1. ' MUHAMMAD Gun, J.-his judgment deals with the above two petitions, both of which are directed against a single judgment of a Division Bench of the High Court at Karachi dated 22-11-1973. By that judgment Writ Petition No, 1 of 1971 and Writ Petition No, 27 of 1971, which proceeded on similar facts and involved common question of law, were dismissed.
2. ' The petitioner in each case is a manufacturer of fabrics and yarn of different varieties, manufactured both for consumption by the Mill owned by the petitioner itself and for sale in the open market. Yarn whether produced from cotton or "man-made fibre" is assessable to central excise duty under the Central Excises and Salt Tax Act, 1944.
3. ' It appears that prior to the year 1966, yarn of various kinds (subject to certain exceptions which are not material to these cases) was assessed to central excise duty under item 16 in the 1st Schedule to the Act, if it was produced in a factory ordinarily using power for its production and contained cotton not less than 10% by weight.
4. ' By the Finance Act of 1966, Entry 16 was replaced by a new entry which for the material purpose read as follows: "'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 911 ' Then followed different rates of excise duty for cotton yarn according to its counts as defined in the explanation to the entry. By the same Act a new Entry 33 entitled "man-made fibres and yarn" was also inserted in the Schedule which read as if.
(a) Acetate and viscose and Two rupess fifty paisas per pound.
5. Yarns.
(b) All other man-made Five rupees per pound.
6. Fibers and yarns.
7. ' The effect of these changes in the entries in the Schedule was that the yarn which hitherto was treated as a singular category and assessed to Central Excise Duty if it was produced in a factory ordinarily using power and contained not less than 10% cotton by weight, under the amended entries, was divided into two broad categories as cotton yarn and yarn made out of "man-made fiber". The duty assessed on the latter category was at a higher rate than the ordinary cotton yarn.
8. ' A further amendment was made by Finance Act, 1968 by which the following explanation was added to entry No,
33. It was also expressly given retrospective effect:- "Explanation.-any mixed yarn the predominant component of which is man-made fiber shall be treated as man-made yarn."
9. ' In C. P. 14 of 1974, subsequent to the amendment in 1966, the petitioner manufactured yarn with 33% cotton and 67 % man-made fibre contents and the same was utilized in manufacture of Trivera shirting. On 10-9-1968, a notice was issued to the petitioner under the signature of Superintendent, C. E. & L. C. Alleging that the petitioner had been manufacturing and using "man- made yarn" in the manufacture of Trivera shirting without paying the central excise duty and other taxes on the same and thereby had evaded the payment of duty and other taxes to the tune of Rs, 53,315.50. The notice required the petitioner to pay the amount within 10 days. The petitioner contested the notice before the Assistant Collector on a number of grounds. The Assistant Collector, vide order dated 16-6-1969 held that the yarn manufactured and utilised by the petitioner in the manufacture of Trivera shirting, contained 67 % of polyster which was a man- made fibre and therefore assessable to duty under item 33 and the demand contained in the aforesaid notice was perfectly valid. An appeal taken by the petitioner before the Collector, C. E. & L.
10. C. Was dismissed summarily on the short ground that the petitioner not having complied with the requirement of section 35(1-A) of the Act, his appeal was rot competent. A revision before the Central Board of Revenue was also dismissed. The matter was then taken before the High Court in its writ jurisdiction in Writ Petition No, 1 of 1971 which was also dismissed by the impugned judgment.
11. ' In C. P. 15 of 1971, the petitioner manufactured certain quantities of mixed yarn during the months of August and September, 1966, containing 12% cotton in weight and 88% man-made fibre but paid duty as if it was the yarn manufactured was a cotton yarn. Subsequently, by a notice issued in December, 1967 a sum of Rs, 35,328.58 was demanded from the petitioner because the yarn manufactured by it was assessable to duty under item No, 33 being yarn, with the predominant content of man-made fibre. As in the other case, the notice was unsuccessfully contested before the Collector and the Board of Revenue and finally in Writ Petition No, 27 of 1971.
12. ' The petitioner in each case now seeks leave to appeal against the judgment of the High Court, except in so far as it granted relief in respect of the sales tax levied in each case.
13. ' Mr. Pesh Imam, learned counsel for the petitioner in each case, did not dispute the percentage of the cotton and man-made fibres used in the manufacture of yarn, the predominant content of which was the "man-made fibre". He however, raised the following two-fold argument:-- ' First, in each case, the duty was assessed under item No, 16 and collected in the year of 196 I and therefore, it constituted a past and closed transaction which could not be reopened by any subsequent amendment in the law, the object of which was to enlarge the definition of "man- made fibre" in item No, 33 in the Schedule.
14. ' Secondly, in any event the amendment in item No, 33 by addition of the explanation thereto could not operate retrospectively so as to affect a past and closed transaction.
15. As rightly pointed out by the learned Judges in the High Court, it is difficult to see, how in view of the clear terms of provisions of rule 10 of the Central Exises and Salt Rules, 1944, it is possible to contend that the A payment of duty in 1967 which in effect amounting to evading the payment of appropriate duty became a closed and past transaction. Rule 1 empowers the Government to recover the balance of duty short levied within a period of 3 years. It is not denied in the instant cases, the department! Moved in the matter within that period.
16. ' As to the second point, Mr. Muaaffar Hassan, learned counsel for the Caveator pointed out that the amendment of item 33 was made by the Finance Act, 1968 which cannot by any stretch be equated with a piece of subordinate legislation and therefore, it operated retrospectively according to its express terms. The learned Judges in the High Court also took the view and in our opinion rightly so, that the addition of the explanation to Entry 33 cannot be treated as enlargement of the earlier provision; it was merely declaratory or explanatory of what was already implicit in the entry itself. In the instant cases, because of the predominant component of the man- made fibers used in the manufacture of yarn, there can be no manner of doubt that the yarn produced by the petitioners during the relevant period was rightly assessed under item No, 33.
17. ' Mr. Pesh Imam also referred to R. R. Textile Mills Ltd. v. Collector, C. E. & L. C. (1) in support of this argument, but as rightly pointed out by the learned Judges in the High Court, the judgment was in respect of yarn manufactured prior to the amendment in 1968 and in any case there was no categorical denial of the fact that it was a cotton yarn within the meaning of item 16 as amended, as is being done in the two instant cases on behalf of the Central Excise Department.
18. ' For the foregoing reasons, we consider that the two writ petitions were rightly decided in the High Court and these petitions are accordingly dismissed.
(1) PLD 1968 Dacca 808