NAZIR AHMAD BHATTI, J--The writ petition in hand and writ petition No.268 of 1989, Premier Sugar Mills and Distillery Company Limited v. Superintendent Customs and Central Excise and others and writ petition No.269 of 1989 Frontier Sugar Mills and Distillery Limited v. Superintendent, Customs and Central Excise pertain to the same matter and call into question the same notification. Moreover, the respondents in all the three writ petitions are the same. Hence judgment in the writ petition in hand shall also dispose of the aforesaid two writ petitions.
2. The facts common to all the three writ petitions are that the petitioners are sugar manufacturing industries. Sugar is an excisable article under the provisions of section 3 of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act) and duty at the rate of Rs.215 per kilogram was leviable on the sugar produced or manufactured by the petitioners in accordance with the provisions contained in the First Schedule to the Act. In the year 1979 by Notification No. S.R.O. 555 (1)/79 dated 28-6-1979 general exemptions were granted from payment of excise duty to certain goods. Table I to this Notification shows at clauses (a) and (e) at serial No.02.02 the exemption granted to sugar manufactured in a factory which is operated without the aid of power, steam or natural gas. According to the provisions of this Notification exemption from payment of so much of the duties of excise was claimable as were in excess of the rates of duty specified in column 3 of the Table I and in respect of sugar mentioned at item (e) of serial No.02.02 of Table I such quantity of sugar was totally exempt from payment of excise duty in the N.-W.F.P. Which was manufactured by a factory in a financial year which exceeded the average production of sugar other than sugar manufactured from beet by the factories in the N.-W.F.P. For the preceding two financial years. This exemption from payment of excise duty in respect of sugar continued till the year 1986 by two subsequent Notifications of the Federal Government issued under No. S.R.O. 263 (1)/82, dated 21st March, 1982 and No. S.R.O. 132 (1)/86 dated 6-2-1986. According to the provisions of the latter Notification sugar produced from beet during the financial years 1985-86 and 1986-87 by the Sugar Mills located in N.--W.F.P. Was also made exempt from payment of excise duty. Yet according to another Notification issued under No. S.R.O. 373 (1)/87 issued on 25-6-1987 under section 37 of the Act, the period of storage of sugar without payment of duty could not exceed one year from the date of its production and this period could not be extended in any case without the prior approval of the Central Board of Revenue and the sugar produced on or before 30th June, 1986 was to be cleared without payment of duty on or before 30th June, 1987. However, by Notification No. S.R.O. 555 (1)/89 issued on 3rd June, 1989 under section 12-A of the Act (hereinafter referred to as the impugned Notification) the said exemption from payment of duty granted in respect of sugar by the aforesaid three Notifications was withdrawn and duty was re-imposed at the rate of two rupees per kilogram. Feeling aggrieved by the latter Notification the Bannu Sugar Mills (Private) Limited petitioner in the writ petition in hand and Premier Sugar Mills and Dispillery Company petitioner in Writ Petition No.268 of 1989 and Frontier Sugar Mills and Distrillery petitioner in writ petition No.269 of 1989 filed the aforesaid three writ petitions wherein they have challenged the impugned Notification. The grundnorm of their challenge to the impugned Notification was that under the provisions of section 3 of the Act excise duty was payable only on the manufacture of excisable goods and the goods which were manufactured during the period of exemption remained so exempted even if cleared subsequently and were not affected by the subsequent withdrawal of exemption and that the petitioners had acquired a vested right to claim exemption in respect of the said sugar and such right could not be taken away by subsequent withdrawal of exemption. It was claimed that the refusal of the respondents to clear the duty free sugar held by the petitioners on the date of the issuance of the impugned Notification (hereinafter referred to as the zero hour) was without lawful authority and of no legal effect.
3. In their comments to the writ petitions the respondents took two preliminary objections to the effect that; firstly, the petitioners had not suffered any legal grievance and were not aggrieved persons within the meaning of Article 199 of the Constitution, and secondly, the petitioners had not exhausted the remedies provided by the Act and the petitions were premature and liable to be dismissed. On facts it was admitted that the exemption from payment of excise duty in respect of sugar was properly withdrawn under - the law and under the provisions of section 3-C of the Act the excise duty was leviable, not only on the date of manufacture or production of goods but on the date on which the goods are cleared for export or for home consumption.
