' AJMAL MIAN, J.-The petitioners through this petition have prayed for the following relief : "It is, therefore, respectfully prayed that the impugned orders and the levy of duty second time be declared to be without lawful authority and of no legal effect, and respondents be directed to pay back the amount of Rs, 39,750 illegally charged from them. Cost of the petition may also be awarded.
' Any other relief admissible to the petitioner-Company may also be graciously allowed."
2. The brief facts leading to the filing of the above petition are that the petitioners produced Straw Board in their manufacturing plant at Kotri and cleared it from there after payment of excise duty leviable thereon and brought it to their premises at Karachi where certain processes of pastings and cuttings by manual labour were carried out during the relevant period namely, from February, 1973 to May 1973. It has been averred that the petitioners had approached the then Joint Secretary, Ministry of Finance, who was also Member of the Central Board of Revenue through their letter, dated 13-7-1973 for the facility of A. R. 3, who ordered that facility of A. R. 3 procedure be allowed to the petitioner. It has been further averred that in the meantime from February 1973 to May 1973 the petitioner had been forced to clear the goods from their Karachi premises on payment of duty on the goods which had already suffered duty at the time of clearance from their manufacturing plant at Kotri. It has also been averred that the amount of duty illegally realised from the petitioner was Rs, 39,750 which was paid under protest which fact was brought to the notice by the petitioners by their letter dated 13-7-1973 addressed to the Joint Secretary. It seems that in response to the petitioner's request for the refund contained in their letter, dated 24-6-1974, respondent No, 1 issued a show-cause notice on 24-8-1974, but by his order dated 13-9-1974 declined the refund of the same on the ground that there was no exemption notice pointed out by the petitioner and that the process of pasting and cutting came within the mischief of the definition of the term 'manufacture" given in section 2(f) of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act). The petitioner filed an appeal before the respondent No, 2, which was dismissed by him by his order dated 1-3-1975 on the ground that there was retreatment of the duty paid goods. The revision filed by the petitioner also met the same fate and it was dismissed by respondent No, 3 by his order dated 31-5-1978. The petitioner being aggrieved by the above order have filed the present petition.
3. In support of the above petition Mr. Zaheer Ahmad assisted by Mr. Mahfooz Yar Khan, learned counsel for the petitioners has urged as follows :
(1) That the definition of the term 'manufacture' given in section 2(f ) of the Act can be pressed into service only if the process incidental or ancillary carried is with the object of the completion of a manufactured product and not if the process does not involve the completion of the product.
(ii) That since the petitioners had paid on the 5traw Board excise duty under item 37 of the First Schedule to the Act at the time of removing of the same from their Kotri Factory, the above duty paid Straw Board on which only the process of pasting and cutting was carried out cannot be made subject to the levy of the excise duty under the same item."
On the other hand Mr. Dastagir Ghazi learned counsel for the respondents has urged (i) that the process of pasting and cutting is covered by the definition of the term "manufacture" given in section 2(f) of the Act, and (ii) that the claim of the petitioner was hit by rule 11 of the Central Excise Rules, 1944 as the claim was filed after the expiry of one, year period.
4. Adverting to the above first contention of the learned counsel for the parties, it may be advantageous to reproduce herein below the definition of the term "manufacture" given in section 2(f) of the Act which reads as follows "Manufacture" includes any process incidental or ancillary to the completion of a manufactured product and any process of re-manufacture, re-making, re-conditioning or repair and the processes of packing or re-packing such product and
(1) in relation to tobacco includes the preparation of cigarettes, cigars, charoots, bilis, cigarettes or pipe or hookah tobacco, chewing tobacco or snuff ; and
(ii) in relation to salt, includes collection, removal, preparation, steeping, evaporation, bailing, or any one or more of these processes, the separation or purification of salt obtained in the manufacture of saltpetre, the separation of salt from earth or other substance so as to produce elementary salt, and the excavation or removal of natural saline deposits or efflorescence ; ' and the word 'manufacture' shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account if those goods are intended for sale and, in respect of gold and silver and products thereof, also any person dealing in gold and silver and products thereof who, whether or not he carries out any process of manufacture himself or through his employees or relatives, gets any process of manufacture carried out on his behalf any person who is not in his employ, and any person so dealing in gold and silver and products thereof shall be deemed to have manufactured for all purposes of this Act, all products of gold's or silver in which he deals in any capacity whatever."
