MUHAMMAD HALEEM, J.--This is a petition under Article 98 of the Constitution, in which the petitioner has impugned the notice of demand dated 25th September 1969, by which duty on natural gas was directed to be calculated "on the basis of meter reading installed at the well of the gas-field".
2. In brief, the facts are that the Government of Pakistan leased out 176 sq. miles of land situated at Sui to the petitioner on 15th September 1954 vide lease deed of the same date. The petitioner thereupon carried out drilling operations and discovered a large gas reservoir. The gas was subjected to chemical analysis and the result showed that Methane was 87.32% while the other constituents were in the following proportions :- {{TABLE}} Nitrogen 4.10 PerCent Propane 0.22 " "
Ethane Ise- 0.84 " "
Butane N- 0.05 " "
Butane 0.03 " "
Carbondioxide 7.44 " " {{TABLE}} Hydrogen Sulphide 100, 81 p 100 cu. ft.
The average beating value of this gas was determined as 930 British Thermal Units per 1000 cu. ft. It is the case of the petitioner that the impurity in the gas did not permit the commercial utilisation of the gas and the petitioner was compelled to construct a purification plant to purify the gas "to a commercially acceptable standard". The result of this purification process was that there is a loss of 8% of the volume of gas out of which 7.44% is carbondioxide, which is an inert gas and a waste product. The petitioner sold the gas to two transmission companies, namely Suigas Transmission Co. Ltd. and Sui Northern Gas Pipelines Ltd. In accordance with the contracts executed with these companies, the petitioner only received payment for the volume of gas metred at the downstream and of the purification plant, viz. after purification entailing loss of volume by 8 per cent. The average heating value of the purified gas was determined as 975 BTU per 1,000 cu. ft. It is further averred in the petition that no excise duty was leviable until 30th June 1969 and it is after the promulgation of Finance Ordinance (Ordinance XVI of 1969) on 28th June 1969 that excise duty is levied on gas produced by the petitioner at the rate of 40 paisas per 1000 cu. ft. By letter dated 25th September 1969, which has been impugned before us, the instructions of the Collector of Central Excise and Land Customs, Hyderabad, were given effect to and the petitioner was directed to pay duty on natural gas calculated on the basis of meter reading installed at the well of the gas field.
The petitioner has taken exception to the payment of duty from the meter reading recorded at the well of the gas-field, and has filed this petition to question the legality of the instructions contained in the letter. Its grievance is that excise duty is leviable on the usable gas and not on the volume of gas produced at the well which is impure to the extent of 8 per cent.
3. The respondents have not disputed the facts. The controversy is accordingly narrowed to the question as to the point of time at which the excise duty is leviable on the gas produced by the petitioner. Their case is that in terms of section 3(1) which is a charging section of the Central Excises and Salt Act, 1944, excise duty is leviable at the well as bringing out of the gas is covered by the meaning of the word 'produced' in section 3(1) of the Act. In this connection, reliance is also placed on the language of entry No, 12.
4. By subsection (10) of section 5 of the Finance Ordinance of 1969 (Ordinance XVI of 1969), the First Schedule of the Central Excises and Salt Act, 1944 was substituted by the schedule set out in III- Schedule to this Ordinance. Under the heading "Mineral Products" in the III-Schedule there is entry No, 12, which reads :- "Petroleum gases and other gaseous hydrocarbons including natural gas and liquified petroleum gas."
There is no dispute as to the applicability of this entry to the gas produced by the petitioner. Mr. Fazlur Rahman, the learned counsel for the petitioner, has urged that having regard to the ordinary meaning of the word "ekcise" which is not defined in the Act, the intendment is that excise duty becomes leviable only when the gas is ready for sale, that is when it is purified and removed of its 8 % impurity. According to him, the excise duty should be levied from the meter reading recorded at the downstream end of the purification plant. In support of his contention he invited our attention to the definition of the words 'curing' and 'manufacture' in clauses (c) and ( f ) of section 2 of the Central Excises and Salt Act, 1944, section 3(1) of the Act, rules 7 and 19 of the Central Excise Rules, 1944 and entry No, 12 laying emphasis on the fact that the words 'natural gas' should be read elusdem generis with the words "gaseous hydrocarbons" preceding them so as to mean other hydrocarbons" in that form. In order to appreciate the contentions of the learned counsel for the parties it will be useful to reproduce the relevant provisions of the Act and the Rules - "(c) 'curing includes wilting, drying, fermenting and any process for rendering an unmanufactured product fit for marketing or manufacture."
"( f) 'manufacture' includes any process incidental or ancillary to the completion of a manufactured product and the process of packing and repacking such product, and any process of remanufacture, remaking, reconditioning or repair."
"3(1) There shall be levied and collected in such manner may be prescribed duties of excise on all excisable goods C produced or manufactured and on all excisable services provided or rendered, in Pakistan, as and at the rates, set forth in the First Schedule."
"7. Recovery of Duty.--Every person who produces, cures, purchases or otherwise acquires without payment of duty, or manufactures any excisable goods, or who stores such goods in a warehouse, shall pay the duty due on such goods, at such time and place and to such persons as may be designated in, or under the authority of these Rules, whether the payment of such duties is secured by bond or otherwise; provided that, in the case of unmanufactured products, the person purchasing or acquiring them from a curer shall assume the liability for the payment of duty and if any such person does not pay such duty or duties at such time and place and to such person as aforesaid, or upon written demand made by the proper officer, whether such demand is delivered personally or is left at his dwelling house, or at the premises where such duty or duties have been charged, every such person shall be liable to a penalty which may extend to two thousand rupees or ten times the amount of duty involved whichever is greater and the goods in respect of which the demand is made shall be liable to confiscation ; Provided that, in the case of natural gas, the liability for payment of duty shall, if the Central Board of Revenue order in writing so directs, be of the distributors or the consumers."
