MUHAMMAD HALEEM, J.---The legal points being identical, this judgment will dispose of Petitions Nos. 1 and 27 of 1971. In both these petitions the levy of Excise duty under item No. 33 of the First Schedule to the Central Excises and Salt Tax Act, 1944, hereinafter referred to as the Act, is impugned. Though the petitioners are different, but they carry on the same business of manufacturing fabrics and yarn of different variety. In Petition No: 1 of 1971, it is the case of the petitioner that during the year 1966-67 the petitioner manufactured Trivera shirting from the yarn produced in the factory comprising 33 J and 67% "man-made fibre" by weight on which excise duty was levied and collected as prescribed in item No. 16 of the First Schedule to the Act. Subsequently, vide demand notice dated 10th September 1968, it was given out that the petitioner had been manufacturing and using "man-made yarn" in the manufacture of Trivera shirting without paying Central excise duty and other taxes and, therefore, the petitioner was called upon to pay a sum of Rs. 53,315.50, which levy was contested on the ground that the yarn corresponded to item No. 16 and not 33 as it stood before the insertion of the explanation by Finance Act, 1968, upon which duty had been paid in 1967, and, therefore, the issue could not be re-opened which had otherwise become past and closed, simply because the explanation was given retrospective effect. This contention was, however, not accepted by the Assistant Collector, Central Excise and Land Customs who, vide order dated 16th June 1969, held that the yarn did correspond to item No. 33 as it contained 67 % of polster, which was man-made fibre, and, therefore, duty was leviable as prescribed for that item. Against this order the petitioner went in appeal to the Collector, Central Excise and Land Customs, but that was also dismissed on 10th January 1970 for non-compliance of section 35 (i-A) of the Act. The petitioner filed a revision before the Central Board of Revenue which was also dismissed vide order dated 19th November 1970. The petitioner has impugned these orders.
2. In Petition No. 27 of 1971, the petitioner alleged that during the months of August; September and October 1966, 359, 296 and 2394 lbs.Respectively of mixed yarn of 30/S count was removed from the spinning section of the factory to the weaving section for being used in the manufacture of fabric, upon which duty was levied and paid as prescribed for cotton yarn in item No. 16 of the First Schedule to the Act. Subsequently, vide show--cause notice dated 23rd December 1967, the petitioner was celled upon to pay excise duty and other taxes amounting to Rs. 35,328.50 on the ground that the petitioner had evaded payment of it in contravention of rule 9 of the Central Excise Rules, 1944. The same plea was taken as in the other petition, but it did not weigh with the Collector, Central Excise and Land Customs, Karachi, who, vide order dated 18th December 190, rejected it.
The appeal was also rejected on 11th April 1970 as there was non-compliance of section 35 (1-A) of the Act. The revision failed on merits as is apparent from the order dated 30th November 1970. It is these orders, which have been impugned in this petition.
3. In the context of the dispute as to whether yarn corresponded to items 16 or 33, it will be of advantage to reproduce the original item No. 16 as it stood before its substitution and thereafter and also item No. 33:- "16. Yarn (other than yarn used in the manu-Such rate not exceed-- facture of cloth on which duty is leviableing seventy-five paisa under item 15-A above) produced in a factoryper lb. As the Central ordinarily using power in the course of pro-Government by noti-- duction of yarn-fication in the officialGazette may from time to time determine. `Yarn' means yarn of any description manufactured either wholly or partly from cotton and containing not less than 10% of cotton by weight."
By Finance Act, 1966, the above item was substituted by the following: --- "16. Cotton Yarn, Twist sand Thread.-`Cotton yarn, twist and thread' means cotton yarn, twist and thread of any description manufactured either wholly or partly from cotton and containing not less than 10 per cent. Of cotton by weight. Cotton yarn, twist and thread-
(a) of counts less than 20 Ten paisa per pound.
(b) of counts 20 or more but less than 35 Fifty paisa per pound.
(c) of counts 35 or more but Icss than 48 One rupee per pound.
(d) of counts 48 or more One rupee and fifty paisa per pound.
Explanation .--`Count' means the count of the basic single yarn."
Again a new item No. 33 was added to the Schedule, which reads :--- "33. Man-made Fibres and Yarns--
(a) Acetate and Viscose and yarns Two rupees fifty paisa per pound.
(b) All other man-made fibres and yarns Five rupees per pound,"
By Finance Act, 1968, an explanation was added to item No. 33, which reads ;--- "Explanation.-Any mixed yarn the predominant component of which is man-made fibre shall be treated as man-made yarn."
