' ABDUL QADEER CHAUDHARY, C.J.--In all these petitions common questions of law and fact have been raised,. As such they are being disposed of by this common judgment.
2. The facts in brief are that the petitioners imported ships for the purpose of scrap under import licences. The petitioners filed with Customs Officer, Appraising Section at Gadani details of entries for assessm ent of duties and for release of vessels. The petitioners also filed valuation certificate issued by Ship Breakers Association certifying the valuation of vessels. The petitioners had deposited 50% of taxes and requested for permission to commence scrapping of vessels. This permission was granted. After receiving the requisite permission from the respondents the petitioners dismantled the ships and recovered various items. The respondents declined to release ship material of the vessels unless excise duty at the rate of Rs,600 per ton is paid.
3. Before 14-8-1988, sales tax at the rate of 121% was also payable on the import of a ship vide Notification No,SR0-531(1)/86, dated 29th May, 1986. The sales tax was payable only upon breaking up of the imported ships. The said Notification, dated 29th May, 1986 was withdrawn vide subsequent Notification No,SRO-501(1)/88, dated 26th June, 1988 totally exempting import of scrap ships from levying of sales tax.
4. On 14th July, 1988 the President of Pakistan promulgated an Ordinance called the. Central Excise and Salt Act (Amendment) Ordinance-Ill of 1988; persuant to which Item No,09.07 was added in Para. 1 of section 1 of the First Schedule to the Central Excises and Salt Act, 1944 (hereinafter called "the Act") imposing Rs,2,000 per ton excise duty on iron and steel plates of all sorts as are recovered through any process of dismantling or breaking of ship and vessel. The said item is reproduced below:- "09.07 IRON AND STEEL PLATES ' Iron and steel plates, all sorts including ship plates, sheets, slabs and flat bars of all sizes and shapes as are recovered through any process of dismantling or breaking of =ships and vessels."
' On the same day, when the said Ordinance' was promulgated another Notification was issued, whereby the excise duty on the iron and steel plates of all sizes as mentioned in Item 09.07 was reduced and fixed at Rs,600 per metric ton: The Notification was issued by the Federal Government in exercise of powers conferred by subsection (1) of section 12-A of the Act.
5. The short question for consideration is as to vires of the levying of the excise duty under Amending Ordinance-III of 1988 on iron and steel plates or ship plates recovered from the process of dismantling or breaking of a ship..
6. There are two sets of petitions i.e,; in Petitions Nos.203, 225, 226, 227, 228, 229, 272, 243 and 273 of 1988, the petitioners had already dismantled the ships before the 14th of July, 1988 and paid the customs duty and sales tax whereas in other petitions the process of dismantling started after the Amending Ordinance III of 1988 came into force.
7. The learned counsel for the parties have been heard at length. It is contended by the learned counsel for the petitioners that the petitioners are not liable to pay the excise duty as the Amending Ordinance would not apply with retrospective effect. In the petitions referred to above, the petitioners had already dismantled the vessels. In other petitions, it is stated that in order to attract the provisions of Amending Ordinance-Ill of 1988, the goods should have been "manufactured", which is not the position in the present cases, as the process of ship-breaking is nothing more than cutting of the ship into small pieces.
8. In order to appreciate the contention of the learned counsel, it is necessary to refer to the various provisions of the Act. The preamble of the Act provides:- "Whereas it is expedient to consolidate and amend the law relating to central duties of excise on goods manufactured or produced, and services provided or rendered, in Pakistan and to salt.
' Manufacture has been described in section 2(f) as under:- "manufacture" includes any process incidental or ancillary to the completion of a manufactured product and any process of re-manufacture, remaking, reconditioning or repair and the processes of packing or, repacking such product and (i) & (ii) (not relevant) 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 the production or manufacture on his own account if those goods are intended for sale."
' Section 3 is the charging section and the relevant provision reads as under:- "(1) There shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods, produced or manufactured, and on all excisable services provided or rendered, in Pakistan, as, and at the rates set forth in the First Schedule.
