JUDGMENT: AJMAL MIAN, J.-1. This petition is directed against the orders, dated 30th December, 1978 and dated 24-9-1975 passed by respondents Nos. 1 and 2 respectively. The brief facts leading to the filing of the above petition are that the petitioners are manufacturers of Woollen Yarn, having their factory in SITE area of Karachi. They were served with a show-cause notice, dated 29-4-1974 by respondent No. 5, alleging therein, that during the period from 15-2-1972 to 20-2-1974 the petitioner had paid excise duty on the lower prices than the declared, advertised and printed retail prices for different descriptions and counts of woollen yarn. It was also alleged that there was short payment of Rs. 2,81,602.32. Consequently, they were called upon to show-cause within 10 days. This was replied to by the petitioners. However, another show-cause notice, dated 27-7-1974 was issued repeating the allegations contained in the above earlier show-cause notice and enquiring from the petitioners, whether they desired to be heard in person or through their authorised representative.
This show-cause notice was also replied to by the petitioner, through their letter, dated 2nd August, 1974. However, respondent No. 4 after hearing the petitioner maintained the above show-cause notice and the demand. The petitioner being aggrieved by the above order filed an appeal, which was allowed by respondent No. 3 (the Collector) by his order, dated 24-9-1975. It may be pertinent to reproduce hereinbelow the operative portion of the above order, which reads as follows:- "It has been contended by the appellant that the value shown on disputed ARs were actually retail prices printed on the different tags attached to the bundles of woollen yarn at the time of clearance. The Assistant Collector has reported that a perusal of the Cash Ledger and original credit memos produced by the party confirm that at no stage they have cleared or realized any amount which is in excess of the amount shown in the clearance documents and in some of the cases it was even less than what has been declared in the clearance documents. It is as such established that the party has not realized any amount in excess of what they had declared in the assessm ent documents. The Assistant Collector has also summed up that the whole confusion arose in the case because of the fact that the proper method of assessment was not adhered to by the manufacturer as well as by the Excise Officer who remained posted from time to time.
Since it is established that the factory did not got anything more than on which duty was paid and no sample of the packages are available either with the Circle Officer or with the party of the goods then cleared, the Assistant Collector's order is set aside and the appeal is allowed."
2. After that the Central Board of Revenue (i.e. Respondent No. 2) issued a show-cause notice under suo moto revisional power on 12th August, 1978, repeating the allegations contained in the aforesaid earlier show-cause notices, this was replied to by the petitioner through their letter, dated 22nd August, 1978, but after hearing them, respondent No. 2 by its order, dated 24-9-1975 maintained its above show-cause notice. The petitioner being aggrieved by the above order filed an appeal before respondent No. 1, which was dismissed by the above order, dated 30th December, 1978. The petitioner being aggrieved by the above two orders have filed the present petition.
(a) In support of, the above petition Mr. Khalid M. Ishaque, learned counsel for the petitioner has urged as follows:-
(i) That under section 4(2) of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act) read with Item 44 of the 1st Schedule to the Act the printed prices on the goods were the prices, which were to be accepted for the purpose of levy of excise duty and not declared or advertised prices.
(ii) That in any case the petitioner had made declaration of the prices through their letter, dated 20th January, 1973, and, therefore, the impugned notice for the period commencing from 15-2-1974 was illegal.
(b) On the other hand Mr. Liaquat Merchant, learned Dy. Attorney-General appearing for the respondents has contended as under:-
(i) That the petitioner filed a declaration before respondents department on 20th January, 1973 as to the maximum retail price and advertised the same in the newspapers, the respondents were entitled to treat the prices so declared and advertised in terms of sub-section 2(4) of the Act.
(ii) That if the respondents had charged the excise duty for the period prior to 20th January, 1973 on the basis of the above declaration, the petition to that extent be allowed.
