JUDGMENT ABDUL KADIR SHAIKH, J.-1. This appeal is directed against the judgment of Sindh High Court dated 10th April, 1979, whereby levy of Central Excise Duty on the manufacture of "corrugated board", under Item No. 37 in Section IX of Part I of the First Schedule to the Central Excises and Salt Act, 1944, was declared as illegal and without lawful authority.
2. The respondents are four different business concerns engaged in the manufacture of box cartons which are made from corrugated board. According to the respondents, in the manufacture of box cartons, the following machines are used: (1) Paper Corrugating Machine; (2) Paper Cutting Machine;' (3) Pasting and Gluing Machine; (4) Creasing & Slotting Machine; and (5) Wire Stitching Machine. The extent and the limit of operation of each machine is as under: (1) Paper Corrugating Machine.- This machine has 2 sets of rollers and a plain surface pressure roller. One set is of 2 plain rollers. The other is a set of 2 grooved rollers. In the set of plain roller, liner paper is fed. Simultaneously semi-chemical fluting paper is fed in set of grooved roller which gives the corrugating effect and wets the tips on one side of the corrugated paper with glue. These tips, on one side of the corrugation, stick to the paper passing through the set of plain rollers. The process produces corrugated paper lined on one side with plain paper. (2) The Cutting Machine.- The single lined corrugated paper is cut by the cutting machine into the desired or required size or sizes. The said sizes depend on the size of the box cartons to be manufactured. A plain printed paper (Printed with the name of the ordering industry and other particulars, of the products to be packed), is cut into the same size as the single lined corrugated paper on the cutting machine. (3) Pasting & Gluing Machine.- The single lined corrugated paper is then passed through the Pasting and Gluing Machine which wets its open tips with glue on which is pasted the corresponding printed paper in this machine. In this manner and by the process 2 plain sheets of paper, one plain and the other printed, is pasted on either side of the two opposite tips of the corrugated sheet which may then be called a double-lined corrugated sheet. (4) Creasing & Slotting Machine.- This machine trims the edges to the exact size of a carton creases and folds for the required dimensions. These creases or folds give the shape to a box carton. (5) Wire Stitching Machine.-At the required places the box carton in this machine is stitched/stapped in order to give it a full and enduring shape of a box carton.
3. According to the respondents, the manufacture of box cartons is a continuous, involving ordinary and semi- chemical fluting paper which are placed in these machines in a particular manner i.e., the corrugated paper put between 2 plain sheets and glued.
4. The respondents claim that the aforesaid industry has been in existence since 1947 and at no point of time, except for a brief period in 1975, these industries or their products were subjected to any Central Excise Duty or any control under the Act. The end-product, that is, the box carton is also exempt from sales tax.
5. However, by letter C. No.12(14)ST-BAL/78/6298, dated 12th December, 1978 Superintendent, Central Excise and Land Customs, Karachi informed the respondents that since they were the manufacturers of paper board (corrugated) which is liable to Central Excise Duty under Item No. 37 of the First Schedule to the Central Excises and Salt Act, 1944, they should not remove the said goods from their factory including the cartons etc. Except in the prescribed manner and on payment of the excise duty and the sales tax etc. The respondents were further required to "introduce, keep and maintain all the records prescribed under the Central Excise Laws".
6. The respondents made several departmental representations but these were of no avail and it was in these circumstances that they filed the Constitution Petition in the High Court seeking to challenge the aforesaid levy of the Excise Duty and the sales tax.
7. At this stage, it may be mentioned that section 3(1) of the Act provides that the Duties of Excise on all excisable goods produced or manufactured shall be levied and collected in the prescribed manner at the rates set forth in the First Schedule. 'Excisable Goods' have been defined in section 2(d) of the Act as meaning goods specified in Part I of the First Schedule. Item No. 37 in Section IX of Part I of the Schedule. Item No. 37 in Section IX of Part I of the Shedule reads as follows: Item No. Descripiton Rate of Duty 37 Paper and Paper Board all sorts. 30 paisas per K.G. 8.
The main question that arose for consideration, according to the learned Judges of the Division Bench of the High Court, was whether corrugated board is paper board in the meaning of Item No. 37 mentioned above. In this behalf, their Lordships observed as under: "Coming now to the main question, whether the corrugated board falls within the term "paper board ", it is necessary to appreciate the nature, physical properties, uses and classification according to trade practices of the respective articles in question. The "Dictionary of Paper", 3rd Edition, published by the American Paper & Pulp Association (1965), defines "paper board" as one of two broad subdivisions of paper.
