' QAZI MUHAMMAD JAMIL, J.--Gadoon Amazai is an area in District Swabi where poppy growing was the cash crop for the local cultivators. With the spread of deadly menace of heroin not only the standing crops were destroyed but the inhabitants were pursuaded to give up the future cultivation on the undertaking that the area shall be developed to provide livelihood to them. One of such measures to develop the area was the establishment of an Industrial Estate there The Federal Government extended helping hand by issuing a Notification No, SR0.517 (1)/89 dated 3-6- 1989, subject matter of this petition, whereby raw material and components as are imported for the exclusive manufacture of goods by recognised industrial units located in the approved Industrial Estate of Gadoon Amazai in the Province of N.-W.F.P. Shall be exempted from whole of the customs duties and sales-tax leviable thereon" subject to certain conditions given therein. Thousands of Industrialists from all over the country applied for a space in the aforesaid Industrial Estate. The petitioner was one of them. After having been allotted a plot in the said Estate for the purpose of manufacture of 'Synthetic Tops' he established an Industrial Unit with the capacity of producing the said Tops at about 1200 Tons. According to the petitioner he spent a huge sum of money on the aforesaid Establishment. The petitioner was also granted Central Excise Licence by respondent No,1.
The production of the said synthetic tops required the import of raw material known as Acrylic Tow.
He, therefore, imported on the basis of three Licence Certificates a certain quantity of the said material. When the first consignment of the aforesaid material arrived at Karachi in November, 1989, the petitioner requested respondent No,2,the Chief Survey and Rebate, Central Board of Revenue, Islamabad, to issue him the requisite certificate to enable him to avail the benefit of aforesaid Notification. Finding no response, he approached the higher authorities for the release of the said material without any success. According to the petitioner he was under strain and heavy losses both on account of demurrage and other charges and also fear of the damage of second consignment at Peshawar Dry Port. Apart from making an application he made a personal call on respondent No,2 requesting him to allow the petitioner to release the consignment already in store at Bonded Warehouse, Karachi and shift it to the factory premises at Gadoon Amazai against Bank Guarantee and similarly allow him to release the consignment from Peshawar Dry Port. The said respondent made no response. The petitioner, therefore, has approached this Court for an appropriate direction under Article 199 of the Constitution.
2. The respondents in their written statement have given reasons for not allowing exemption to the petitioner under the aforesaid Notification. In para 4 of their written comments they claim, "the goods stated to be produced in the instant case are Acrylic Tops from the Acrylic Tow which by no means can be termed as an exclusive manufacturing process". Today,the learned Deputy Attorney-General has also produced before us a telex from a Second Secretary of Federal Government to the Collector Customs and Central Excise, Peshawar wherein he requested the latter to bring to the notice of the Deputy Attorney-General that the "conversion of Acrylic Tow into Acrylic Tops is not an exclusive manufacture". No direct reply has yet been received by the petitioner.
3. The learned counsel for the petitioner has demonstrated before this Court the raw material known as Acrylic Tow which is then processed into Acrylic Tops. The Acrylic Top is admittedly a marketable product. It is also admitted that the raw material undergoes change through skilled labour and machinery and transformed into a different shape. Mr.Saif-ur-Rahman Kiyani, the learned Deputy Attorney-General, appearing for the respondents relied on the interpretation of the term manufacture of goods used in the aforesaid Notification by the respondents. He argued that the exemption from customs duties and sale-tax is to be granted only to that raw material which is used for the exclusive manufacture of goods. Mr.Saif-ur-Rehman Kiyani, however, has not controverted that the raw material is known as Acrylic Tow and it is transformed into what is called Acrylic Tops which is marketed as a product under that name. He has also not questioned that the said product goes through a mechanical process by skilled and unskilled labour. He, however, laid great stress on the import of the phrase used in the Notification, exclusive manufacture of goods.
His view is that the definition of manufacture cannot be borrowed from other statutes and judicial precedents as is done by the learned counsel for the petitioner but it has to be seen in the context of the Notification itself. The Notification has used the word exclusive with the manufacture of goods. According to the learned Deputy Attorney-General exclusive means the ultimate manufactured goods and not any intermediary product.
4. The entire controversy revolves around the question whether the raw material imported by the petitioner shall be used exclusively for the manufacturing process or manufacturing goods in order to be exempted from the customs duties and sale-tax under the aforesaid Notification. The word manufacture is neither defined in the Customs Act nor in the Sale Tax Act, 1951, under which the aforesaid Notification of exemption was issued. However, subsection (11) of Section 2 of the Sales Tax Act gives the meaning of `manufacturer or producer' as "a person who engages, whether exclusively or not, in the production of manufacture of goods, and includes a printer, publisher, lithographer or engraver, or a person engaged in the ginning of cotton, and also any person (not being an employee) who manufactures goods, whether or not the materials of which the goods are manufactured are owned by him; provided that where one person, other than a person engaged in the ginning of cotton, manufactures goods for another, wholly or in part out of materials supplied by that other, and the goods are not for the use of, but are for sale by that other, the person supplying the materials shall be deemed to be the manufacturer, and the person who so manufactures the goods shall be deemed not to be the manufacturer". (the underlining is ours).