3. In order to appreciate the above contentions, it may be pertinent to reproduce sub-sections (1) and (2) of section 4 and Item 44 of the 1st Schedule to the Act at the relevant time, which read as follows:- "4(1) Where under this Act any article is chargeable with duty at a rate dependent on the value of the article, such value shall be deemed to be the wholesale cash price for which an article of the like kind and quality is sold or is capable of being sold to the general body of retail traders or, if there is no general body of retail traders, the general body of consumers on the day on which the article which is being assessed to duty is removed from the factory or the warehouse, as the case may be, without any abatement or deduction whatever except the amounts of duty and sales tax then payable.
(2) Where under this Act any article is chargeable with duty at a rate dependent on the retail price of the article, the retail price shall be the price fixed by the manufacturer, inclusive of all charges and taxes, at which any particular brand or variety of such article should be sold to the general body of consumers or, if more than one such price is so fixed for the same brand or variety, the highest such, price.
Item 44. "Woollen Yarn Woollen yarn, all sorts, including knitting wool- Such rate, not exceeding thirty per cent of the retail price as may be fixed by the Central Government by notification in the official Gazette, and different rates may be fixed with reference to different conditions and circumstances.
(2) If not covered by sub-item (1) 200 per cent ad valorem."
A plain reading of the above-quoted sub-section (2) of section 4 of the Act indicates that where under the Act any article is chargeable with duty at a rate dependent on a retail price fixed by the manufacturer, the retail price is to be fixed by the manufacturer inclusive of all charges and taxes, at which any particular brand or variety of such article should be sold to the general body of consumers and in case of more than one such price is so fixed for the same brand or variety, the highest of such prices. It may also be noticed that under para 1 of Item 44, it has been provided that if weight and retail prices are legibly, prominently and indelibly printed on every package, cover, -wrapper or label, thirty per cent of the retail price as may be fixed by the Central Government is to be charged as the excise duty. The Government may also fix different rates with reference to different conditions and circumstances. In case the goods are not covered under para 1 of the above Item under para 2, 200 per cent ad valorem excise duty is payable.
4. In the present case, it is the case of the petitioner that though they had declared and advertised the prices mentioned in their letter, dated 20th January, 1973, but they printed the prices on the goods lower than the declared price and sold the same on the above low prices and paid the excise duty thereon accordingly. Whereas the case of the respondent as urged by Mr. Liaquat Merchant is that even if it Is to be assumed that the petitioner had printed on the wrappers or on the labels the prices lower than the prices declared by the petitioner in their above letter, dated 20th January, 1973 and advertised in the newspapers, the respondents were justified in adopting the highest prices as the basis for the levy of the excise duty. Both the learned counsel have referred to the Supreme Court judgment in the case of Atlas Battery Ltd. Vs. Superintendent, Central Excise &. Land Customs, Circle 'C', Karachi and Others PLD 1984 SC 86=PTCL 1984 CL 250, it may be pertinent to quote the relevant observations of the Supreme Court in the above judgement, which reads as follows:- "Upon a proper analysis of the provisions of the sub-section it would appear that for the assessm ent of excise duty 'retail price' has been defined to constitute the following ingredients:-
(i) It shall be the price fixed by the manufacturer.
(ii) It shall be inclusive of all charges and taxes.
(iii) It shall be the price at which the particular brand or variety of such article should be sold to the general body of consumers.
(iv) If more than one such price is so fixed for the same brand or variety, it shall be the highest of such price.
Item No. 53 of the First Schedule to the Act prescribes the rate at which duty is payable in regard to storage batteries as under:-
(a) If retail price is legibly, promi- 25 per cent of the retailnently and indelibly printed on price.
Each battery (b) If not covered by clause (a) 200 per cent, ad valorem.