(2) The Central Board of Revenue may, by Notification in the Official Gazette fix, for the purpose of levying the said duties, tariff values of any articles enumerated, either specifically or under general headings, in the First Schedule as chargeable with duty ad valorem and may alter any tariff values for the time being in force."
9. On the basis of the above provisions, it is contended that the duties of excise are leviable only on such excisable goods which are produced and manufactured in Pakistan. On the other hand, it is stated by Mr. Riaz, learned counsel for the respondents that the decisions of these petitions depend on the definition of Manufacture. He submitted that the word "manufacture" covers iron and steel plates and, therefore, liable to excise duty. This process of dismantling results in the production of such goods which are clearly different from the ship or vessels. By this process, value is added to the material which constitutes a ship or a vessel. It is accordingly, a process of manufacture and the levy of central excise duty thereon is not repugnant to the meanings of section 3 of the Act.
Besides; the description of the item 09.07 illustrates clearly that the ship plate etc. Recovered through dismantling or breaking of ships and vessels is excisable and liable to Central Excise Duty after the promulgation of Ordinance No,III of 1988.
10. The respondents have also challenged the contention of the petitioners that the ships which had already been dismantled are not liable to excise duty and submited that under section 3-C of the Act the material date for determination of tariff value and rate of duty is the date on which the goods are cleared for home consumption. The date of manufacture is of no consequence.
11. We have considered the arguments of learned counsel for the parties. The preamble of the Act is a guideline to the provisions of the Act. Excise duty has not been defined in the Act itself, but generally it means imposition of duty on the goods manufactured or made in Pakistan and intended for home consumption, whereas customs duty is levied on goods being imported into Pakistan from abroad or exported from Pakistan. In Governor-General-in-Council v. Province of Madras, reported in AIR 1945 Privy Council 98, it has been held that-- "a duty of excise is primarily a duty levied upon a manufacturer or producer in respect of the commodity manufactured or produced."
' It is to be seen whether the breaking of ship into small pieces amounts to process of manufacture or production. The decision of these petitions depends on proof of manufacture. Fiscal liability of subject is based on term manufacture and produce. The admitted position is that the vessels are imported for the purpose of scrapping. A ship is composed of many components. In the process of dismantling a ship, various articles are recovered such as plates, sheets, copper, wood and other finished products of iron and steel. The definition of manufacture includes any process incidental or ancillary to the completion of a manufacture product. According to Abbot's Law Dictionary "whatever is made by human labour whether directly or through instrumental of machinery h is also been termed as manufacture". According to Mamnadas Chhotalal Desai and others v. C.L.
Nangia and others reported in AIR 1965 Gujarat 215: "the natural and plain meaning of manufacture is to make or D fabricate or to bring into existence an article or product either by physical labour or by power."
' In Union of India and another v. Delhi Cloth and General Mills Company Limited and others, reported in AIR 1963 SC 791, it has been held.As under:- "Manufacture which is liable to excise duty under the Central Excises and Salt Act, 1944, must therefore, be the 'bringing into existence of a new substance known to the market and does not mean merely to produce some change in a substance, however minor in consequence the change may be to become the manufactured article. The application of machinery or labour in such processes would not bring goods within the definition of manufacture unless a transformation of its substance takes place'. It is necessary that in the process of such making, a new product comes into existence."
' In re: A .M.Chinniah, Manager, 786 Sangu Soap Works Kattumavadi Road Arantangi v. Sub- Divisional Magistrate Tanjore, reported in AIR 1957 Madras 755, the concept of manufacture has been described as under:- "To sum up, to constitute a manufacture there must be a transformation. Mere labour bestowed on an article even if the labour is applied through machinery, will not make it a manufacture, unless it has progressed so far that a transformation ensues, and the article becomes commercially known as another and different article from that as which it 'begins its existence. Whatever is made by human labour, either directly or through the instrumentality of machinery (Abbot) Law Dictionary).
Something of a corporeal and substantial nature, something that can be made by man from the matters subjected to his art and skill, or at the least some new mode of employing practically his art and skill is required to satisfy the word 'manufacture', Per Abbot, C.J. In R.V. Wheeler, (1819) 2B & Ald 345 (E). See also Gibson v. Brand, (1842) 4 M&G 179(F)."