4. We have heard very detailed and exhaustive arguments by Mr. M. Sardar Khan, counsel for the petitioners and Mr. Saifur Rehman's Kiani, Deputy Attorney-General.
5. In so far as the aforesaid two preliminary objections are concerned, we first intend to dispose of the objection with regard to other remedies provided in the Act because it is purely a question of law whereas the other preliminary objection is concerned more with the facts which we intend to dispose of after we have discussed the merits of the case.
6. It was contended by Mr. Saifur Rehman's Kiani that there was provision of appeal under section 35, of revision to Central Board of Revenue under section 35-A and revision to Federal Government under section 36 of the Act. His contention was that the petitioners had not exhausted the aforesaid remedies before coming to this Court by way of the writ petitions.
7. We have considered this aspect of the matter very anxiously. In so far as the provisions of section 35 of the Act are concerned this is an appeal by a person deeming himself aggrieved by any decision or order passed by a Central Excise Officer under the Act or the rules made thereunder and this appeal is to be, A preferred to the Central Board of Revenue. Although the demand of excise duty was made by the Excise Officer yet it was made in pursuance of the provisions contained in the impugned Notification of the Federal Government issued on 3rd June, 1989.
Similarly the power of the Central Board of Revenue to call for any record for examination under section 35-A of the Act is also confined as to the legality or propriety of any decision or order passed by an officer subordinate to the Board or to the Collector. Similarly the power of revision by Federal Government under section 36 of the Act is exercisable on the application of any person aggrieved by any decision or order passed under section 35 or section 35-A of the Act.
8. The minute perusal of the provisions of sections 35, 35-A and 36 of the Act would clearly reveal that the power of appeal and revision is exercisable when an order is made by Central Excise Officer. However, the demand of excise duty was made from the petitioners in pursuance of the provisions of the impugned Notification which was issued by the Federal Government. In such a case the remedies provided in the aforesaid three sections of the Act could not be called adequate remedy. The Federal Government had issued the impugned Notification whereby the exemption granted by it to certain quantity of sugar was withdrawn and the action by the Central Excise Officer against the petitioners was taken in pursuance of the impugned Notification as such the filing of appealor revision under the provisions of sections 35, 35-A and 36 of the Act was an exercise in futility because the end result of such proceedings was to be nil. What 11 we gather from the words "other adequate remedy provided by law", as contained in Article 199 of the Constitution, is that there should be a remedy and it should also be adequate whereas from the aforesaid discussion we have come to the conclusion that the remedy provided by sections 35, 35-A and 36 of the Act was not adequate in the circumstances of the three writ petitions. There is a very illuminating judgment by late Manzur Oadir, C.J. In the case of Mehboob Ali Malik v. The Province of West Pakistan and another (P.L.D. 1963 Lahore 575) laying down principles of the scope and extent of other remedy and test for determining the same and the learned late Chief Justice discussed the correctosition in this respect in paragraph 13 of the judgment and he came to the following conclusion in paragraph 14: "If there is no other authority which has the power to give relief of the requisite nature and extent, it is the duty of this Court in a fit case, to give that relief if it has the power to do so under Article 98.
There is nothing in Article 98 which would relieve this Court, in such a case, from that obligation, merely because it would be necessary to take evidence, whether oral or documentary, before relief could be given.,,
9. In the same context the learned Deputy Attorney-General also contended that the remedy of a civil suit was also available to the petitioners to challenge the demand of excise duty and in this respect he has drawn our attention to the case of Union of India v. Ayed Ram (A.I.R. 1958 Patna 439).
However, the facts of this reported case are different than the facts of the writ petitions in hand. In the reported case tobacco was seized and confiscated on the allegation that duty was not paid and the suit for recovery of tobacco or its market price was filed. Whereas in the case as disclosed in the writ petitions the sugar has not so far been seized nor has yet been marketed but duty is being demanded. As such the remedy of civil suit was also neither appropriate nor adequate in the circumstances of the case in hand. We are, therefore, of the considered opinion that other adequate remedy under the law was thus not available to the petitioners before coming to this Court for invoking its Constitutional jurisdiction.
