RUSTAM S. SIDHWA, J.--1. This judgment will dispose of two writ petitions WP No. 698 of 1973 and WP No. 793 of 1973 filed by the Punjab Vegetable Ghee and General Mills Limited, petitioner, against the orders oj' the Central Excise Authorities passed in two cases of the petitioner before them.
2. The brief facts of the case in respect of writ petition WP No. 698 of 1973 are that on 15th January, 1968 at 3. p.m. a truck carrying 500 tins, each weighing 35 pounds, of vegetable ghee was apprehended near the main gate of the petitioner mills. The driver of the truck could not produce excise documents covering the release of the goods from the factory and their intended transportation to Haji Pasham Gul and Sons, Peshawar, the consignee of the goods. The goods were, therefore, seized and notice was issued to the petitioner on 10th February, 1968 by the Collector, Central Excise, Lahore, to show cause why action under rules 210, 237(8), 241 and 242(4) of the Central Excise Rules, 1944, should not be taken against it for contravention of rules 237, 238, 241, 242 and 243 read with rule 226 of the said Rules. On 21st February, 1968, the petitioner submitted its reply to the show cause notice, controverting the allegations. On 6th April, 1968, the Collector, Central Excise, Lahore, took up adjudication proceedings and' found that the goods in the instant case were removed from the factory without preparing proper documentation and adjusting the amount of excise duty leviable thereon in the account registers and by issuing a gate pass in contravention of the Central Excise Rules. He, therefore, found the petitioner guilty for contravention of rules 226, 237(6), 238(1), 241 and 241(1) of the Central Excise Rules, 1944, and imposed penalty on the petitioner, apart from ordering confiscation of goods, subject to redemption of the goods on payment of Rs. 25,000/-, in addition to excise duty payable thereon. Being aggrieved by the said order, the petitioner preferred an appeal before the Central Board of Revenue. In the said appeal, the- petitioner took up the plea that the Rules under which the learned Collector had penalised the petitioner were ultra vires of the Central Excise Act and the Rule making Authority. However, the petitioner's appeal was dismissed on 14th February, 1970, on the short ground treat as the Collector's order appealed against was correct in law and on facts, the Board found no reason to interfere with it. Being aggrieved by the said order, the petitioner preferred a revision petition to the Government of Pakistan, Ministry of Finance. In the grounds of revision it was also urged that the Rules under which the Collector had penalised the petitioner were ultra vires of the Central Excises and Salt Act, 1944, and the Rule making Authority. However, on 27th October, 1972 the petitioner's revision was dismissed, without the legal contentions of the petitioner being discussed. Being aggrieved by the orders of the Central Excise Authorities the petitioner preferred a writ petition WP No. 698 of 1973, which is now before me for disposal.
3. The brief facts of the case in respect of writ petition WP No. 793 of 1973 are that on 15th January, 1968 at about 4. p.m.
When the Central Excise Staff was checking the accounts and stocks of the petitioner mills at Lahore, the Staff found that the stock shown in EB-4 Register was less than the physical stock lying at the premises. The excess quantity of 140 tins of vegetable ghee, each weighing 35 Lbs, were, therefore, seized. On 25th April, 1968, the Collector, Central Excise issued notice to the petitioner to show cause why action should not be taken against it under rules 226 and 237(8) of the Central Excise Rules, 1944. On 9th May, 1968, the petitioner submitted its reply to the show cause notice. On 16th September, 1968, the Collector, Central Excise, conducted adjudication proceedings and found the petitioner to be guilty of having in physical possession stock in excess of that mentioned in the register. He, therefore, found the petitioner guilty under rules 226 and 237(8) of the Central Excise Rules and ordered confiscation of the goods, subject to the option of redemption against payment of i.e Rs. 50,000/- in lieu of confiscation. A further penalty of Rs. 10,000/- was also imposed on the petitioner. Being aggrieved by the said order, the petitioner preferred an appeal before the Central Board of Revenue. In the said appeal the petitioner took up the plea that the Rules under which the learned Collector had penalised the petitioner were ultra vires of the Central Excises Act and the Rule making Authority. However, the petitioner's appeal was dismissed on 13th February, 1970 on the short ground that as the Collector's order appealed against was correct in law and on facts, the Board found no reason to interfere with it. Being aggrieved by the said order, the petitioner preferred a revision petition to the Government of Pakistan, Ministry of Finance. In the grounds of revision it was also urged that the Rules under which the Collector had penalised the petitioner were ultra vires of the Central Excises and Salt Act, 1944, and the Rule making Authority. However, on 23rd January, 1973 the petitioner's revision was dismissed, without the legal contentions of the petitioner being discussed. Being aggrieved by the orders of the Central Excise Authorities the petitioner preferred a writ petition J[WP No. 698] of 1973, which is now before me for disposal.
