1. ' SALEEM AKHTAR, J.---The petitioner manufactured cotton yarn on which Central Excise Duty was levied at the rate provided by the Central Excises and Salt Act, 1944 hereinafter called the Act. The Federal Government issued a Notification No, SRO 557(1)/72, dated 3rd August, 1972 under section 12-A of the Act whereby certain manufactured goods were granted full exemption or partial exemption' from payment of Excise Duty. On 30th October, 1974 the Federal Government exercising powers under section 12-A of the Act issued Notification No, SRO 1362 (1)/74 granting partial exemption on the cotton yarn manufactured by the textile industry. The statutory rate of duty on cotton yarn of less than 21 counts was 60 paisas per pound, but by this notification same was totally exempted from payment of Central Excise Duty. Likewise on cotton yarn of counts 21 or more but less than 35, the Duty was reduced to 60 paisas per pound. On 30th October, 1974 the petitioner had stock of 3,92,282 pounds of cotton yarn of less than 21 counts and 184,208 pounds of cotton yarn of 32 counts which were manufactured before this date 30-10-1974. The petitioner cleared these goods after 30th October, 1974 on various dates and paid duty at the rate prevalent on the date of clearance as provided by the exemption Notification dated 30-10-1974. In the year 1978, the Federal Government exercising poweer under section 12-A issued Notification No,SRO 810(1)/78, dated 29-6-1978 granting total exemption from payment of Excise Duty on cotton-yarn on certain categories manufactured by textile industy. In the year 1979 the Federal Government by Notification No,555(1)/79, dated 28-6-1979 withdrew the exemption. After the withdrawal of exemption on 28-6- 1979 the Central Excise Authorities started claiming Central Excise Duty at the rate applicable from 28-61979 on the stock of yarn and goods manufactured during the period of exemption. This action was challenged by several other manufacturers and was held by the High Court of Lahore as illegal which was upheld by the Supreme Court in Central Board of Revenue v. Colony Thal Textile Mills Ltd.
2. 1981 SCMR 303. The Federal Government by Notification S.R.O. 571(1)/83, dated 11-61983 omitted Rule 9-A. Simultaneously section 3-C was also added in the Act.
3. On 22-10-1984 respondent No,3 issued a show-cause notice to the petitioner demanding a sum of Rs,348,472.20 as Central Excise Duty on 576,490 pounds of cotton-yarn which was held in stock on 30th October, 1974 and had been cleared by the petitioner without payment of Excise Duty and or on reduced excise duty in terms of notification dated 30th April, 1974. Petitioner denied the claim but respondent No,3 by order dated 30-12-1985 relying on the judgments of the Lahore High Court in Colony Thal Textile Mills Ltd. v. Assistant Collector, Central Excise and Land Customs and others 1980 CLC 1660 and Assistant Collector v. Colony Thal Textile Mills Ltd. 1980 CLC 1825, which were upheld by the Supreme Court and a Special Order of exemption issued by the Central Board of Revenuet in December, 1984 rejected the petitioner's contention and ordered for payment of Rs,348,472,20. The petitioner filed appeal which was dismissed and the Revision filed by it was also rejected.
4. ' Mr. Khurshid Anwar Shaikh the learned counsel for the petitioner has contended that as Rule 9-A was applicable, the duty was paid at the rate prevalent at the time of clearance of the goods and not the date of manufacture of the goods. The demand of respondent was, therefore, illegal as the petitioner had paid Excise Duty applicable on the date of clearance of the goods. The learned counsel has referred to Colony Thal Textile Mills Ltd., Ismailpur, Bhakkar v. Assistant Collector, Central Excise and Land Customs, Faisalabad and another 1980 CLC 1660 and Assistant Collector, Central Excise and Land Customs and others v. Colony Thal Textile Mills Ltd. 1980 CLC 1825. The first judgment is by a learned Single Judge where it was held that the duty is payable at the time of manufacture of goods and is not dependent upon their subsequent disposal as per dictum of the Supreme Court of Pakistan in Colony Sarhad Textile Mills Ltd. v. Superintendent, Central Excise and Land Customs 1973 SCMR 640. This judgment was upheld in C.B.R. v. Colony Thal Textile Mills Ltd.
5. 1981 SCM R 303. The Supreme Court relied on the observation made in Colony Sarhad Textile Mills, Nowshera v. Superintendent, Central Excise and Land Customs 1979 SCM R 640 which is reproduced as follows:-- "In the instant case, it is not disputed that the goods on which duty has been levied are specified in Part I of the First Schedule of the Act. It is also not disputed that the aforesaid goods were produced or manufactured by the petitioner in Pakistan. If these two conditions are fulfilled, then these goods come within the ambit of the charging section 3 above reproduced and the authorities concerned were justified, the moment these goods were produced or manufactured in Pakistan, to levy and recover excise duty on them. The charging section talks of levying duty on production or manufacture and is not concerned with their sale, or what happens to those goods after they are produced or manufactured."
6. ' The learned counsel for the petitioner has pointed out that in the judgments of the Lahore High Court as well as of the Supreme Court reference has been made to Rule 9 and not to Rule 9-A which was the relevant rule for the purposes of determining the controversy. We cannot presume that both the Hon'ble Courts were not aware of the existence of Rule 9-A. According to Rule 9-A the rate of duty applicable to any goods shall the rate of duty in force on the date on which the goods are cleared for home consumption. But as held by the Supreme Court in terms of section 3 duty is payable at the rate in force on the date of manufacture. A rule cannot override the statutory provision. The law laid down by the Supreme Court is binding which we respectfully follow. It is pertinent to note that in 1983 Rule 9-A was deleted and the same provision has been enacted as section 3-C, but it is not applicable to this case.
7. The learned counsel then contended that a vested right had been created by virtue of the exemption and, therefore, it cannot be taken away. The question of vested right does not arise because as the duty was payable at the rate in force on the date of manufacture which was much earlier to the date when exemption was granted, the benefits of exemption were not available to the petitioner on the date when the Excise duty was payable. We, therefore, find no force in the petition which is dismissed.