JUDGMENT: WAJIHUDDIN AHMED, J.-- 1. Through this Constitutional Petition Central Excise Orders in Original dated 2nd December, 1985, in Appeal dated 18th March, 1986 and in Revision dated 30th October, 1987 are called in question.
2. Petitioners' contentions, in brief, are that, in or about 1982, they visualised a project for the preparation of "wet tissue" and conducted a market survey, subsequently, launching the project, on making an investment of Rs, 800,000. They, were issued a provisional permission, dated 16th April, 1984, pending issuance of L-4 licence for the project of "Sanitary Napkins/Tissue Papers". Later, L-4 licences, for the periods ending December, 1984 and December, 1985, were issued to them for "Sanitary Napkins and Wet Tissues". L-4 licence for "Tissue Paper and Wet Tissues", dated 4th May, 1986, followed thereupon but a renewal was made, on 11th June, 1987, in the shape of "Original L-1 (licence) No, 6 Paper and Paper Board/87" dated 10th June, 1987 for the period ending 31st December, 1987.
3. Petitioners' case is that on 9th August, 1984 they addressed a detailed representation to the Central Board of Revenue seeking exemption from levy of Central Excise Duty on their preparation "Wetty" (wet tissues). In such representation they provided details of per item costs incurred by them in the preparation of the product in question. Out of which each bottle cost Rs, 3.00, paper No, 5.50, perfume and excipients No 1.50 and the rest were packing, labour, power, advertisement and commission charges, with Sales Tax of No, 2.14 added thereto. The petitioners, in the representation, expressed, apprehension, that, in the event, demand of the Central Excise Department for payment of excise duty, as applicable to cosmetics, was raised they, the petitioners, would be driven out of the market. This apprehension was based on physical verification by the Divisional Central Excise Staff, made on 24th July, 1984 and, true to the petitioners forebodings, was followed by a show cause notice, dated 10th October, 1984 from the Deputy Collector Central Excise and Land Customs, Karachi, claiming Central Excise Duty at 39% plus 7-1/2% Sales Tax. On 2nd December, 1985, the Deputy Collector-I, Central Excise and Land Customs, Karachi, on hearing the petitioners and examining the samples, came to the conclusion that the disputed products were not "Tissue Papers", pure and simple, but the same "were wet and perfumed of a kind normally (used) for the purpose of refreshing and as an alternative for perfume spray. These tissues have clearly lost the character of paper and are thus classifiable under 04.04 of the First Schedule to the Central Excises and Salt Act, 1944". Central Excise Duty of No, 86,801 plus a penalty of Rs, 5,000 was directed to be recovered from the petitioners. The petitioners appealed. The Collector (Appeals)' found that "such perfumed paper is not paper liable to pay duty under item 07.01 of the First Schedule to the Central Excises and Salt Act 1944. Note (1) B of Chapter 48 of the CCC Nomenclature specifically excludes such perfumed paper from the category of paper. It is classified under item 33.06 of CCCN as "perfumery". On a further finding that the case was covered under item 04.04 in the First Schedule to the Central Excises and Salt Act, 1944 and exemption under section 3-B of such Act not being available, the order in original was upheld. In Revision, the petitioners again failed, the Revisional Authority declaring that the "wet perfume tissue papers packed in plastic bottles are used and marketed as fragrant refreshing tissues. they are, therefore, appropriately classifiable under item No, 04.04-A of the Excise Tariff as perfumery and odoriferous article". However, penalty of Rs, 5,000 was remitted.
4. In the meantime, it is interesting to note that the Superintendent, Central Excise and Land Customs, SITE Circle, Karachi, per notice dated 4th November, 1985, recording that the petitioners were "not paying Central Excise Duty on Tissue Papers" "a product of paper and paper board" falling under Central Excise Tariff Item No, 07.01 read with section 2 (f) of Central Excises and Salt Act; 1944, called upon the petitioners to deposit Central Excise dues, amounting to Rs, 913.49, within 10 days of the receipt of such notice. The petitioners paid, per challan dated 9th November, 1985. They, also, vide their follow up letter, dated 4th December, 1985, asked for refund of Sales Tax. Such refund was allowed to them, as reflected in order, dated 22nd December, 1986 of the Assistant Collector, Central Excise, S.I.T.E. Division, Karachi.