The distinction between paper and paper board is not sharp but generally speaking, paper is lighter in basis weight, thinner and more flexible than paper board which is heavier, thicker and more rigid with the exception of blotting paper. 'Paper and Paper Board Characteristics, Nomenclature, and Significance of Tests' Third Edition, published by American Society for Testing and Materials, page 28, describes paper board as "paper board" is characterised by a structural strength as differing from paper; that is, it is constructed for certain properties, such as stiffness, ability to resist deformation and to retain its original general form under stress, tearing resistance, and the like. Paper board of various descriptions, such as card board, straw board, file board, chip board, grey board etc. Are used for variety of purposes and not merely for manufacture of box cartons. The raw material used for the manufacture of paper and paper board is primarily wood pulp as a fibrous material although a smaller percentage of non-fibrous ignorance chemicals and fillers are added. Special kinds of machines known as four-drinier type or cylinder type machines, are used by paper board mills for manufacture of paper board after passing through various processes of preparing the wood pulp, draining off the water and drying the pulp sheets and treating the surface to produce the various kinds of paper board. On the other hand, corrugated board differs from paper board in all these respects. The raw material for the manufacture of corrugated board is the chemically-treated liner paper already prepared by the paper board mills.
The process of manufacture and the types of machinery used are also different. Unlike the paper board, a single-face or double face corrugated board is not sold pressed and because of the fluting, the board provides some degree of cushioning effect of the corrugation. It is flexible and permits easy folding. The cross section is hollow. Single-face or double-face board or even a double-wall or triple-wall board may even be a stiff board but it is a misnomer to call it a paper board."
9. After having noticed the above difference, learned Judges also took into consideration the argument advanced on behalf of the respondents that in the Pakistan Customs Tariff and in the I.T.C. Schedule, paper board and corrugated paper are classified under different headings, in that, "the heading 48.01 covers machine-made paper board as manufactured in the form of rollers or sheets but it excludes, inter alia, paper board corrugated (with or without flat surface sheets) under heading 48.05."
10. Yet another argument advanced on behalf of the respondents that prevailed with the learned Judges was that "the words, 'paper board' and 'corrugated board' are words of art and have acquired technical meanings, and the trade distinguishes paper board from corrugated board". In this connection, learned Judges noticed the decision of this Court in Collector of Customs v. Abdul Majid Khan and others 1977 SCM R 371 at 387 that "if a statute is one passed with reference to a particular trade, business or transaction and words are used therein, which every body conversant with the trade, business or transaction knows and understands to have a particular meaning in it, then the words are to be construed as having 'that particular meaning which may differ from the ordinary or popular meaning- "Moreover, in interpreting a penal or a taxing statute the Courts must look to the words of the statute and interpret them in the light of what is clearly expressed. It cannot imply anything which is not expressed, it cannot import provisions in the statute so as to support assumed deficiency, as held in M/s. Hirjins & Co.
(Pakistan) Ltd. v. Commissioner of Sales Tax, Central Karachi 1971 SCM R 128. Last but not the least, it is also well-established that penal provisions of a statute should be 'strictly construed and in case of any ambiguity or doubt arising from the construction, the benefit must go to the accused person: Muhammad Ali v. State Bank of Pakistan, Karachi 1973 S CM R 140."
11. It was on the basis of the above that the learned Judges reached the conclusion that corrugated board made out of paper is neither 'paper' nor 'paper board' and rejected the submission advanced on behalf of the appellants that the expression "all sorts" would cover corrugated board as the sort of paper board.
12. It may be mentioned that it was submitted before the High Court on behalf of the respondents that the corrugated board is an intermediate product to produce the finished articles, namely, box cartons and as such these are not liable to excise duty. Their Lordships however took the view that the process of conversion of liner paper into corrugated paper and then into corrugated! Board is itself a process of manufacture of box cartons and the respondents admittedly employ several types of machines during the process of manufacturing the corrugated board and it was also not disputed that corrugated board is itself an independent product which is sold in the market and has independent uses. On this view of the case, the aforesaid plea was rejected.
