This is a constitutional petition filed by Muhammad Fayyaz, petitioner challenging the order of the Customs Authorities imposing Central Excise duty on gas pressure regulators manufactured by him prior to July, 1979.
2. The brief facts of the case are that Muhammad Fayyaz proprietor of Pak Engineering Works, Lahore, petitioner manufacturers domestic gas regulators.
3. On 12-5-1979 the Deputy Superintendent Central Excise, Lahore, with his team of Inspectors, visited the factory of the petitioner and found that the petitioner neither had obtained an excise licence in form L-4 as required under Rule 174 of the Central Excise Rules, 1944, nor had been paying the central excise duty on the domestic gas regulators being manufactured by him. Accordingly, the Central Excise staff seized the goods lying at the premises. It also made inquiries and found that the petitioner had supplied roughly 27500 domestic regulators to Sui Northern Gas Pipelines Ltd. In the current financial year, on which no central excise duty had been paid. Accordingly, on 9- 6-1979, the Deputy Collector Central Excise issued a notice to the petitioner to show cause why penal action under rule 210 of the Central Excise Rules, 1944, should not be taken against him and why excise duty and sales tax should not be recovered from him under Rules 7 and 10 of the same Rules.
4. On 13-6-1979, the petitioner submitted his reply to the Deputy Collector of Central Excise, Lahore, submitting that the domestic gas pressure regulators manufactured by him were part of pipe fittings used in the transmission of gas and that, therefore, they could not come within the category of gas apparatus or gas appliances within the meaning of item 59 of the First Schedule of the Central Excises and Salt Act, 1944, and, therefore, he had neither taken out a licence for its manufacture nor paid any central excise duty. As regards the charge of mis--statement regarding the number of gas pressure regulators manufactured by it in the year in question, the petitioner submitted that he had only given approximate figures to the Central Excise Officer and had requested him to ascertain the correct figures from the office of the Sui Northern Gas Pipelines Ltd., Lahore, and as such he had not made any mis-statement.
5.The Deputy Collector, Central Excise, Lahore, heard the arguments on 16-6-1979. On behalf of the petitioner it was submitted that gas apparatus and appliances listed in item No.59 of the First Schedule of the Central Excise and Salt Act, 1944, related to items which consumed gas for achieving a certain object, namely,, heating or cooling, as the case may be, but the gas pressure regulators did not achieve such a purpose, but was only a fitting to the gas pipelines that served the gas apparatus or appliances. The learned Deputy Collector of Central Excise, without even adverting to the arguments raised on behalf of the petitioner, merely held that as the Central Board of Revenue by its letter dated 27-8-1978 had given a ruling that gas pressure regulators and pressure reducing devices fell under item No.59 of the Central Excise Tariff, he had no choice but to hold accordingly and, he, therefore, imposed a penalty of Rs.500 on the petitioner under Rule 210 of the Central Excise Rules and ordered the confiscation of the goods seized, but granted the petitioner option of redemption on payment of fine of Rs.3000 in addition to the central excise duty payable amounting to Rs.3963.77 and sales tax amounting to Rs.8720. He also ordered the petitioner to pay central excise duty and sales tax on 27500 gas pressure regulators which had been supplied by it earlier to the Sui Northern Gas Pipelines Ltd,. Lahore.
6. Being aggrieved by the above order, the petitioner preferred an appeal before the Collector Central Excise (Appeals). The petitioner raised the same submissions which had been raised earlier before the Deputy Collector of Central Excise. However, the appeal was dismissed on the short ground that the impugned order was based on the ruling of the Central Board of Revenue, which was binding on him.
7.The petitioner then preferred a revision petition before the Central Board of Revenue, which also failed and was dismissed on 25-10-1979.
8. Being aggrieved by the above orders of the Central Excise Authorities, the petitioner preferred a writ petition in High Court, which is now before me for disposal.
9. In order to understand this case, it is necessary to set out items 58 and 59 of the First Schedule of the Central Excise and Salt Act, 1944: ,
58. Electrical goods, Apparatus and Appliances:- Electrical goods, apparatus, appliances equipment and fittings, not otherwise specified, including air conditioners, boilers water coolers, refrigerators, freezers, heaters stoves, cooking ranges, hot plates, juice extracting machines, domestic grinding machines, switches, plugs, regulators, electric irons and kettles and parts of all such electrical goods, apparatus, appliances, equipment and fittings.
59.Gas Apparatus and Appliances-- Gas apparatus and appliances, all sorts, including boilers, heaters, stoves, cookers, cooking ranges and cooling and refrigerating equipment and parts of all such apparatus and appliances.
Likewise, it is necessary to set out item 10.07 of the new Schedule which was enforced by the Finance Act, 1979: 10.07 Gas Apparatus and Appliances-- Gas apparatus, appliances, equipment and fittings all sorts, whether in assembled or unassembled form and parts thereof, (A)Cooling and refrigerating equipment and fittings.