4. It is the case of the petitioners that excise duty was levied and collected on the yarn as prescribed for item No. 16; and that having collected such duty, no fresh levy could be, made on the ground that by virtue of the added explanation, the yarn answered to the description of man- made fibre as defined in item No. 33. Reliance for this contention is placed on R. R. Textile Mills Limited v. Collector of Central Excise and Land Customs and others (PLD 1968 Dacca 808). That case was decided before the explanation was added to item No. 33, in which the composition of the yarn manufactured was of 30 counts and contained more than 10--/ of cotton by weight. In Petition No. 1/7l Mr. Pesh Imam, the leaned counsel for the petitioner, contended that the description of the cotton yarn was on the same footing as it contained 33%, cotton by weight and, therefore, the case is on all fours with the observations of the Division Bench as under: --- "The definition of cotton yarn clearly states that cotton yarn of any des--cription manufactured either wholly from cotton or partly from cotton but containing not less than 10 per cent. Of cotton by weight is cotton yarn. The definition is quite clear and unambiguous, and admits of no doubt as to what cotton yarn is within the meaning of the said Act. Even on behalf of the respondent it has been conceded that the petitioner's yarn is more appropriately classifiable for purposes of assessm ent under item 33 of the 1st Schedule to the Excise Act'. The respondents obviously felt difficulty in categorically denying that the petitioner's yarn is a cotton yarn within the meaning of the aforesaid item 16 of the Act."
So also in Petition No. 27/71 the same stand was taken as in that case too, the cotton yarn was 12 %, being on the higher side of the prescribed limit.
5. Item No. 16, as it stood before the amendment, only rendered leviable to duty the yarn of any description which contained cotton not less than 10% by weight and which was produced in a factory ordinarily using power in the course of production of yarn. Looking at its language, therefore, the use of power was the absolute requirement. In the re-enacted item No. 16 the word `cotton' is prefixed before the word `yarn' and tile expression "(other than yarn used in the manufacture of cloth, on which duty is leviable under item No. 15-A above, produced in a factory ordinarily using power in tile course of production of yarn" has been omitted and Substituted by tile word `manufactured', which has not left the legislative intent in doubt. For Yarn answering to this description, whether produce, in a factory using power or otherwise, is subject to payment of excise duty. Item No. 33 with tile added explanation renders any mixed yarn leviable to excise duty. In which tile predominant component is man-made fibre, which expression is technical and is defined in tile Encyclopaedia of Textiles to mean, "an inclusive term for (ill textile fibres not provided by nature". In other words, it refers to artificial fibre. Looking at tile language of items 16 and 33, it is apparent that for an article to answer description of item No. 16, the only requirement is that cotton should be not less than 10 per cent. By weight, whereas in the case of item No. 33 the predominent component should be man-made fibre. Though the two items appear to be, separate yet it is possible that the yarn corresponding to the description of item No. 16 may yet be one, in which the predominant component is mail-- made fibre, which could equally fall under item No. 33. Again, there can be an instance, where the yarn is wholly of cotton or where the cotton and man-made fibre is in proportion in which it cannot be said that man-made fibre is a predominent component, in which case it will fall under item No. 10. The present is not an instance of that kind. In the mixed yarn in one case, cotton is 33 per cent. And in the other 12 per cent., therefore, they correspond equally to the description of cotton yarn and so also the man-made yarn. The process of spinning is common for producing both kinds of yarn, namely, cotton and man-made which, could either be by physical labour or power and, therefore, all that it means is to snake or fabricate or bring into existence an article or product; hence the word `manufactured' in item No. 16 can have no distinguishing feature in view of the wide meaning given to the word "manufacture" in the Act. Now, by the added explanation, the scope of the description of item No. 33 namely man-made fibre and yarn categorised in clauses (a) and (b) under the main heading is not enlarged but it is merely C explained which, though expressly stated to be retrospective, would be even without it retroactive, in operation as it is merely explanatory as from the date the said item was added by the Finance Act, 1966 vide Attorney General v. Herford (18 L J Ex. 332), Attorney-General v. Bugett (146 E R 130) and Bulaji Singh v. Chakka Ganga Mama and another (AIR 1927 Mad. 85), Item No. 33 has thus to be construed as always to have that meaning even though the explanation was added subsequently. There is, therefore, no escape from the conclusion that the yarn in the instant case answered to the description of man-made yarn, for which higher duty is prescribed. In the case of R. R. Textile Mills Ltd. There was no categorical denial of the fact that it was not cotton yarn within the meaning of item No.16 and, therefore, the learned Judges held it to conform to that definition.
The case was not pressed from the above angle in spite of the defence having been taken that item No. 33 was applicable as the yarn manufactured by the petitioner in that case was "synthetic yarn mixed" and, therefore, covered by the words "man-made fibre and yarn". With respect I may say so that it is difficult to follow that view; more so in view of the added explanation. The contention, therefore, that the yarn only corresponded to item No. 33 is misconceived.