' The contention of the learned counsel for the petitioners has force that there should be such transformation in the original product that a new and different article must emerge having a distinctive character of an article. The ships were manufactured outside Pakistan. They were brought into Pakistan for dismantling and breaking. This process, therefore, cannot be termed as remanufacture or remaking as no new product is made out by process of dismantling. On the other hand, through this process, it is an act of disintegrating i.e, an act opposite to remaking. A ship is composed of several components. The admitted facts are that the ships were broken into small pieces to be delivered to the customers. No excise duty was leviable on ship plates until 14th July, 1988. The effect of the Amending Ordinance III was that Schedule II of Act was amended.
Produce has, not been separately defined in the Act. However, it included in the definition I of manufacture. It means produce represents the same concept as manufacture otherwise the legislature would have defined this term also. Even according to the dictionary meaning "Produce" means to bring forward or out, to extend, to bring into being, to bring forth, to yield, to bring about, to make (Chambers 20th Century Dictionary).
' The learned counsel for respondents has referred to the cases of (i) The Nagpur Electric Light and Power Co. Ltd. And another v. The Regional Director Employees, State Insurance Corporation and others, reported in AIR 1967 SC page 1364, (ii) Union of India and another v. Delhi Cloth and General Mills Co. Ltd. And others, reported in AIR 1963 SC page 791, (iii) Messrs Chenab Woollen and Textile Mills Ltd. v. Pakistan and others, reported in PLD 1968 Lahore page 1116, (iv) Superintendent of Central Excise, Lyallpur v. Ch. Faqir Muhammad, reported in PLD 1959 SC page 103, (v) Pakistan and another v. Muhammad Aqil, reported in PLD 1960 SC page 4,
(vi) State v. Madhogaria, r'eported in AIR 1959 Kerala page 200,
(vii) Commissioner of Sales Tax, U.P. v. Dr. Sukh Deo, reported in AIR 1969 SC page 499, and (viii)
State of Bihar v. Messrs Chrestain Mica Industries Limited, reported in AIR 1957 Patna page 184.
In AIR 1959 Kerala, page 200, manufacture process has been defined under the Factories Act.
According to AIR 1969 SC page 499 (Commissioner of Sales Tax, U.P. v. Dr. Sukh Deo): "the expression 'Manufacture' has in ordinary acceptation a wide connotation. It means making of articles, or material commercially different from the basic components by physical labour or mechanical process."
' It has been held in the case of Pakistan and another v. Muhammad Aqil, reported in PLD 1960 SC page 4, -that:- "Duty does not fall upon any process, but the goods produced ' In the case of State of Bihar v. Messrs Chrestain Mica Industries Limited, reported in AIR 1957 Patna page 184, it has been observed as under:- "the essential point is that something is brought into existence which. Is different from that originally existing, in the sense L that the thing produced is by itself a material commodity and is capable as such of being sold or supplied."
' The observations in the last case were made in considering the definition of manufacture made in Indian. Sales Tax Act. The case of Union of India and another v. Delhi Cloth and General Mills Co.
Limited and others, reported in AIR 1963 SC page 791 has been relied upon by the petitioners also and necessary quotations have been incorporated in the judgment. None of the cases cited by Mr. Riaz supports his view. On the contrary, some of them help the petitioners. It has been observed in Union of India and another v. Delhi Cloth and. General Mills Co. Ltd. And others, reported in AIR 1963 SC page 792, already referred, as follows:- "Moreover, the definitions of 'goods' make it clear that to become 'goods' an article must be something which can ordinarily come to the market to be bought and sold. The 'manufacture' which is liable to excise duty under the Central Excises and Salt Act, 1944, must therefore, be the 'bringing into existence of a new substance known to the market.' The definition of manufacture in section 2(f) does not equate mere 'processing' to 'manufacture'. The processed raw oil is not, therefore, covered by the expression 'vegetable non-essential oil' or 'by all sorts' as no new substance known to the market has been brought into existence at that stage.