(B) Heaters, stoves, cookers and cooking ranges.
(C) Geysers, boilers and water heaters.
(D) Meters, pressure regulators and thermostats.
(E) Others including lamps.
(F) Parts of gas apparatus, appliances, equipment and fittings.
Assessable rates on account of Exemption or Regulatory Duty, etc. Example: Gas apparatus and appliances in un-assembled form or in knocked down condition or parts of gas apparatus and appliances, used for the manufacture of gas apparatus and appliances on which duty is levied, provided that the provisions of the rules in Chapter X of the Central Excise Rules, 1944, are followed. (See S.R.O. 555(1)/1979 as amended by S.R.O. 556(1)/1980).
10. It is clear from the above that where the Act desires equipment and fittings to be included amongst the items to be taxed, it does so specifically. The only question , therefore, that arises for determination in the present case is whether the gas regulator or the gas pressure regulators manufactured by the petitioner is a gas apparatus, appliances, equipment, or fitting.
11. The word "apparatus" can be used in many senses. First, as a collection or set of materials, implements or utensils, which can be used for a given piece of work experiment or operation. Next, as a form of complex instrument or appliance, for a specific duty or action operation. There are other senses in which A this word is used, but I need not discuss them. According to Websters International Dictionary, (Unabridged), Second Edition, "apparatus" means "A collection or set of materials, implements or untensils for a given work, experimental or operative. Any complex instrument or appliance, mechanical or chemical, for a specific action or operation; machinery, machanism." According to Shorter Oxford English Dictionary, Third Edition, this word means "The things collectively in which preparation consists, and by which its proceses are maintained; equipment, material, machinery; material appendages or arrangements. The mechanical requisites for scientific experiments or investigations". According to Funk and Wagnalls Standard Encyclopedic College Dictionary, the word means "A device of machine for a particular purpose; an X--Ray apparatus, an integrated assembly of tools, appliances, instruments, etc., used for a specific purpose." According to Collins English Dictionary, this word means "A collection of instruments, machines, tools, parts, or other equipment used for a particular purpose. A machine having a specific function; breathing apparatus." According to the English Universal Dictionary, it means "instruments, devised, arranged and got ready for accomplishing a desired end; a collection of utensils, or mechanical contrivances for carrying out a given work: an apparatus for pump water, driving piles, heating a building, etc. A delicate and complex instrument for experiment in physics and chemistry etc., scientific apparatus." According to Black's Law Dictionary, Third Edition. "apparatus" means "an outfit of tools, utensils or instruments adapted to accomplishment of any branch of work or for performance of experiment or operation. As used in statutes granting exemption from execution, etc., apparatus means a complex device or machine designed for the accomplishment of a special purpose; a complex instrument or appliance, mechanical or chemical, for a spec action or operation; machinery, mechanism; as a newspaper printing press.
12. The word "appliance" is used in a number of senses. First, as an act of applying or using; application. Next, as a thing applied or used as a means. There are other senses in which this word is used, but they can be left out. According to Webstor's International Dictionary, (Unabridged), Second Edition, the word "appliance" means "A thing applied or used as means to an end; a piece of apparatus; device; as, to use a mechanical appliance". According to Shorter English Dictionary Third Edition, this word means "A thing applied as a means to an end: apparatus According to Wagnalls and Standard Encyclopedic Dictionary, it means "A device or instrument; specially, an electrically powered device for household work, as a washer, vacuum cleaner, etc." According to Collins English Dictionary, this word means "A machine or device esp. An electrical one used domestically; any piece of equipment having a specific function; a device fitted to a machine or tool to adapt d for a specific purpose." According to the Universal English Dictionary, this word means "Mechanical device or contravance, used as a means to a particular end; apparatus." The Black's Law Dictionary defines it as "Refers to machinery and all the instruments used in operating it and is to be distinguished from the word `materials' which includes everything of which anything is made. An appliance is a mechanical thing, a device or apparatus ...The term has been applied to a telephone line-man's safety belt."
13. The word "equipment" is also used in a number of senses. First, as material or articles used in equipping some thing. Next, the physical facilities available for production, such as machines. It is also used in other senses, but they need not be discussed here. According to Websters International Dictionary (Unabridged), Second Edition, the word "equipment" means" material or articles used in equipment, as for an expedition; the articles comprised in a outfit as furnishings or apparatus; equipige; as laboratory equipments. In Industry the physical facilities available for production, including the buildings, machines, tools etc." According to Shorter's Oxford English Dictionary, this word means "Anything used in equiping, furniture, outfit, war like apparatus; necessaries for travelling, etc." According to Funk and Wagnalls Encyclopedic Dictionary, this word is defined as "Materials with which a person or organization is provided for some special purpose or service. The rolling stock and apparatus for operating a rail, road or other transportation system."
According to Black's Law Dictionary, it means "Furnishings, or outfit for the required purposes. In a legacy to be applied towards rebuilding and equipment of a hospital, it was held "equipment" meant everything required to convert an empty building into a hospital. An exceedingly elastic term, the meaning of which depends upon context."
