is used in the motorcycle but these are called the automotive similarly the industrial lubricating oil used in hand looms, powers looms, oil mill expellers and the machinery of spinning mills etc. All are of different types and varieties. The rate of each and every variety should also be different according to the norms of business. The appellant has regularly been submitting the retail price list to the Federal Excise Department and the department did not ever raise any objection on the retail price as declared by the appellant. The learned counsel further agitated that most pressing factor in this regard is that the appellant applied for refund on the basis of goods sold on retail price during the period 1-10-2007 to 31-3-2008 whereas the provision of section 2(46) of the Sales Tax Act, 1990 in the Federal Excise Act, 2005 regarding section 12(1) was incorporated and enforced w,e,f, 1st July 2008 and admittedly no law can be given retrospective effect so this very section even otherwise cannot be applied in the instant case. Also contended that the case of the appellant does not fall under section 12(1) it is the case of 12(4) of the Federal Excise Act, 2005 and as per provision of subsection (4) of section 12 of Federal Excise Act, 2005, the appellant being manufacturer is at liberty to fix the retail price of the goods produced by him and denial of this legal right of the appellant conferred under section 12(4) of the Act 2005 is in total contradiction to the statutory provisions of law as well as the judgments of the Hon'ble Supreme Court of Pakistan in the case "Government of Pakistan v. Hashwani Hotel Limited", reported as PLD 1990 SC 68. The Hon'ble Sindh High Court while deciding the case of "Souvenir Tobacco' Company limited v. The Deputy Collector" reported as 1989 CLC 1134 also held that the manufacturer was entitled under the law to fix the retail price of its commodities. On the other hand, the learned D.R appearing on behalf of the Revenue strongly supported the orders of the authorities below.
5. We have heard the arguments advanced by the rival parties and perused the available record before us. We have noted that the appellant charged Rs,1,26,57,811 as excise duty on the clearance of lubricating oil and the respondent paid the excise duty on the base material i,e, base oil to the tune of Rs,1,47,74,667 on the purchases. Further noted that the difference between the, two amounts i,e, Rs,21,16,856 seem to be a genuinely refundable amount in favour of the assessee. Also observed that the appellant applied for refund on the basis of goods sold on retail price during the period 1- 10-2007 to 31-3-2008 while the provisions of section 2(46) of the Sales Tax Act 1990 in the Federal Excise Act, 2005 regarding section 12(1) was introduced/incorporated and enforced w,e,f, 1st July, 2008. It is also pertinent to mention here that the provision of section 12(1) of the Federal Excise Act, 2005 came into force from July, 2008 and was applicable for the determination of excise duty depending upon the value after excluding the amount of duty, whereas on the retail price in terms of section 12(4) of the Federal Excise Act, 2005 includes all charges and duties hence these two are distinctive and totally distinguishable provisions of federal excise law and can only be applied separately remaining within their own spheres. The strength in this regard has also been acquired by the appellant from a case law cited as PLD 1990 SC 68 Supreme Court of Pakistan (Full Bench) in re: Government of Pakistan and others v. Hashwani Hotel Limited and 1989 CLC 1134 (Sindh High Court, Karachi). Relevant para of the judgment of the Supreme Court of Pakistan is being reproduced as under:--
28. There is no legal bar to create different categories of different customers for the purposes of levy of excise duty.---We have not found anything in the provision which either expressly or even by implication prohibited the hotel management to create different categories of different customers. There being no legal bar we are of the view that categorization was lawful and was not done with any ulterior motive or to avoid paying the duty.
' The Hon'ble Sindh High Court has also resolved this issue in its reported judgment cited as 1998 CLC 1134 (Sindh High Court, Karachi) and relevant para of the said judgment is as under:-- ' In the case before us the petitioner has offered for sale the same brand of cigarette in different type of packing which has effect of changing the variety of goods. We are therefore of the view that "Melburn" cigarettes offered for sale by the petitioner to the general body of consumers in crush proof packing and soft packing were of different cigarettes though the brand of the cigarette was the same, and as such the petitioner was entitled under section 4(2) of the Act to fix different retail prices for each variety. Accordingly the action of respondents in demanding excise duty from the petitioner on the basis of higher retail price of the same brand of cigarette was illegal and without lawful authority. We accordingly declare the impugned order without lawful authority and of no legal effect. There will be no orders as to costs.
6. The judgments referred by the learned counsel of the appellant are fully applicable in the case and the appellant being manufacturer has exclusive right, conferred upon under section 12(4) of the Federal Excise Act, 2005, to fix the retail price of the conditions produced by him and the appellant charged Federal Excise duty on the same retail price. The Federal Excise duty paid on the purchases is adjustable under section 6 of the Federal Excise Act, 2005 against the Federal Excise duty payable on supplies and as in the instant case the appellant has paid excess amount of federal excise duty on the purchases than the duty charged on the supplies it is, therefore, the legal right of the appellant that the over-paid federal excise duty should be refunded to him under Rule 8 of the Federal Excise Rules 2005 issued vide S.R.O. 534(1)/2005 dated 6-6-2005. Having taken regard to the facts of the case in its entirety, and also going through the reported judgments referred supra by the learned counsel, the orders passed by the authorities below have no legal consequences in the eye of law. Keeping in view, of the above discussion, we have no option except to vacate the orders of the authorities below and direct the Additional Collector to allow refund of the appellant amounting to Rs,21,16,857 in accordance with law. This would result into acceptance of the appellant's appeal.
7. Ordered accordingly.