13. Leave to appeal was granted by this Court as it was pointed out that the Lahore High Court in Writ Petitions Nos. 498 and 499 of 1974 has upheld the levy of Central Excise Duty on the corrugated board under the Item No. 37 of Section IX of Part I of the First Schedule and since there was a conflict of opinion in the High Court, it is necessary to resolve the conflict.
14. In support of the above appeal, Mr. Shahudul Haq, learned ASC appearing for the appellants vehemently contended that Item No. 37 which gives the description as "Paper and Paper Board all sorts" has wide connotation which will include corrugated board in question as to make it subject to levy of excise duty.
15. On the other hand, Mr. Mansoor Ahmad Khan, leamed ASC appearing for the respondents, has reiterated the arguments which found favour with the leamed Judges of the Division Bench in the High Court, firstly, he relied upon the definition of the "paper board" given in the "Dictionary of Paper", 3rd Edition, published by the American Paper and Pulp Association (1965), which defines "paper board" as one of the two board sub-divisions of paper. It also points distinction between paper and paper board by stating that though the distinction is not sharp but generally speaking, paper is lighter in basis weight, thinner and more flexible than paper board which is heavier, thicker and more rigid with the exception of blotting paper. He also referred to the definition of the "paper board" given in 'Paper and Paper Board Characteristics, Nomenclature, and Significance of Tests' Third Edition, published by American Society for Testing and Materials, page 28, as "paper board is characterised by a structural strength as differing from paper; i.e., it is constructed for certain properties, such as stiffness, ability to resist deformation and to retain its original general form under stress, tearing resistance, and the like." It also describes the various kinds of paper board such as card board, straw board, file board, chip board, grey board etc. Mr. Mansoor Ahmad Khan referred the judgment under appeal for the purpose of the above definitions and also for the purpose of highlighting the distinction between "paper board" and "corrugated board".
16. It has been observed in the judgment under appeal that the paper board has different process of manufacturing as compared to corrugated board and that corrugated board also differs in characteristics inasmuch as unlike the paper board, a single-face or double-face corrugated board is not sold pressed and because of the fluting, the board provides some degree of cushioning effect of corrugation. It is flexible and permits easy folding.
17. In our view, the factum that there is a different process of manufacturing of other types of paper board as compared to the corrugated board or that corrugated board has different characteristics as compared to the other kinds of board, would not be the deciding factor for determining whether corrugated board falls within the above Item No. 37, which has been worded in such a way as to have widest possible connotation. The Item reads "Paper and Paper Board all sorts". The High Court has not taken into consideration the effect of the use of the words "all sorts". In this regard, it may be pertinent to refer to the ordinary and literary meanings of the above words "all sorts of ", "all" and "sort" in the Oxford English Dictionary, Volume 10, page 451, in the Concise Oxford Dictionary, 1967 Print, pages 23 and 1012, in the Chamber's Twentieth Century Dictionary, New Edition 1983, pages 30 and 1236, in the Stroud's Judicial Dictionary, Fourth Edition, Vol. 1, page 109 and Vol. 5, page 2579, and in the American Heritage Dictionary of the English Language, pages 33 and 1233, which reads as follows:-- Oxford English Dictionary Vol. Xpage 451- "All sorts of (things or persons),-'things or persons of ail kinds or descriptions'---------------------------------------------------------------------------- The Concise Oxford dictionary, Seventh Edition, pages 23 and 1012.- "all" (awl) a., n., & adv.l. a. Whole amount, quantity, or extent of (all day; all England; all his life; and all THAT; take it all); all hail, int. Of greeting (to) [hail = health]; get away from it all (from everyday tasks and worries); stop all this (this excessive) grumbling; all the TIME 9; all the WAY 3.2. Greatest possible (with all speed). 3. (w.
Pl.) entire number of (all men; all ten men; his children are all boys; admirals all; all the others);---- ----------------------- " "sort" n.