"19. Lability to Duty.--Duty shall become chargeable as soon as the products have been cured and are in a fit state for sale or, where manufacture precedes sale, for manufacture, but the liability for the payment of duty shall lie on the person who purchases or otherwise acquires unmanufactured products without payment of duty. The Curer himself shall not be liable for the payment of duty unless he retains any quantity otherwise than for personal consumption, as provided in Rule 20."
Mr. Fazlur Rehman drew our attention to the meaning of the word 'excise' in the Oxford Dictionary and argued that when the goods becomes marketable it is only then that the excise duty becomes leviable and in support of this plea he placed reliance on rule 19 of the Excise Rules. Section 3(1) of the Act clearly lays down that the duty shall be levied and collected on all excisable goods produced or manufactured.
Excisable goods' have been defined in clause (d) of section 2 of the Act to mean "goods specified in Part 1 of the First Schedule as being subject to a duty". In this context, petroleum gases and other gaseous hydrocarbons including natural gas in entry No, 12 in the Schedule, are excisable goods.
We are unable to spell out either from the definition of the words "excisable goods" or the language of entry No, 12 the above concept. It is also not possible to give to the language of either excisable goods or entry No, 12, a meaning different from what they convey. As the heading shows, petroleum gases and other gaseous hydrocarbons including natural gas are mineral products and are obtained in that form. They are covered by the meaning of the word 'produced' in section 3 of the Act. This word is not defined in that Act but in the Webster's International Dictionary, Second Edition, Volume II at page 1974, the word "produce" is defined to mean "to bring forth as a natural products, and again in the book entitled " Words and Phrases Legally Defined" by John B. Saunders, IV, Volume, II Edition, at page, 187, the word 'produce' is thus defined :- "In relation to minerals or other substances includes the getting thereof."
There can, therefore, be no doubt that "gaseous hydrocarbons" become excisable goods as soon as they are brought out from the well and in terms of section 3(1) of the Act, liable to excise duty as a natural product.
5. However, Mr. Fazlur Rahman vehemently relied on rule 19 and in that context he referred us to the definition of the words 'curing' and 'manufacture' in clauses (c) and (f) of section 2 of the Act respectively. Rule 19 is in Chapter IV under the head "unmanufactured products". The words "unmanufactured products" in clause (ix) of rule 2 of the Central Excise Rules, 1944, are defined to mean excisable goods which are described in the First Schedule to the Act as "unmanufactured or cured". The learned counsel realising the difficulty that rule 19 refers to unmanufactured products, contended that the definition of the words `unmanufactured products' given in the Rule is beyond the scope of the Act as it is inconsistent with the definition of the word 'manufacture' and, therefore be disregarded. In the first place, the relevant clause in the Rule does not attempt to define what are unmanufactured products and in the second, these words are not defined in the Act, and if the relevant clause of the Rule refers to them as those mentioned in the Act as "unmanufactured or cured", we do not see how this meaning can be read beyond the scope of the Act. Reference, therefore, to the meaning of the word "manufacture" in the Act is irrelevant. A perusal of the Schedule to the Act shows that the head 'Mineral Products" under which entry No, 12 occurs, is neither referred to as unmanufactured nor cured. 'Curing' according to its meaning in the Act, is also in relation to unmanufactured product which is not the case here. This rule will, therefore, have no application as it only makes duty leviable as soon as the products have been cured and are in a fit state for sale. For the reasons given above, we are of the view that this rule cannot be pressed into service for contending that the excise duty is leviable only after the gaseous hydrocarbons are purified and ready for sale. Rule 7 is not helpful to the case of the petitioner either. Ordinarily, the excise duty is recoverable from the producer and it is only in terms of the proviso that a discretion is given to the Board of Revenue to recover it either from the distributor or the consumer.
6. Gaseous hydrocarbons are also included in the definition of the term "natural gases". This is clear from the definition of la the term "natural gas" in Webster's New Dictionary, Second Edition, Volume II at page 1630 :- "A gas issuing from the earth's crust through natural openings or bored wells and frequently accompanied by petroleum.When combustible it consists chiefly of methane with small and variable amounts of ethane, propane, butane, hydrogen, oxides of carbon, nitrogen, helium, hydrogen sulphide etc." The gaseous hydrocarbons in the instant case consist principally of Methane and other gases, such as Nitrogen, Propane, Ethane, Butane, Carbondioxide and Hydrogen Sulphide. By the use of they word 'including' after the words "gaseous hydrocarbons" and before the words "natural gas" the legislative intent is clear to enlarge the meaning of the words "gaseous hydrocarbons" to include not only those gases which come in that category but also those which are declared to be included in it. Accordingly the other gases, such as Carbondioxide, Hydrogen Sulphide, Nitrogen and others will also be included in the definition of the words "gaseous hydrocarbons" as they are constituents of natural gas. We are unable to give to the words "natural gas" the same meaning as that given to gaseous hydrocarbons, upon the rule of construction that the general words which follow the particular, should be given the same meaning. We may observe here that the doctrine of "edjusdem generis" is not an inviolable' rule of law. It is merely a rule of construction and if the language is clear it should not be invoked to defeat the legislative intent.
The learned counsel for the petitioner has pressed this rule into service merely to assert that "natural gas" should also mean some gas having the common factors as gaseous hydrocarbons so as to exclude impurity. According to him, what is, therefore, liable to excise duty is gaseous hydrocarbons minus impurity. We do not see any substance in this contention.
7. In the result, for the foregoing reasons we are of the view that the petition has no substance and it is accordingly dismissed with costs.