"In the case of Indian Aluminium Cables Ltd. v. Union of India and others, reported in AIR 1985 SC page 1201, it has been held as under:- "The process of manufacture of a product and the end use to which it is put, cannot neces sarily be determinative of the classification of that product under a fiscal schedule like the Central Excise Tariff. What is more important is whether the I broad description of the article fits in with the expression used in the Tariff. The aluminium wire rods, whether obtained by the extrusion process, the conventional process or by Properzi process, are still aluminium wire rods. Therefore, it I cannot be said that Properzi Rods cannot be described as wire rods merely because the process of manufacturing the two articles is different."
12. The goods manufactured outside Pakistan are not subject to excise duty. Basic commodity should have been manufactured and produced in Pakistan. It is to be proved that a product has been manufactured within Pakistan, only then, fiscal liability of subject is determined. Though the iron and steel plates including ship plates etc. Have been mentioned in the schedule but the term "manufacture" has not been amended in the definition clause. The legislature could easily amend the definition of "manufacture" so as to bring it in consonance with the schedule. This has not been done in the present case. It has been held in the cases of (i) Royal Trust Company v. Minister of Finance of the Province of British Columbia, reported in AIR 1921 Privy Council, page-184, (ii) M.Ismail and Brothers v. Pakistan, reported in 1983 CLC 3204, (iii) Lt.-Col. Nawabzada Muhammad Amir Khan v. The Controller of Estate Duty and others, reported in PLD 1961 SC page 119 and (iv) Muhammad Younus v. Central Board of Revenue, Government of Pakistan and others, reported in PLD 1964 SC page 113 that tax cannot be levied except in clear and unambiguous language.
13. It is also submitted by the learned counsel for the petitioners that in the cases where the goods are already broken, they cannot be subjected to excise duty before the Amending Ordinance came into effect. Reliance has been placed on the cases of 1941 ITR 522, Tax East Bengal v. B.W.M. Abdur Rahman, Manager, Taki Bara Taraf Wards Estate, reported in 1973 SCMR page 445 and Province of West Pakistan through the Secretary, Revenue Department, Lahore and 2 others v. Associated Hotels of India Ltd. Reported in 1973 SCMR page 367, relevant page 371, Orient Straw Board and Paper Mills Ltd, Karachi v. The Assistant Collector of Central Excise and Land Customs, Division No,II, Karachi, reported in PLD 1985 Karachi, page 126; Union of India and others v. The Tata Iron and Steel Co. Ltd. Reported in AIR 1975 SC page 769 and South Bihar Sugar Mills Limited and another etc. v.
Union of India and another etc. Reported in AIR 1968 SC page 922.
In the case of Commissioner of Agricultural Income Tax East Bengal v. B.W.M. Abdur Rehman, Manager Taki Bara Taraf, Wards Estate, reported in 1973 SCMR page 445, it has been observed that:- "In determining whether or not a particular matter comes within the taxing Statute, it is only letter of the law which must be looked to. There is ample authority for the proposition that in a fiscal case, form is of primary importance, the principle being that if the person sought to be taxed comes within the letter of law, he must be taxed, however great a hardship may thereby be involved but on the other hand, if the crown cannot bring the subject within the letter of the law he is free, however apparent it may be that his case is within what might be called the spirit of law:.
' In all these cases ratio has been laid down that if a tax does not come within the letter of law it cannot be levied as the spirit of legislation is immaterial in taxing legislation. It is a rule of interpretation that in construing fiscal statute, one must have regard to strict letter of law. If the case is not covered within the four corners of law, no tax can be imposed by inference or by analogy or by trying to probe into intention of legislature. When a Statute is clear then its meaning cannot be extended by intendment or by implication.
' We need not enter into this factual controversy, whether the ships were broken before imposition of duty. It is also immaterial that the duty could not be imposed on ships, which were already broken, as we have come to the conclusion that goods in question are not liable to excise duty.
14. A taxing Statute must be interpreted strictly. In case, if there are two interpretations possible, then the one which is favourable to the citizens must be accepted. In the case of Central India Spinning and Weaving and Manufacturing Co. Limited, The Empress Mills, Nagpur v. The Municipal Committee, Wardha, reported in AIR 1958 SC page 341, it has been held as under:- "If in construing a taxing Statute, there are two interpretations possible, then effect is to be given to the one that favours the citizen and not the one that imposes a burden on him."