1. Group of things etc. With common attributes, class, kind, species, variety,---------------" Chamber's 20th Century Dictionary, New Edition, pages 30 and 1236.- "all" adj. Comprising every individual one (e.g. All men, all roads, all instances): comprising the whole extent, etc., of (e.g. All winter): any whatever: (preceding 'the') as many as there are, or as much as there is (e.g. All the men, all the cheese); also used following pl. Pers. Pron., or sometimes pi. n. (e.g. We all laughed, the guests all came): the greatest possible (e.g. With all haste, in all sincerity): every, n. The whole: everybody: everything: the totality of things-the universe: one's whole possessions (formerly often in pi.), -adv. Wholly: entirely: quite: without limit, infinitely: on all sides: on each side, apiece:" even, just (passing into a mere intensive, as in all on a summer's day, or almost into a conjunction by omission of if or though).- In composition, infinite, infinitely: universal: completely: wholly: by all: having all for object.-Possible compounds are without limit: only a selection can be given.------------------------------------------------------------ " "sort" n. a lot (in sortilege ) (Shak): a company, group, collection, parcel (obs.): a class, kind, or species: quality or rank: one, a specimen or instance, of a kind--- --------------------------- " Stroud's Judicial Dictionary Fourth Edition, Vol.1 page 109 & Vol.5 page 2579-"AW----------------- (2) "All" is equivalent to "each and every" (see judgment of Lord Fitzgerald, Burnett v. Great North of Scotland Railway, 54 L.Q.B.539); but by a context, it may mean "any" (1 Jarm., 8th Edn., 607)----------------- ------ " "sort"."sort," in the expression "kind or sort," is probably synonymous with "QUALITY or NATURE"(see DYE)." The American Heritage Dictionary of the English Language pages 33 and 1233.- "AH" (ol) adj.
1. The total entity or extent of: all Christendom.
2. The entire or total number, amount, or quantity of: all the saints.
3. The utmost possible of: in all truth.
4. Every, used only in phrases such as all manner, all kinds,
5. Any whatsoever: beyond all doubt.
6. Nothing but; only:---------- " "sort"
(sort) (n.l. A group or collection of similar persons or things; class, kind; set.
2. The character or nature of something; type; quality----------------------------------------------------------- ----------- ".
18. From the above-quoted definitions of the words "all sorts of and the words "all" and "sort" it is evident that the word "all" connotes the entire, the total number, amount or quantity, whereas the word "sort" denotes inter alia class and kind and, therefore, it is apparent that the above description of Item No. 37, namely, "Paper and Paper Board all sorts" will include all kinds of paper boards including corrugated board particularly keeping in view even the word "sort" has been used 'in plural. In this regard, reference may be made to a Dictionary of Nomenclatures, published by the Customs Co-operation Council, entitled Explanatory Notes to the Brussels Nomenclature 1955, Volume II, Item No. 48.05, which reads as follows:- "48.05 -PAPER AND PAPER BOARD- This heading covers a variety of papers and paper boards in rolls or sheets having the common characteristic of having been worked during or after manufacture in such a way that they are no longer flat or of uniform surface. It includes:-- (1) Corrugated paper and board.- These are made by impressing or embossing the corrugation on the paper or board, usually in the wet state, by passing between grooved rollers. They may consist of a single layer of paper or board so processed, of two layers, one flat and one corrugated, joined together by means of adhesive, or of one corrugated layer between two flat surface sheets. Heavier boards may be built up with successive plies of corrugated paper or board with alternate flat layers."
19. It may be observed that Dr. Nasim Hasan Shah, J. Sitting as S.B. In the Lahore High Court (as his Lordship then was) while deciding Writ Petition No. 498 of 1974 (M/s. Sethi Straw Board Limited v. Pakistan etc.) on 15th January, 1976, relied upon the above definition and held that corrugated board is covered by Item No. 37. The relevant portion of the judgment reads as follows:-- "15. The definition of "manufacture" in section 2(f) of the Act, reproduced in para 11 above, shows that it includes therein any process incidental or ancillary to the completion of a manufactured product and any process of remanufacture, remaking, reconditioning or repair and the process of packing or repacking such product. The definition of Paper Board, reproduced in para 10 above, shows that Corrugated Paper Board, Glazed Paper Board and Glazed Chip Board would be covered by it .The processes applied to bring the above products into being clearly include the process of remaking and reconditioning the original products and, therefore, the processes applied in this behalf are covered by section 2(f) of the Act and accordingly included within the scope of "manufacture", as visualized by section 3(1) of the Act. Moreover, as the manufactured articles fall within the category "paper board all sorts" they are covered by item 37 of the Schedule to the Act."