10. In so far as the facts of the case are concerned it was contended by the learned counsel for the petitioners that under the provisions of subsection (1) of section 3 of the Act excise duty was leviable on sugar produced or manufactured. His contention was that as soon as sugar was produced or manufactured by the factory it became liable to payment of excise duty no matter whether it was lying in the factory or had not yet been disposed of. He continued to argue that since the sugar in dispute had already been produced and manufactured during the period when such quantity of sugar was exempt from payment of excise duty under the aforesaid three notifications which had granted exemption and before the enforcement of the impugned Notification and the zero hour, a vested right had been created in favour of the petitioners to claim exemption on such sugar as well. In this respect he referred to many cases wherein such levy of excise duty was held illegal. In the case of Colony Sarhad Textile Mills v. Superintendent, Central Excise and Land Customs (1979 SCMR 640) it was held that duty under the Act leviable on their production and manufacture under section 3 of the Act was not dependent on their sale or other manner of disposal. In the case of Colony Thal Textile Mills Ltd. v. Assistant Collector, Central Excise and Land Customs (PLD 1980 Lahore 377) it was held that stocks of cotton yarn produced or manufactured till zero hour of 28-6-1979 continued to exempt from duty. In the case of Assistant Collector v. Colony Thal Textile Mills Ltd. (1980 CLC 1825) it was held that goods produced or manufactured during exemption period could not be called excisable goods and duty could not be paid on the same. In the case of Central Board of Revenue v. Colony Thal Textile Mills Ltd. (1981 SCMR 303) it was held that "First notification levying excise duty on certain articles, second notification exempting cotton yarn and yarn made of man made fibres from excise duty and third withdrawing exemption granted earlier and levying excise duty at a certain rate, liability in respect of goods manufactured prior to issuance of third notification, was to be regulated by second notification, such being in force at time of manufacture of goods in question".
11. On the contrary the learned Deputy Attorney-General has drawn our attention to the case of Abdul Rashid v. Central Board of Revenue (PLD 1965 Peshawar 249) wherein it was held that the power of Central Government to exempt from duty commodity leviable under the Act included power to withdraw by notification any exemption so made and withdrawal of exemption did not amount to fresh imposition or levy of duty. In the case of Yakub & Co. And others v. Collector of Central Excise and Land Customs (PLD 1969 Dacca 477) it was held that duty on salt was exempted for a period of one year and such exemption could not be claimed after expiry of notification of exemption on the grounds that salt was manufactured during exempted period and salt manufactured . Such period but remaining in possession of manufacturer after expiry of notification was liable to excise duty. In the case of Collector of Central Excise and Land Customs v.
Azizuddin Industries Ltd. (PLD 1970 Supreme Court 439) it was held as under:-- "The exercise of power under section 12-A to grant exemption as well as the power to withdraw the exemption under section 21 of the General Clauses Act is unconditional. It is, therefore, not open to Courts to go behind the Notification by Government, on the ground that the exercise of power by the Central Government was improper. However, if the grant of exemption was subject to the existence of certain conditions and the withdrawal of exemption was also made conditional on the happening of certain eventuality, then the Government could not withdraw the exemption unless the requirement of law was fulfilled. As no such conditions are provided in section 12-A the High Court has no authority to make its own surmises as to the propriety of reasons which had motivated the issue of the Notification by the Government."
"The question was whether exemption from excise duty granted by the Central Board of Revenue by its Notification S.R.O. 35 (R)/61, dated 30-6-1961 could be withdrawn, or curtailed by its Notification S.R.O. 31 (R)64, dated 28-2-1964.
Held: It is a settled rule that an executive authority cannot in exercise of , the rule-making power or the power to amend, vary or rescind an earlier order, take away the rights vested in the citizens by law. If a person had acquired a vested right of exemption from the levy of excise duty on all the goods produced or manufactured by it for a period of four years under Notification No.S.R.O. 35 (R)/61 of the Central Government that vested right could not, therefore, be taken away by an executive action. E The Notification, dated the 28th February, 1964, being completely destructive of the right already vested is without lawful authority and of no legal effect."
"The liability once created under an Act would thus stick till it is wiped out by the Legislature itself.
The payability on the other hand could be F excused under the delegated power of exemption.