' In the case of Managing Director, Pakistan Agricultural Storage and Service Corporation Limited, Lahore and another v. Nawab Din and 2 others, reported in 1981 CLC page 284, the learned Judge while considering the taxing statute has expressed in para. 6 of the judgment as follows:- "6. Before dealing with the question in issue, one might as well refer to the fact that the dispute is about imposition of tax and the principles applicable for construction of taxing statute are in the words of Rowlatt, J. (in Cape Brandy Syndicate v. I. R. C. About whom Viscount Simon, I.C. Said as quoted in Craies on Statute Law, 7th Edn. Page 113, that his outstanding knowledge was coupled with a happy conciseness of phrase, 'that in a taxing Act one has to look at what is clearly said.
There is no room for intendment.
' There is no equity about a tax. There is no presumption as to tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used.' Craies quotes Lord Parker of Waddington having said in 1914 that 'The Finance Act is a taxing statute and if the Crown claims a duty thereunder it must show that such a duty is imposed by clear and unambiguous words'. 'It is not the function of a Court of law, to give to words a strained and unnatural meaning' said Lord Simons in IRC v. Wolffson (2),' because only thus will a taxing section apply to a transaction which had the Legislature thought of it, would have been covered by appropriate words."
' In Crawford the Construction of Statutes in para 257 at page 504, the. Court in Bedford v4 Johnson (102 Colo. 203, 78 Pac. (2) 373, refused to regard automobile parking lots as falling within the scope of a statute which imposed a tax on general' warehouse storage establishments:- "This Court has repeatedly held that statutes levying taxes or duties upon citizens will not be extended by implication beyond the clear import of the language used, nor will their operation be enlarged so as to embrace matters not specifically pointed out, although standing upon a close analogy, and all questions of doubt will be resolved against the Government and in favour of the citizen, and because burdens are not to be imposed beyond what the statute expressly imparts."
15. It is next contended by the learned counsel for the petitioners that the amendment in addition of new item 09.07 is inconsistent with the provisions of Section 3. This contention has force. This section contemplates that all items listed in the schedule should be liable to excise duty. Section 3 is charging section which creates a charge on all excisable goods. Section 3 has been reproduced above and according to this section, excise duty is levied on goods produced or manufactured.
The goods which are not manufactured, are not liable to the excise duty. Though the item has been included in the 1st Schedule in order to attract provisions of the Amending Ordinance, U but charging section 3 and the definition of manufacture has not been amended so as to include the iron and steel plates etc. Within the taxable items. The learned counsel for respondents has made much emphasis, on the word "recovered" mentioned in item 09.07 but the word "recovered" does not find its place in section 3. It is held in Barnard and another v. Gorman (All England Law Reports 1941(3) page 45) as under:- "We must not give the statutory words wider meaning merely because, on a narrower construction, the words might leave a loopehole for frauds against the Revenue. If, on the proper construction of the section, that is the result, it is not for Judges to attempt to cure it. That is the business of Parliament. Our duty is to take the wards as they stand and to give them their true construction, having regard to the language of the whole section, and, as far as relevant, of the whole Act, always preferring the natural meaning of the word involved, but nonetheless always giving the word its appropriate construction according to the context."
16. The learned counsel for the respondents has referred to Section 3-C which provides the tariff value and rate of duty. The tariff value of and rate of duty applicable to, any goods or services shall be the tariff value and the rate of duty in force--
(a) in the case of goods, on the date on which the goods are cleared for home consumption; and
(b) in the case of services, on the date on which the services are provided or rendered.
' The effect of the above provision is that the tariff value and rate of duty will be applicable when the goods are cleared from the place of manufacture or the services are rendered. It appears that the amendment was necessary in view of the decision of the High Court and the Supreme Court in case of Colony Textile Mill Bhakkar v.. Assistant Collector, Central Excise and Land Customs. But the respondents cannot take benefit of this provision. Section 3 is analogous to section 30 of Customs Act. According to this provision, the date material for determination of valuation has been mentioned; but the duty is to be imposed on the goods where the goods are not dutiable. This provision would not apply. Section 3-C refers only to date when it is applicable. This section does not impose any charge as it refers to date of payment. If the goods are not liable to duty under law for excise duty the question of date of payment does not arise. Reference may be made to Al- Samrez Enterprise v. The Federation of Pakistan, reported in 1986 SCMR page 1917.