20. There is therefore no escape from the conclusion that corrugated board is covered by the description "paper and paper board all sorts". The definitions referred to in the judgment under appeal and relied upon by Mr. Mansoor Ahmad Khan do not provide that corrugated board is not a species of paper board. In the above book "Paper and Paper Board Characteristics, Nomenclature and Significance of Tests, Third Edition, after describing the various types of paper board, namely, card board, straw board, file board, chip board, grey board, the word "etc." has been used indicating that the description of the above kind of paper board was not exhaustive. Even if for the sake of arguments it is to be held that the corrugated board is not a species of paper board, it would then fall in the category of "paper all sorts" and, therefore, would be covered by Item No. 37. However, we are clear in our mind that corrugated board is a species of paper board as is evident from the definition of the corrugated paper and board given in the Explanatory Notes to the Brussels Nomenclature referred to hereinabove.
21. Then, it was contended by Mr. Mansoor Ahmad Khan that in the trade circles, the terms "paper board" and "corregated board" have different connotations and, therefore, this Court should construe the same differently with reference to Item No. 37. Reliance was placed by him on the case of Collector of Customs (Appraisement), Karachi and others v. M/s. Abdul Majeed Khan and others 1977 SCM R 371, in which this Court after referring to the case of M/s. Usmania Glass Sheet Factory Ltd., Chittagong v. Sales Tax Officer, Chittagong PLD 1971 SC 205 inter alia held that first rule of interpretation is that general statutes will prima facie be presumed to use words in popular sense and that the second rule is that if the statute is one passed with reference to a particular trade, business or transaction, and words are used therein which everybody conversant with the trade, business or transaction knows and understands to have a particular meanings which may differ from the ordinary or popular meanings.
22. In order to press into service the ratio decidendi of the above cases, it is necessary to decide as a question of fact on the basis of evidence whether paper board has acquired any specific meaning in the trade circle of Pakistan other than its . normal meaning which is wanting in the present case. Secondly, the use of the words "all sorts" after the words "paper and paper board" in Item No. 37 will negate the application of any alleged special meaning of the above term "corrugated board".
23. It was next contended by Mr. Mansoor Ahmad Khan 11 that the department has also understood corrugated board as the species of board not covered by the paper board inasmuch as since 1947 except only for a short span of time in 1975 it was not subjected to the levy of excise duty as a paper board and, therefore, the respondents have acquired vested rights which cannot be taken away. Reliance has been placed by him on the case of Asian Food Industries Ltd. And others v. Pakistan and others 1985 SCMK 1753 and the case of Nazir Ahmad v. Pakistan and 11 others PLD 1970 SC 453. In the first case, it has been observed by this Court that "It is true that a departmental practice consistently followed giving rise to vested rights over the years will not be lightly interfered so as to disturb or destroy the rights". While construing Pakistan Customs Tariff heading 17.02-A for payment of Customs duty on chemically pure glucose, whereas in the second case, while dealing with a service matter, this Court inter alia observed that "Where the departmental practice has followed a course in the implementation of the relevant rule whether right or wrong, it will be extremely unfair to make a departure from it after a lapse of many years and to disturb rights that have been settled by a long and consistent course by the practice". In this regard it may be pertinent to point out that there is nothing on record to indicate that the language of Item No. 37 or the corresponding item in the original Schedule to the Act from 1947 onwards was same. On the contrary, it seems that the words "all sorts" were introduced in Items Nos. 36 and 37 which covered "paper all sorts" and "paper boards all sorts" respectively after considerable period of time. However, in 1977 by the Finance Act, 1977, the above two items were merged into one item, namely, Item No. 37 as "paper and paper board all sorts". In the present case notices were issued in 1978 by the department to the respondents, which were impugned in the writ petition and, therefore, it cannot be urged that the item in question was couched in the identical language from 1947 up to 1978 and that the department had placed construction to the same as to exclude corrugated board during the above period as to create any alleged vested right nor it can be urged that the department has changed the interpretation consistently adopted by it.
24. Then, it was urged by Mr. Mansoor Ahmad Khan that while construing the description of the term "paper and paper board all sorts", ejusdem generis rule is to be applied and that the words "all sorts" would not cover corrugated board as it does not fall within the category of paper board. The above contention is also untenable as we have already held hereinabove that corrugated board is a specie of paper board and the intention of the Legislature to incorporate the above words "all sorts", seems to be to include all kinds of paper boards without any exception and, therefore, the above ejusdem generis rule has no application.
25. The upshot of the above discussion is that the appeal is allowed and the writ issued by the High Court is recalled. The respondents shall appear before the department concerned in response to the impugned notices. However, there will be no order as to costs.