' I.MAHMUD, J.--This Constitutional petition is directed against the notices issued by the Superintendent, Central Excise & Land Customs, Karachi, respondent No. 4, purporting to levy central excise duty in respect of corrugated board under item 37 of the First Schedule to the Central Excises & Salt Act, 1944 (hereinafter referred to as the Act) and further directing each of the petitioners to obtain the required manufacturing licence.
2. The petitioners carry on business at Karachi an manufacturers of box cartons which are made from corrugated board. Because of the special property of corrugated board such as flexibility, cushioning_ against shock, support and protection, the box cartons made from the corrugated board are found very suitable for use as containers for fragile articles. e.g, bottles, glass bulbs, crockery and sundry consumer goods manufactured by various industries in Pakistan. Several processes are employed on different machines to produce the box cartons as the end products. In a nutshell the processes comprise of feeding a semi-chemical liner paper into a paper corrugating machine comprising plain and grooved rollers to produce fluted sheets of paper called corrugated paper. "Fluting" is the geometric configuration or parallel wavy undulation formed by running the continuous sheets of liner paper through the grooved rollers to produce the corrugated effect. On one side of the flutes the paper passing through the set of plain roller is bonded with glue on the tips of the flutes. The articles thus produced is a "single face" board specimen of which is Annexure 'A' to the petition. With facings on both sides of the corrugation double-face board is produced.
Two sets of lutes with a facing on each side and one in the middle is called double-wall board. The board thus produced is then cut to the required sizes of the box cartons, the edges trimmed, folded and finally stitched by wire or stapled on the respective machines to produce the box cartons. The box cartons as end products in themselves are not liable to central excise duty and for several years until 1978 (except for a brief period in 1975), corrugated board was not subjected to the said duty. It is the case of the petitioners that all of a sudden in December 1978, the petitioners were served with notices by the Superintendent of Central Excise and Land Customs, respondent No. 4, informing them that they were liable to central excise duty in respect of the corrugated board as being 'paper board' covered by item 37 of the First Schedule to the Act. They were further directed not to remove from the factories the said goods including the box cartons made therefrom except on payment of the said duty. They were also directed to obtain the required central excise manufacturing licence. L-4, and to keep and maintain records as required under the Act in respect of the manufacture of the said goods. The petitioners made representations to the Collector of Central Excise and Land Customs as well as the Central Board of Revenue, but without success. The petitioners have, therefore, filed this constitutional petition praying that the levy of central excise duty in respect of corrugated board be declared illegal and without lawful authority and for issuance of necessary directions in that behalf to the respondents.
3. Section 3(1) of the Act provides that duties of excise on all excisable goods produced or manufactured shall be levied and collected in the prescribed manner at the rates set forth in the First Schedule "Excisable goods" have been defined in section 2(d) as meaning goods specified in Part I of the First Schedule. Item 37 in section 9 of Part I to the First Schedule reads as follows:- "Item No. Description Rate of Duty 37 Paper and paper board, 30 paisa all sorts per Kg."
4. Before discussing the main question whether the corrugated board is included in the expression "paper board, all sorts" of Item 37, two minor submissions of Mr. Mansoor Ahmad Khan, learned counsel for the petitioners may be disposed of. The first submission is that corrugated board is an intermediate product to produce the finished articles, box cartons, and as such is not liable to excise duty. But, as rightly submitted by Mr.Shah Jamil Alam, learned Deputy Attorney-General for the respondents, the process of conversion of liner paper into corrugated paper and then into corrugated bond, as above-described, is itself a process of manufacture of the box cartons, "incidental or ancillary to the completion of a manufacture product". The word "manufacture" is so defined in section 2(f) of the Act and in this connection the learned Deputy A.-G. supported his submission by relying on the cases of Superintendent of Central Excise, Lyallpur v. Ch. Faqir Muhammad PLD 1959 SC 103 and Pakistan and others v. Muhammad Aqil PLD 1960 SC 4.
Admittedly, the petitioners employ several types of machines as stated in para. 2 of the petition, during the process of manufacturing the corrugated board. It is also not disputed that corrugated board is itself on independent product, which is sold in the market and has independent uses. The word 'manufacture' is generally understood to mean bringing into existence a vendible product known in the market. B There is, therefore, no force in this submission of Mr. Mansoor Ahmad Khan.
5. The next submission of Mr. Mansoor Ahmad Khan is that the levy of excise duty on corrugated board in addition to excise duty already paid on paper by the manufacturer under item 37, would amount to double taxation. The respondents relied on Notification No. SRO 492 (1)/77, dated 11th June, 1977, which allows remission of duty on the paper used as raw material for the manufacture of corrugated board. There is no force in this contention. A case of double duty can only arise if the duty is leviable twice on the same article. The petitioners defeat their own argument by contending that the paper and corrugated paper made therefrom are two distinct and different articles and the question of remission of duty under the aforesaid notification does not arise.