5. It is in these circumstances that this Court was approached for relief.
6. Now classification of goods, for the purposes of taxation, is a mixed question of fact and law and has to be determined by the Revenue in a proper, just, fair and lawful manner. Whether a particular article falls under a specific item under a fiscal statute presents no difficulty once the article is found to be in circulation and involves acceptance, in the trade and in common parlance, in a particular sense. Such popular meaning should, undoubtedly common itself to the Revenue.
Likewise, if an article is included, classified and clearly put in a distinct entry no problem arises for neither the express classification nor the basis thereof is, speaking generally, open to question.
Difficulty, however, arises where the item is either purported to be taken out from the standard or specific item in the Tariff Schedule and consigned to the residua heading, involving higher duty, or placed, by invoking extraneous aids of interpretation, into some other classification, again involving a higher tax burden. Normally, it is not for the Court to determine such classifications and the matter, as a rule, should, where necessary, be referred back, for due correction. But where the departmental approach is based on patently fallacious considerations or a charge to higher duty is foreign to due and proper determination on the subject, the court would be free to draw its own conclusions in order to make necessary declaration. It is on the foregoing prognosis that this matter shall come up for consideration.
7. Item 04.04 in the First Schedule to Act I of 1944 is entitled, "Perfumery, Cosmetics and Toilet Preparations". Such heading includes "perfumery cosmetics and toilet preparations, all sorts, whether medicinal, medicated or otherwise, and whether or not perfumed". It is to be noted, at the outset, that whereas perfumery, cosme tics and toilet preparations are covered in this category, it is, expressly, envisioned that, medicinal attributes thereof, whether perfumed or not, would not exclude the same from the heading. Sub-headings A, B, C, D & E of the heading, though elaborate and detailed, do not, at all, either expressly or by implication contemplate paper, perfumed or not, wet or otherwise. It is, therefore, clearly through interpretative aids that "wet tissue" has been made to fall in heading 04.04, aforesaid. Whether the rules of construction have been correctly, justly and lawfully applied has to be seen.
8. While the Deputy. Collector acid the Collector, Central Excise and Land Customs, generally, applied heading 04.04, to the goods in dispute, the Federal Government, specifically, applied sub- heading 04.04-A, which is reproduced as under:-- "04.04-A. Perfumery and odoriferous, all sorts, in liquid or spray form including scents, colognes, mists, deodorants, levenders, toilet waters, antiperspirants, etc."
9. The charging provision, therefore, having finally been held to be heading 04.04-A, aforesaid, the closest we can go to the items, named therein, could be to sprays or toilet waters, since even the Federal Government has not cared to specify under which specific item in the sub-heading the goods would fall. But, obviously, "wet tissues" are neither spray nor toilet water. The classification, therefore, is per se bad.
10.Even if, in accordance with the order-in-original and in appeal, the entire categorizations in heading 04.04, in the First Schedule to Act I of 1944, are taken into account, after excluding sub- heading 'A', as above, the product is, again, clearly not covered under sub-headings 'C', 'D' & `E'. This leaves sub-heading 'F', substantive part of which is reproduced below:-- "F. Perfumery, cosmetics and toilet preparations, not otherwise specified, including room deodorizers, bath oils, after bath milk and preparation for bubble bath and foam bath etc."
11. We regret to say that even sub-heading 'F' does not cover "Wet Tissues" in question. A well- recognised principle of interpretation, applicable to fiscal laws, is that such laws, as and when the same come up for construction, must be strictly construed. Applying such principle of interpretation to the instant case, we find that the petitioners' goods do not fall under any of the categorisations, specific or general, in heading 04.04 in the First Schedule to the Central Excises and Salt Act, 1944,1 which being the conclusion, such goods do not fall to be I classified in terms thereof.