17. An objection is taken by the learned counsel for the respondents that an alternate remedy is available to the petitioners. He has referred to sections 35 and 35-A of the Act. These sections confer a right on an aggrieved person to challenge the order by filing an appeal or revision as the case may be. The learned counsel, therefore, contended that the petitioners should have approached the appellate authority and availed the alternate remedy before approaching this Court in the extraordinary jurisdiction. This contention has no force. There have been series of decisions that an aggrieved person may straight Y away come to Court in respect of fiscal statute.
Reference may be made to The Burmah Oil Company (Pakistan Trading) Ltd., Chittagong v. The Trustees of the Port of Chittagopg and others, reported in PLD 1962 SC page 113; Nagina Silk Mill, Lyallpur v. The Income-Tax Officer, A- Ward, Lyallpur reported in PLD 1963 SC page 322; Sky Rooms Limited, Karachi v. Assistant Collector of Central Excise and Land Customs, 'Karachi, reported in PLD 1982 Karachi, page 244; Shershah Industries Limited v. The Government of Sind and 4 others, reported in PLD 1982 Karachi, page 653. In Sky Room's case, it has been held as under:- "Petition involving interpretation of an important provision of Excise Law authoritative pronouncement 'on question also necessitated by a superior Court. Writ Petition, in circumstances, not liable to be rejected."
' In Malik Shamas Din and Brothers v. The Income Tax and Sales Tax Officer and another, reported in PLD 1959 Lahore, page 955, it has been observed as under:- "Mere fact that the relief sought by the petitions could be obtained by the petitioners by resorting to appeals and references under the Sales Tax Act should not stand in the way of issuing writs by the High Court if the petitioners could show' that they should issue in their favour."
In Lt.-Col. Nawabzada Muhammad Amir Khan v. The Controller of Estate Duty and 2 others, reported in PLD 1961 SC page 119, it has been held as under:- "The rule that the Court will not entertain a wtrit petition when other appropriate remedy is yet available is not a rule of law barring the jurisdiction of the Court."
' An alternate remedy must be meaningful and effective. In the present petitions, the'wires of law has been challenged. - The interpretation of the Amending Ordinance is involved. The alternate remedy would not be efficacious; it would only delay the proceedings and, in fact, an exercise in futility. In case, the petitioners are not liable to any duty under the law, then on such technical ground, the petitions cannot be dismissed.
18. It may also be pointed out that in the counter-affidavit, it has been stated that Central Excise Duty has been levied on ship plates etc. Which is recovered from such ships and vessels through the process of manufacture at Gadani. By dismantling or breaking of a ship or vessel, a new product i.e,; intermediary goods for re-rolling mills is produced. It has been further stated that dismantling and breaking is not manufacture or remaking, but still a process of manufacture to obtain a new product for a re-rolling Mill. Thus, according to the respondents themselves (i) the goods in question do not come within the definition of manufacture as laid down in Section 2(f) of the Act and (ii) the goods are to be used by the re-rolling Mill for a new product. There is no material worth the name to support this plea. As such, in the absence of any material, no finding could be recorded either way. Even otherwise, this is farfetched argument. In case a new product is to be manufactured from the plates etc. Then the petitioners cannot be held liable for the payment of duty on the goods which are yet to be shaped a new article.
19. Sales Tax was imposed on the breaking of ships and the petitioners .Were paying such tax, but the sales tax was withdrawn and thereafter the excise duty was imposed. One could not understand as to what was the purpose of such action, and the sales tax was withdrawn giving the monetary benefit to the petitioners. However, if there was intention of legislature to impose the excise duty, it should have been done in accordance with the provisions of law.
20. In the result, we hold that the ship plates and other materials recovered from breaking of vessels are not liable to excise duty. The action of the respondents was without lawful authority and of no legal effect. The petitions are accepted with no order as to costs.