4. On behalf of the petitioner it is submitted that all the proceedings which were taken against it in both the cases, whether for contravention of rules 210, 226, 235, 237, 238, 241, 242 or 243, were all void, as the said rules were framed by the Central Board of Revenue vide SRO 1373(K) dated 29th December, 1962, whereas under sub-section (3) of section 37 of the Central Excises and Salt Act, 1944, the power to frame rules imposing penalties or ordering confiscation of articles in respect of which any breach was committed, was only with the Central Government. Relying upon Province of East Pakistan v. Md. Mefidi Ali Khan (PLD 1959 S.C. 387), it is contended that the addition of Chapter XV to the Central Excise Rules, 1944, by the Central Board of Revenue was ab initio void, as the Central Board of Revenue suffered from lack of power to remove the said defect and the lack of jurisdiction could not be removed by a subsequent conferment of the requisite legislative power and Chapter XV which was included, remained void, till re-enacted by the competent law- making Authority.
The learned Standing Counsel for the Federal Government has not been able to controvert the argument of the learned counsel for the petitioner.
5. I have heard the arguments of the learned counsel for the petitioner and the learned Standing Counsel for the Federal Government and have perused the i.e. Both the cases against the petitioner are under one or more of the rules contained in Chapter XV of the Central Excise Rules.
Rules contained in Chapter XV were added to the Central Excise Rules by SRO 1373(K)/62 dated 29th December, 1962.
1. It should be No. 793 instead of W.P. No. 698.
Unfortunately, on this date, the power to frame rules imposing certain penalties or ordering confiscation of goods in respect of which any breach may have been committed, was with the Central Government and not the Central Board of Revenue. Thus the said Chapter XV was ab initio void. However, on 30th June, 1964 sub-section (3) of section 37 of the Central Excise Rules (sic) was amended. The words "Central Board of Revenue" were substituted for the words "Central Government" by the Finance Act V of 1964. This, however, could not cure the legal defect, for what was void ab initio remained so, as Chapter XV had been enacted by an authority that had no power to frame it. See Province of East Pakistan vs. Md. Mehdi Ali Khan (Supra). Realising the difficulty, [1][Chapter XV was re-enacted and added (sic)] ,to the Central Excise Rules much later vide SRO No. [2][36(I)/73 (sic)] on 12th January, 1976. In these circumstances, all actions taken by the Central Excise Authorities in the two cases in instance imposing penalty on' the petitioner or confiscating the goods, are illegal and void and deserve to be set aside.
6. For the foregoing reasons, both the writ petitions WP No. 698 of 1973 and WP No. 793 of 1973 are accepted and the orders of the Central Excise Authorities in both the cases are declared to have been passed without lawful authority and are set aside. All the penalties and fines imposed on the petitioner, in the two cases, shall be refunded to it.
7. Both the writ petitions are accepted with costs. Rupees Two Thousand (Rs. 2,(KK)/-) is fixed as counsel's i.e in each case, which shall be paid to the petitioner.