6. By Notification No. SRO-72(R)/67 dated 17th May 1967 issue under section 12 of the Act, section 21 of the Sea Customs Act, 1878, was made applicable to duties imposed by section 3 of the Act; necessarily, therefore, in terms of section 21 of the Sea Customs Act, duty at the highest rate could be levied and collected. Mr. Pesh Imam did not contest the levy on this ground but merely wanted to be satisfied whether such notification was in fact issued. He was shown the Extraordinary Gazette, in which the noti--fication was published, and thereupon he gave up that objection. If such be the legal position, then I fail to see how an objection can be taken to the demand of further amount as prescribed in item No. 33; to which description the yarn equally answered. Assuming for argument's sake that those responsible for collecting such duty had not done so, still that cannot be a legal ground for avoiding payment. In this connection, it will be pertinent to refer to the observations of Lord Chancellor (Halsbury) in Corporation of Dublin v. Trinity College (88 L T R 305): "There is a single observation which I ought to make, rather in reply to that was urged by the learned counsel at the, Bar than by way of adding anything to the judgments below. The learned counsel have insisted that if the plain words of an Act of Parliament imposed a tax, no amount of omission to charge that tax or to insist upon it by the proper executive officer could control, or cut down, or override the force of the Act of Parliament itself."
7. No exception can, therefore, be taken to the short-levy. Legally, duty could also be levied and collected in terms of rule 10 of the Centra. Excise Rules, 1944 within three years from the date, on which such dut3 had become due. Admittedly, the demand notice for the amounts, which the petitioners were liable to pay, was sent within the prescribed period. I, therefore, fail to see how the transaction was past and closed when the rule itself permits the recovery of the amount short levied. The plea resting on the doctrine that the transaction cannot be re-opened once it is past and closed, would not, therefore, apply to such case when there is no finality to the assessment. Mr. Pesh Imam, however, invoked that principle on the authority of the judgment in Income-tax Officer, Central Circle III, Karachi and others v. Cement Agencies Ltd. (PLD 1969 SC 322), but the facts in that case are dis--tinguishable. Not only, the question of limitation was involved but there was also the consideration of re-opening of the assessment for the years, for which the Income-tax Officer had issued certificates that they were not liable to be assessed to income-tax. It was in that context that the principle, that a transaction cannot be re-opened once it becomes past and closed, was applied. That principle cannot be invoked in the instant case.
8. Lastly, Mr. Pesh Imam urged that sales tax could not be collected on the basis of the higher duty demanded from the petitioners as it was only the Sales Tax Officer who could initiate proceedings in terms of section 28 of the Sales Tax Act, 1951. He relied on Messrs Usmania Glass Sheet Factory Ltd. v. The Assistant Collector of Customs, Chittagong and another (PLD 1968 Dacca 276), in which a similar question came up for decision though it related to levy of customs duty and along with it by virtue of section 3(5) of the Sales Tax Act, the Customs Officer is also authorised to collect sales tax. The instant case is not different, for the proviso to section 3(4) of the Sales Tax Act on the same footing authorises the recovery of sales tax along with excise duty levied under the Act. On a consideration of sections 3(5) and 28 and the pertinent sections of the Sales Tax Act and section 39 of the Sea Customs Act, the Division Bench, which decided that case, reached the F conclusion that the power of making re-assessment for the rectification of mistakes or escaped assessment does not appear to have been incorporated into the Customs Act by reference to section 3(5) of the Sales Tax Act, which is a legislation by reference and that such proceedings can only be instituted and taken by the officer mentioned in section 5 of the Sales Tax Act and not by the Customs Officer in accordance with the provisions of Chapter XV of the Sales Tax Act. I may here as well mention that section 28 of the Sales Tax Act also categorises other cases, such as underassessm ent or assessm ent at lower rate : and that section 39 of the Sea Customs Act corresponds to rule 10 of the Central Excise Rules, 1944. The observations, therefore, apply on all fours to the instant case, which I would respectfully follow. Mr. Naimuddin for the respondents was unable to distinguish it on the legal plane. In its light, I am persuaded to hold that the demand for the payment of sales tax and Rehabilitation Tax as it was collected alongwith the Sales Taxes in Petition No. 1 /71 and Petition No. 27/71 is without lawful authority. While giving relief to the petitioners to this extent I would uphold the demand for the levy of higher duty in both the petitions. In all other respects the impugned orders are maintained. Subject to the above, the petitions are dismissed with no order as to costs.
DORAB PATEL, J.-I agree.