The above definition of manufacturer shall be useful at least for the purpose of determining what is meant by exclusive as used in the Notification. The learned counsel for the petitioner also referred to Section 2 (f) of the Central Excise and Salt Act, 1944, which defines the word `manufacture' as follows; "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 process of packing or repacking such produce". In Superintendent of Central Excise, Lyallpur. v.
Ch. Faqir Muhammad (PLD 1959 SC 103), the Supreme Court of Pakistan interpreted the word manufacturing while dealing with a case under the aforesaid Central Excises and Salt Act. Relying on Encyclopaedia Britannica (1953 Edition, Vol.5, page 846),the Supreme Court held that calendering of cloth is a process ancillary to the completion of the manufacturing product which is the calendered cloth. Again in Messrs Norrani Cotton Corporation's case (PLD 1965 SC 161), the Supreme Court found that the cottonseed manufactured by the assessee and kept for manufacturing of cottonseed oil were exempt from sale-tax as a final product i.e, the cotton seed oil itself was taxable. The Lahore High Court in a case reported as Malak Shams Din and others v.
Income Tax and Sale Tax Officer (PLD 1959 Lah. 955) held that cutting of forest trees into pieces of timber for sale was a process of manufacture. This Court in an unreported Tax Reference No,6 of 1986 (Commissioner of Income Tax, Peshawar v. Messrs Saif Nadeem Kawasaki Motors Ltd.) decided on 26-5-1990 agreed with the Income Tax Appellate Tirbunal Peshawar Bench, Peshawar that the production of motorcycle from the knocked down parts of the same was a manufacturing process. Different cases from Indian jurisdiction were cited before us in this respect by the learned counsel for the petitioner reported in 1967 Sale Tax Cases 430, (oilseed and oilcake were held to be two different articles), 1975 Sales Tax Cases 493, (mixing and blending of coffee with chicon was found to be manufacturing process) and 1976 Sales Tax Cases 319 (the transformation of steel into steel rod considered as manufacturing process).
5. The sum total of opinions expressed in the judgments quoted before us as well as the definition given in the Dictionary and Encyclopaedia, leads us to the following conclusions with regard to the word 'manufacture' in the context of the present case. The word manufacture would imply that the labour, both skilled and unskilled, is used through machinery for making of a product commercially known as such, distinct in character than the one which has been used in its transformation and capable of being sold as such product. The definition of the word given in the Central Excises and Salt Act, 1944 as interpreted in different judgments of the Supreme Court of Pakistan is exhaustive and includes varied ramifications of the process of manufacturing, but it also indicates the aforesaid conclusion drawn by us. In the case in hand, as admitted by the learned Deputy Attorney-General, the goods to be produced by the petitioner are Acrylic Tops which are commercially known as such. The material which is used in the production of the said Tops is called Acrylic Tow. This artificial material like the natural fabric material, silk, wool and cotton can be thus manufactured into definite shapes. The fact that the Tops can also be used for the production of different goods shall not take it out of the manufacturing process which it has itself undergone. The learned Deputy Attorney-General's meaning of the word `exclusive' cannot be accepted as `conslusive'. The word exclusive does not mean some ultimate goods which can be made out of another product. Apart from the fact that no substance has its ultimate shape, the word exclusive is used in the afore-said Notification in its ordinary meaning as well as in the context of its application in the Sales Tax Act itself. The manufacturer as defined in the aforesaid Act and as reproduced above, could be exclusive manufacturer or otherwise. There is another kind of relationship mentioned therein between the person who simply sells the raw material but is not concerned with the manufacture of the product made from it. Hence by the aforesaid Notification that raw material shall be exempted from the customs duties and sale tax which is exclusively used for the manufature of goods in the Industrial Estate of Gadoon Amazai. Such raw material if sold otherwise than for being used in the Industrial Unit shall not be so exempted. There can be no other meaning of the word exclusive and we cannot accept the interpretation placed on it by the learned Deputy Attorney-General. Such an interpretation may also lead to arbitrary selection of products to be exempted from customs duties and sale tax. It is for the Federal Government to lay down further guidelines with clear definition of the words used therein for the aforesaid purpose, if so advised. But the Notification already issued, as it stands today, has a clear meaning and connotation of the phrase 'exclusive manufacture of goods' as stated by us above.
6. In the light of the above discussion, this petition is accepted, the respondents are directed to act in accordance with the Notification dated 3-6-1989 issued by the Federal Government by granting exemption as provided therein to the petitioner in the matter of Acrylic Tow imported by the petitioner for the purpose of manufacturing of Acrylic Tops in Gadoon Amazai Industrial Estate.
There shall he no order as to costs.