' It may be noticed that the above definition inter alia provides that the term "manufacture" includes any process incidental or ancillary to the completion of a manufactured product and any process of remanufacture, re-making, re-conditioning or repair and the process of packing or repacking of such product.
5. Mr. Zaheer Ahmad Khan learned counsel for the petitioners has invited our attention to the following cases
(i) Superintendent of Central Excise, Lyallpur v. Ch. Faqir Muhammad PLD 1959 SC (Pak.) 103, in which the question in issue before the Supreme Court was, whether calendering is a process ancillary to the co,, pletion of the manufactured product which is the calendered clot . It was held that there can be no doubt that calendering is a proctss ancillary to the completion of the manufactured product which is the calendered cloth and, therefore, a licence under section 6 of that Act is required.
(ii) Collector of Central Excise and Land Customs v. Muhammad Aqil, PLD 1960 SC 4. In the above case it was held that the process of dyeing and glazing of tanned leather made from sheepskins are calculated to produce goods which would fall within the description of the two categories of tanned leather specified in item 23, First Schedule to the Act. It may be pointed out that the learned Judges of the erstwhile High Court of West Pakistan, Karachi Bench who heard the writ petition took the view that the above process would not attract the above provision of the Act. In this regard it was observed by the honourable Supreme Court that "the would appear to be a misconception here, for the duty does not 1 11 upon any process, but upon the goods produced, and the attic t s produced by Muhammad Aqil are clearly, as seen above, that leather of the category falling within the precise definition of `uppers' contained in item 23 of the First Schedule to the Act".
(iii) Messrs Star Vacuum Bottle Manufacturing Co. Ltd. v. Collector of Central Excise and Land Customs, Karachi and 2 others PLD 1972 Kar. 210, in which a Division Bench of this Court while construing whether vacuum flasks which were assembled were subject to levy of excise under first Schedule item 40 when its component parts were separately taxed at 10% ad valorem, it was observed as follows : ' The word manufacture is not really defined in the Act and the definition in clause ( f ) of section 2 of the Act, if definition it can be called, merely includes in the meaning of the word certain process.
In other words, the word itself is left to bear the ordinary or dictionary meaning with the addition in that meaning of all such processes whether or not the dictionary meaning would have included them. Now the dictionary meanings of the word processes are : ' The action of process of making by hand ; the making of articles or material by physical labour or mechanical power.
' Where, therefore, by the application of physical labour an article is made from material of goods the process. I think would undoubtedly be manufacture, however simple it may be and however easily distinguishable, the original items might remain in the finished product. It would be wrong, I think, to confine the meaning of the word to any highly complicated process or the use of machinery or to insist that the original material be so changed as not to make it recognisable in the finished product. Suppose for instance, a person purchased a carved piece of wood through which a hole has already been drilled, such as are commonly sold in Gift and Curio shops as also a length of electric wire, a plug and electric bulb and a socket and assemble the hole together into an electric lamp, I do not think it can be doubted that he has manufactured an electric lamp out of the various goods that he purchased readymade. Even though the manufacture is of the simplest kind, the finished article is an electric lamp and not merely a bulb of a wood craving or a piece of electric wire. The present case is in essence the same, even if one ignores the fact that the flasks are subjected to oxidization. This contention must, therefore, I think fail. Vacuum Flasks are manufactured goods and come within the purview of section 3 of the Act.
(iv) Union of India and another v. I. Delhi Cloth and General Mills Co. Ltd. AIR 1963 SC 791, in which the Indian Supreme Court while construing section 2( f) of the Act observed that under the Act the excise ditty is leviablz on goods which has not been defined in the Act but defines excisable goods as meaning goods specified in the First Schedule being subject to the duty of excise. It was further held that the ordinary meaning of the word 'goods' given in Webster dictionary provides strong support for the view that 'manufacture' which is liable to excise duty under the Central Excise and Salt Act, 1944 must be the 'bringing into existence of a new substance known to the market'. It was further held that inserting this definition the Court was unable to agree with the learned counsel for the appellant that by inserting the definition of the word `manufacture' in section 2(f) the Legislature intended to equate `processing' to 'manufacture' and intended to make mere 'processing' as distinct from 'manufacture' in the sense of bringing into existence of a new substance known to the market, liable to duty.