12. Once having found that the product in question is not covered under heading 04.04, aforesaid, it would not be necessary for us to go into the further question as to under what heading it falls or whether it falls within the range of excisable goods at all. All that we have to do, on. recording such finding, is to make necessary declaration and grant consequential relief or reliefs. However, having disagreed on conclusions bearing legal implications, we would prefer to, also, examine- heading 07.01 in the First Schedule to Act I of 1944 since such heading was considered in juxta position with heading 04.04 in the con-text of the Orders impugned in this petition. Section/heading VII of the First Schedule is entitled, "Paper, Paper Board and Paper Products." Sub-heading 07.01 reads as under:-- "07.01. Paper and paper-board, all sorts, including paste-board, millboard, strawboard and such other paper and paperboard, which ay laminated, bonded coated, corrugated, creped, crinkled, sensitized, impregnated, surface-coloured or surface decorated".
13.It would appear to us that "wet tissue", the product in question, is of an "impregnated" type, impregnated with traces of perfume and excipients and would fall, as admitted by the petitioners counsel, under the above heading 07.01.
14.It would not be out of place here to make reference to heading 33.06, in the Customs Cooperation Council Nomenclature, to which the Collector (Appeals) has adverted, for concluding that the product in these proceedings falls under heading 04.04 aforesaid. Heading 33.06 of the Customs Tariff, which, incidentally is neither, directly nor otherwise applicable, includes "Perfumery, Cosmetics or Toilet Preparations" and seems to cover also "Cosmetic Papers" and even "Bonded Fibre Fabric". It would seem to us, as observed in Order-in-Original, No, 31/85, dated 19th December, 1985, passed by the Deputy Collector, Central Excise and Land Customs, to which reference was made by the Federal Government, that "cosmetic paper" in CCCN heading 33.06 may cover paper "which is impregnated or coated with perfume" imparting "a strong aroma to articles like clothing wherein it is normally inserted", and not to the product herein considered.
Likewise, sub-heading, "Bonded Fibre Fabric", impregnated or coated with perfume, whether or not containing detergent or other substances, would cover only fibre and fabric of such attributes as aforesaid. "Fibre," it may be pointed out, literally means "any fine threadlike object of animal, vegetable or mineral origin, natural or synthetic: a structure or material composed of fibre" whereas "Fabric" denotes "an act of constructing, texture, manufactured cloth". Tissue paper, similarly impregnated, may not be covered.
15.Even otherwise, Excise & Customs Tariffs operate under distinct statutes, having different objectives, the first dealing with a value added tax and the other with controls on imports etc. and while assistance may be invoked, in inter-preting one on the basis of the other, such an invocation can never be conclusive, unless the item is, expressly, shown to be commonly dealt with, which is not the position here.
16.In the ultimate analysis, classifications of goods whether under the Excise or Customs Laws must be determined on the basis of their primary use. Reference on the point may be made to a decision of this Court in the case of Sultan Ahmad Baig v. Collector 1983 CLC 1538. It is an undisputed fact that the product involved is essentially paper, though partially impregnated with other substances. Such paper is meant as the petitioners rightly say, for wiping of hands and face, so as to remove dust and provide cleansing effect. On the basis of such primary use, the tissues involved, even though wet and impregnated, remain tissues and do 'not become another commodity such as perfumery or toilet preparations, since the latter are defined with some exactitude and do not embrace the disputed product.
17.Lastly, may be referred the show-cause notice, dated 10th October, 1984, from the Superintendent, Central Excise & Land Customs, SITE, Karachi, whereunder the goods, under reference, were classified under Item No, 07.01 of the Central Excise Tariff, which classification the petitioners accepted,. paid due duty in accordance therewith and the Assistant Collector, per order dated 22nd December, 1986, also allowed pursuant refund of Sales Tax. None of the forums below adverted to this aspect of the matter. Two inconsistent views on the same subject cannot be allowed to stand together and only one must prevail.
18.Before parting with this case, it is not only proper but also necessary to record that probably because of the some-what out of place interpretation accorded by the Excise Authorities the petitioners, as they contend, have been driven out of such business and, not only allegedly but admittedly, are no longer preparing the product in question which according to them, on such interpretation, has become uneconomical. This is regrettable. It is only for this reason that fiscal measures are always strictly construed. It is for like reason that the Revenue Collecting Agencies should realise the heavy weight of responsibility that lies on their shoulders. They have to encourage and foster industry and commerce. While evasions of revenue are, certainly, to be dealt with a heavy hand, new and upcoming industries are to be carefully fostered and nurtured. We remain confident that these objectives would never be lost sight of.
19.With these observations we allow this petition and with costs.