6. Coming now to the main question, whether the corrugated board falls within the term "paper board", it is necessary to appreciate the nature, physical properties, uses and classification according to trade practices of the respective articles in question. The "Dictionary of Paper" 3rd edition, published by the American Paper and Pulp Association (1965), defines "paper board" as one of two broad sub-divisions of paper. The distinction between paper and paper board is not sharp but generally spearing paper is lighter in basis weight. Thinner and more flexible than paper board which is heavier, thicker and more rigid with the exception of blotting paper. "Paper and Paper Board Characteristics, Nomenclature, and Significance of Tests" Third Edition, published by American Society for Testing and Materials, page 28, describes paper board as, Paper board is characterised by a structural strength as differing from paper; that is, it is constructed for certain properties, such as stiffness, ability to resist deformation and to retain its original general form under stress tearing resistance and the like. Paper board of various descriptions, such as card board, straw board, file boards, chip board, grey board etc. are used for variety of purposes and not merely for manufacture of box cartons. The raw material used D for the manufacture of paper and paper board is primarily wood pulp as a fibrous material although a smaller percentage of no ferrous inorganic chemicals and fillers are added. Special kinds of machine known as four drinier type or cyclinder type machines, are used by paper board mills for the manufacture of paper board after passing through various processes of preparing the wood pulp, draining off the water and drying the plup sheets and treating the surface to produce the various kinds of paper board.
On the other hand, corrugated board differs from paper board in all these respects. The raw material for the manufacture of corrugated board is the chemically treated liner paper already prepared by the paper board mills. The process of manufacture and the types of machinery used are also different. Unlike the paper board, a single face or double face corrugated board is not sold pressed and because of the fluting, the board provides some degree of cushioning effect of the corrugation. It is flexible and permit easy folding. The cross section is hollow. Single-face or double- face board or even a double wall or triple wall board may even be a stiff board but it is a misnomer to call it a paper board.
7. As evidence of the fact that corrugated board has been treated differently from paper board in respect of excise duty Mr. Mansoor Ahmad Khan submitted that for several years, except for a brief period in the year 1975, neither corrugated paper nor corrugated board was subjected to excise duty. In this connection, he referred to Sales Tax Circular No. 6 of 1975, which clarified that Central Board of Revenue had decided that the items not included in the annexure to the Circular made of paper, shall henceforth be classified as 'Paper Products' and shall be subjected only to sales tax and not to excise duty. Corrugated paper was, therefore, treated as paper product and only sates tax was leviable thereon. According to counsel, this past practice operated as an estoppel and binding on the respondents. He referred to Lever Finance Ltd. v. Westminster City London Council (1970) 3 W L R, 732, in which the Court of Appeal held that the conduct of the planning authorities of the respondent in leading the appellants property developers to believe that no further permission was required for minor modification in the building plans, amounted to a representation made by an officer of the respondent acting within the scope of his ostensible authority on which the appellant acted, and as such the respondent was bound. That case is clearly distinguishable as it was a case of representation. Counsel also cited Wazir Ahmad v. Pakistan PLD 1970 SC 453, in which their Lordships of the Supreme Court observed that a departmental construction of the relevant service rules followed consistently in the past, will be binding on the department so as not to disturb the rights which have been created or settled on the faith of such practice. That case is again is distinguishable, for it is well-established that past practice cannot create an estoppel against a taxing statute passed in the public interests Crawford in his book. The Construction of Statutes (1948 Edition), Article 219, observes that the departmental construction followed and acted upon for a long period of time and generally acquiesced in, is only of pursuasive character, but will not be binding upon the Court, inasmuch the interpretation of statute is a judicial function and law is what the Courts interpret. And where there is a doubt in such interpretation, the Courts will readily be persuaded to resolve it in favour of the subject.
8. Mr. Mansoor Ahmed Khan also relied on the fact that in the Pakistan Customs Tariff and in the I.C.T. Schedule paper board and corrugated paper are classified under different headings. The heading 48.0] covers machine-made paper boards as manufactured in the form of rolls of sheets but it excludes, inter alia, paper board corrugated (with or without flat surface sheets ) under heading 48.01
9. The contention of Mr. Shah Jamil Alam, learned Deputy Attorney-General, was that in its popular sense corragated board meant board made of paper and, therefore, it is paper board. But, as rightly submitted by Mr. Mansoor Ahmad Khan, the words "paper board" and "corrugated board" are words of art and have acquired technical meanings. The trade distinguishes paper board from corrugated board. As observed in Collecter of Customs v. Abdul Majid Khan and others 1977 SCMR 371 that if a statute is one passed with reference to a particular trade, business or transaction and words are used therein which every body conversant with the trade, business or transaction knows and understands to have a particular meaning in it, then the words are to be construed as having the particular meaning which may differ from the ordinary or popular meaning. Their Lordships further observed :- "Moreover, in interpreting a penal or a taxing statute the Courts must look to the words of the statute and interpret them in the light of what is clearly expressed it cannot imply anything which is not expressed, it cannot import provisions the statue so as to support assumed deficiency as held in Messrs Hirjina & Co. (Pakistan) Ltd. v. Commissioner of Sales Tax, Central , Karachi 1971 SCMR
128. Last but not the least, it is also well-established that penal provisions of a statute should be strictly construed and in case of any ambiguity or doubt arising from the construe H tion, the benefit must go to the accused person. Muhammad Ali v. State Bank of Pakistan, Karachi 1973 SCMR 140."
10. We have, therefore, reached the conclusion that corrugated board made out of paper is neither 'paper' nor 'paper board'. It was, however, contended by the learned Deputy Attorney-General that the expression "all sorts" would, cover corrugated board as a sort of paper board. We are unable to accept this interpretation as it begs the question J whether corrugated board fails within the general classification of paper board.
11. For the foregoing reasons, we would declare that the levy of central excise duty in respect of corrugated board under item 37 to the First Schedule of the Act is illegal and without lawful authority. The respondents are restrained from levying the same. The petition is accordingly allowed with no order as to costs.