(v) Civil and Military Press Ltd. And 3 others v. Pakistan through Secretary, Finance and 3 others PLJ 1979 Kar.
313. In the above case the question before the Division Bench of this Court was, whether item 37 of the First Schedule to the Act namely paper and paper board all sorts will cover corrugated board made out of paper, while answering the above question in negative observed that 'it is also not disputed that corrugated board is itself an 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,'
' There is, therefore no force in this submission of Mr. Mansoor Ahmad Khan."
' On the other hand Mr. Dastagir Ghazi has referred to the case of Colony Sarhad Textile Mills Ltd. v.
Collector Excise and Customs and another (1), in which a Division Bench of the Lahore High Court while construing the expression "manufacture" used section 2(g) of the Act held that it is comprehensive and wide enough to include all processes principal or ancillary which a finished product had to undergo before its completion and that subjection of coarse cloth to refining processes is covered by the expression "manufacture". It was also held that cotton cloth going through various processes of bleaching and calendering etc. Could legitimately be assessed to double duty in terms of Explanation 10, item 15-A of the First Schedule.
6. From the above-cited cases, it is evident that the basic question in issue is, whether the process of pasting and cutting of the paper board is carried out with the object to complete the product or in other words, whether the carrying out of the above process results into a finished product marketable under a separate trade name. If paper board remains paper board in spite of the fact that two thin paper boards are pasted with each' other to make it thicker or it is cut to bring it to the required size, in our view; the same remains paper board and not a different item warranting the levy of excise duty second time. It may be pointed out that in most of the above-cited cases, the levy of excise duty second time is held justifiable only if process of treatment brings about into existence a new marketable item, for example coarse cloth is a separate marketable item, in contrast to refined cloth, tanned leather after carrying out the processes of bleaching and glazing result into a new marketable product and similarly assembling of various components of a vacuum flask results into an end product in the form of vacuum flask. We are, therefore, of the view that the respondents have not dealt with the point in issue in its right perspective and have misconstrued the relevant provision of law. It is not the case of the department that the process of pasting and cutting results into a new product. We are therefore of the view that the levy of the excise duty was not warranted by law.
7. As regards the above second contention of Mr. Zaheer Ahmad, it will suffice to observe that he has cited certain decided cases of Indian jurisdiction to support his above contention but in our view it is not necessary to examine the above second contention.
8. The only point which requires further consideration is, whether the demand of the petitioners was hit by rule 11 of the Central Excises and Salt Rules, 1944, which reads as follows : "11. No refund of charges erroneously levied or paid, unless claimed within one year. No duty which has been paid, or has been adjusted in an account-current maintained with the Collector under rule 9, and of which re-payment wholly, or in part is claimed in consequence of the same having been paid through inadvertence, error or misconstruction, shall be refunded and no abatement in duty shall be allowed, unless a written claim is lodged with the proper officer
(1) PLD 1969 Lab. 228 within one year from the date of such payment or adjustment as the case may be."
' It may be noticed that the above rule provides that no duty which has been paid or has been adjusted in an account current maintained with the Collector of which repayment wholly or in part is claimed on the ground that the same has been paid through inadvertence or error or misconstruction, shall be refunded and no abatement in duty shall be allowed unless a written claim is lodged with the proper officer within one year from the date of such payment or adjustment as the case may be. In the present case the petitioner had paid the amount under protest and not due to inadvertence, or error or misconstruction and therefore the above rule 11 is not attracted to the present case.
9. We, therefore allow the above petition and declare that the petitioners were not liable to pay excise duty second time for the paper board in question on which duty was recovered during the period from 26-2-1973 to 24-5-1973. We direct the respondent to refund the sum of Rs, 39,750 to the petitioners. The petition stands disposed of in the above terms with no order as to costs.