Reading Item No. 53 with section 4(2) of the Central Excise and Salt Act, 1944, it would appear that if the retail price is printed on each battery the duty is to be asserted at the reduced rate of 25 per cent of such retail price, otherwise the duty would be assessed at 200 per cent ad valorem. The argument of the learned counsel looks at merely the provisions of Item No. 53 of the Schedule and does not take into consideration the basic statutory requirements for attracting clause (a) of Item No. 53 to his case. While it is correct to say that it is for the manufacturer to determine the retail price in order to print the same on his goods, it will not be entirely correct to contend that he can do so arbitrarily at his discretion without any letters of law upon his discretion. This is because Item No. 53(1), which provides for the chargeability of duty in respect of storage batteries at a rate dependent on the retail price has a nexus with section 4(2) of the Central Excises and Salt Act, as that provision of law defines "retail price" which is referred to in Item No. 53. In other words before the price printed on each item of batteries of a particular brand or variety, can become the basis for the assessm ent of the duty it has to constitute "retail price" in terms of section 4(2). Clearly, therefore, it is for the assessing officer to determine the question whether such retail price has been printed on each items of battery, so as to attract the beneficial provisions of clause (a) of Item No.
53. It is only when the retail price is fixed by the manufacturer in conformity with the requirement of this sub-section as analysed above, that the mechanics of the economic forces at work in the market will itself take care of the arbitrariness of the manufacturer. Otherwise by merely printing the retail price on the goods the manufacturer would be entitled to determine the assessment of duty on his goods, even if the printed price does not constitute the retail price within the meaning of section 4(2) of the Central Excises and Salt Act. To my mind such could not be the intention of the Legislature nor indeed is the meaning of the plain language employed, in a fiscal statute of the nature under consideration, In view of the aforesaid if the assessing officer finds that the price printed by the manufacturer on his goods cannot constitute retail price within the meaning of the said provision of section 4(2), the case would not then fall under the category of articles chargeable with duty at a rate dependent on the retail price, but would fall under sub-section (1) of section 4 and would be assessed on the value of the article."
5. A perusal of the above-quoted passage of the judgement of the Honourable Supreme Court indicates that the respondent department is entitled to examine the question, whether the prices printed by manufacturer of goods are the actual prices for the general body of consumers or whether they are fictitious, if the department finds that the prices so printed are not actual prices for the general body of consumers, it can press into service sub-section (1) of section 4 of the Act.
In the instant case the Collector, Central Excise in his above quoted passage of the order concluded that factually the petitioner has sold the goods at the printed prices and even for lesser prices, which were less than the prices declared in the above letter and advertised in the newspapers. This finding of fact has not been adverted to in the two impugned orders by respondents Nos. 1 and>-2. However, as pointed out by Mr. Liaquat Merchant the fact remained that the petitioners had declared maximum retail prices in their above letter, dated 20th January, 1973 and advertised the same. There is nothing on record to indicate that this declaration was withdrawn by the petitioners or that they had re-advertised the lower prices in order to inform the general body of consumers. It was then contended by Mr. Khalid M. Ishaque that factually if the printed prices were not to be acted upon in terms of above Item 44, the respondents could have invoked above-quoted sub-section (1) of section 4, but could not have assessed the excise duty under sub-section (2) of section 4 of the Act. Since we intend to remand the case tn the C.B.R, in our view, it will not be proper comment upon the above omission to dilate in the impugned orders of the above-quoted finding of fact recorded by the Collector or on the merits of last referred to hereinabove submission of the learned counsel for the petitioner.
6. As regards the above second submission of the learned counsel for the parties, we have noticed that in the above show-cause notice the period mentioned is from 13-2-1972 to 20-2-1974, whereas in the petitioner's above letter, dated 20th January, 1973 the prices mentioned therein were to be effective from 7th February, 1973, and therefore, re-working of the amount of the excise duty will have to be done if the impugned demand includes the period prior to 7th February, 1973.
7. In our view, it will be just and proper to remand the case to the C.B.R, with the direction to examine the above finding of the Collector quoted hereinabove in para 1 and also to examine the question whether the petitioner have been charged w.e.f. 7th February, 1973 on the basis of the declared prices contained in the petitioner's above letter, dated 20th January, 1973 or from 1-2- 1972. It will be open to the Board to decide the case in accordance with the law. And any observation contained herein may not be construed against the petitioner or the respondent department.
The above petition stands disposed of in the above terms with no orders as to costs.