Connected with this aspect of the case is the question if recall of a notification of exemption would amount to imposition of tax, which could be done only by the Legislature itself. As stated above, the power of exemption has nothing to do with the `taxability or the liability'. It only concerns itself with payability, and therefore, would only revive a power to assess, quantify, demand and recover and not to re-impose a tax. In the Customs Act of 1969 this power of allowing exemption had been given to the Central Government under section 19 of the said Act. The recall of the notification, dated 7th .Tune, 1975, allowing exemption in respect of the duty imposed by the Legislature previously, by virtue of section 21 of the General Clauses Act would, therefore, not amount to re- imposition of a tax but only obliging an assessee to pay what he was not obliged to pay previously.
The next question that would arise is, what is the nature of the benefit created by a notification allowing exemption and if it can be claimed as a matter of right. 1t seems to be well-established that a notification allowing exemption does create a right."
1986 SCMR 1917) it was held as under: "The concept of exemption presupposes a liability and is a grant of immunity from the payment of duty which would otherwise be attracted in respect of the goods. `Non-liability' and `exemption' are: different concepts, the first connotes that the subject was never in the tax net, while the latter connotes that it was, but has been permitted to escape.
The mere grant of exemption under section 19 does not have the effect of modifying or altering the levy of duty under section 18 which continues to be in force. But the only legal effect is that the liability for the payment of duty that accrues under section 18 on the importation of dutiable goods is wiped of to the extent exempted. The two sections, therefore, clearly operate independently and the exercise of power under section 19, is distinct in character and scope, so that it cannot have the effect of nullifying the statutory provisions contained in section 18 whereby the charge is created by the statute itself."
Vested right was created and the transction was not open to doubt as fraudulent and no attempt to evade the payment of duty was made.
Retrospective operation cannot be given to executive orders so as to destroy contractual rights and obligations already accrued."
12. The Federal Government was conscious of the fact that different interpretations were being made of the question as at what stage certain goods were liable to payment of excise duty because according to the provisions contained in subsection (1) of section 3 of the Act the goods became liable to payment of excise duty after production or manufacture whereas some such goods continued to be lying inside the premises of the factory long after production or manufacture. In order to resolve this controversy section 3-C was added to the Act by way of amendment by section 3 of the Finance ordinance, 1983 (Ordinance XIV of 1983) whereby the tariff value of, and the rate of duties applicable to, any goods or services was to be the tariff value and the rate of duty in force on the date on which the goods were cleared for expiry or for home consumption. It shall thus be seen that excise duty leviable, on all excisable goods under the Act became due when such goods were produced or manufactured but it had to be realized when the goods were cleared for export or for home consumption. This is the combined effect of the provisions of sections 3 and 3-C of the Act. It has now become very clear that although the excise duty on any goods which are excisable under the Act is leviable on the production and manufacture of such goods, yet the excise duty has to be realized when such goods are cleared for export or for home consumption. The petitioners have only challenged the re-imposition of excise duty on sugar which was previously exempt G therefrom and which had not so far been cleared till the zero hour. It was not, therefore, a case that excise duty had also been re-imposed on the sugar which they had already cleared. We have, therefore, arrived at the conclusion that the sugar which was manufactured or produced by the petitioners during the period of exemption but was still not cleared for export or home consumption till the zero hour i.e. On 3-6-1989 when the impugned Notification withdrawing the exemption was issued, had also become excisable and was liable to payment of excise duty at the time of clearance. As such we hold that no vested right to claim exemption from payment of excise duty had either existed or could be claimed by, the petitioners in respect of such sugar.
13. In so far as the other objection of Mr. Saifur Rehman's Kiani, Deputy Attorney-General about the petitioners not being the aggrieved party is concerned, we know that although the manufacturer or producer of sugar is liable to pay excise duty on such sugar at the time of clearance yet the incidence of this excise duty has to pass on from the manufacturer to the trader and ultimately from the trader to the consumer. The incidence of this excise duty is to be ultimately paid by the consumer of sugar and the manufacturer or producer will H actually not be paying the same from his own pocket. As he has to pass on the. incidence of this excise duty to some other person, imposition or re-imposition of excise duty on the manufacture or production of sugar cannot make the manufacturer or producer thereof to be an aggrieved party. Actually the ultimate consumer can well be called an aggrieved party in this case and no one else. We would, therefore, agree with the learned Deputy Attorney-General and hold that the petitioners of all the three writ petitions are not aggrieved persons within the meaning of sub-clause (a) of clause (1) of Article 199 of the Constitution.
14. As a result of the above discussion all the three writ petitions are dismissed with no order as to costs.