14. The word "fitting" also carries a number of meanings. First, as an act of arranging. Next, as things used in fitting up. It is in this sense that the word is used in the Act. According to Websters New International Dictionary, (Unabridged), Second Edition, this word means "Anything used in fitting up; esp., pl., necessary fixtures or apparatus; auxiliary parts as of a boiler or the small parts of a machine; as the fitting of a room; gas fitting." According to Shorter's Oxford English Dictionary, this word means "Anything used m fitting, Fixtures, apparatus, furniture. The bringing together and adjusting of the parts o" engines, machines etc.' According to Funk and Wagnalls Encyclopedic College Dictionary, the word means "A piece of equipment or an appliance used in an adjustment; a gas fitting. Furnishing, fixtures, or decorations, as for a house." According to Collins English Dictionary, this word means "An auxiliary or part; an electrical fitting. Furnishing or accessories in a building. "The Universal English Dictionary defines it as "A thing that is fitted to another thing.
Fixtures in buildings, etc., detachable part of machinery etc. Accessory."
15. The wording of Article 59 of the First Schedule covers gas apparatus and appliances, all sorts, including boilers, heaters, stoves, cookers, cooking ranges, etc., and parts of all such apparatus and appliances, whilst item 58 of the said Schedule covers electrical goods, apparatus, appliances, equipment and fittings, not otherwise specified, including air-conditioners boilers, water coolers, refrigerators, ....Switches, plugs, etc. And parts of all such electrical goods, apparatus, appliances, equipment and fittings. In view of the difference in the wording of these two items, it is apparent that the words", apparatus and appliances" refer to the completed apparatus, machines and appliances which are intended for specific duties, action or operation, as opposed to a collection or set of parts or materials that go to make up such apparatus, machines and appliances. The word ."appliances" used in items 58 and 59, is in reference to the devices, contrivances and machines which perform primary functions, such as gas heaters, electric irons, electric hair dryers, etc. Appliances which perform secondary functions, which are aids or accessories to or support other apparatus and appliances, obviously fall within "equipment" or "fittings" depending upon their functions and duties, such as circuit breakers, gas pressure regulators, taps, cocks, valves etc. The word" equipment" referred to in item 58 obvious has, therefore, reference to the materials or articles that can be treated as aids or accessories to any electrical apparatus or appliance and the word "fittings' has reference to the materials or parts used in fitting the electrical apparatus. Or appliances A gas pressure regulator is normally fitted outside a house or an office at a place just before where the gas meter is installed, in order to regulate, an even flow of gas into the meter. It is far away from the gas apparatus or appliance in the home or office. In these circumstances, I would hold that the gas pressure regulator falls within gas equipment or fitting, but not in the category of gas apparatus or appliance, as laid down in item 59 of the First Schedule of the Central Excises and Salt Act, 1944.
16. As regards the contention that item 10.07 of the new schedule to the Central Excises and Salt Act, 1944, which was enforced by the Finance Act, 1979, f is only declaratory or explanatory of item 59 of the Schedule to the said Act and, therefore, in construing whether the gas pressure regulators manufactured by the petitioner should be treated as covered by item 10.07 of the new schedule, 1 am afraid I cannot accept this argument. Where the legislative draftsman wanted to include "equipment and fittings" in different items appearing in the old schedule, he did so, as in item 58; and where he did not desire to do so, he omitted the same, as, in item 59. Later, when the legislative draftsman wanted to expand the goods to be included under the head "Gas, Apparatus and Appliances" in the new Schedule, which was to be enforced by the Finance Ordinance, 1979, he did so by not only including "equipment and fittings" in the new item 10.07 of the new. Schedule, but also clarified it by detailing different types of goods thereunder, which included accessories and fittings. In these circumstances, the definition given in item 10.07 of the new Schedule cannot be used to determine whether the gas pressure regulators manufactured by the petitioner during the period prior to 1-7-1979 was chargeable to central excise duty or not. The case of the petitioner is covered by item 59 of the First Schedule to the Central Excises and Salt Act, 1944, as was in force upto 27th June, 1979.
17. For the foregoing reasons, the orders of the Central Excise Authorities imposing penalty, fine and central excise duty on the petitioner and ordering confiscation of his goods, are illegal and deserve to be set aside.
18. In view of the above, this petition is accepted and the orders of the Deputy Collector of Central Excise dated 16-6-1979, that of the Collector of Central Excise (appeals) dated 23-6-1979 and that of the Central Board of Revenue dated 25-7-1979 are hereby declared to have been passed without lawful authority and are set aside. The goods seized from the petitioner shall be returned to him, in case they have already not been released. Penalty, fine and central excise duty, if any recovered from the petitioner, shall be refunded to him.
19. This petition is accepted with costs. Rupees Two Thousand (Rs. 2000) is fixed as counsel's fee, which shall be paid to the petitioner.