1. ' TANVIR AHMAD KHAN, J.---This judgment will dispose of Writ Petitions Nos,2639/89 and 2177/87 as both of them involve the same question of law and facts.
2. ' The petitioner is a public limited company incorporated under the Companies Ordinance, 1984 having its registered office at Lahore and the factory/mill is situated at Ashrafabad, District Bahawalpur. It started its production on Ist of November, 1983 and intimation to that effect was conveyed to the Central Excise Authority on 2nd of November, 1983. The Federal Government by its Notification No,SRO 814 (I)/85, dated 29th of August, 1985 granted exemption of 50% in the payment of excise duty on the sugar produce by the new sugar mills for the first two years commencing from the date of their operation/production. It was also provided that if the new sugar mills had already paid the amount, the same would be adjusted towards the payment of excise duty of their production during the period mentioned therein. It will be advantageous to reproduce the Notification which reads as under:- "S.R.O. 814(1)/85:--In exercise of the powers conferred under subsection (1) of section 12-A of Central Excises and Salt Act, 1944 (I of 1944), the Federal Government is pleased to exempt new sugar mills, which commenced operation during 1982-83 crushing season or thereafter from payment of fifty per cent. Of central excise duty leviable on their production of first two years commencing from the date of operation.
2. The new sugar mills which commenced production during 1982-83 and 1983-84 and which have already paid excise duty on the first two years of their production of sugar will be entitled to refund/adjustment of duty in such a manner that fifty per cent. Of the total amount of such refund/adjustment will be made against the duty payable by them during 1985-86 and fifty per cent against the duty due from them during 1986-87."
3. ' Accordingly, the petitioner/company was informed that an amount of Rs,2, 98,28,374.50 as 50% of the total duty on the production of first two years was allowed and such amount would be adjusted during the preceding yeaRs, However, subsequently, through letter C. No,IV (8)/Rebate/548/85/10321, dated 31st of July, 1986 the Assistant Director, Central Excise & Customs, Multan, disallowed the refund of 50% which was ealier allowed in terms of Notification No,SRO 814(1)/85, dated 29th of August, 1985. The petitioner/Company filed W.P. No,2177/87. Thereafter, another notice No,13 Sugar Confidential/PA Collector/89/1881 was issued on 19th of April, 1989 to the petitioner who was directed to make payment of Rs,2,98,28,374.50 within fifteen days, which led to the filing of second writ petition. The notice dated 19-4-1989 is as under:--- "Under the Ministry of Finance Notification No, SRO-814(1)/85, dated the 29th August, 1985, issued under section 12A of the Central Excises and Salt Act, 1944, you were granted refund/adjustment of excise duty amounting to Rs,2,98,22,847.50 (Rupees two crore ninety-eight lac, twenty-two thousand, eight hundred forty-seven and Paisa fifty.)
(2) In view of the settled law that a notification cannot have retrospective effect, Notification No,SRO-814(I)/85, dated the 29th August, 1985, was void ab initio in so far as it purported to grant exemption retrospectively.
(3) In view of the legal position stated above, the refund/adjustment granted to you was without legal authority and it has therefore, been decided to call upon you under rule 10 of the Central Excise Rules, 1944 to pay the aforesaid amount of duty refunded to you or adjusted against the duty payable by you. You are, therefore, requested to make the payment within 15 days of the delivery of this notice to you failing which action will be taken to recover the aforesaid amount?
4. ' It is argued by the learned counsel for the petitioner on the basis of the decision of the Supreme Court announced on 26th of April, 1992 in Civil Appeals Nos,100-K/91 to 116-K/91 wherein an identical notice issued by the Collector to M/s. Faran Sugar Mills and others on 18th of April, 1989 for the refund of certain amount came under consideration. The Sindh High Court did not agree to the plea of the appellants and held that the exemption could not be granted retrospectively. However, on appeals filed by the aggrieved mills, the Hon'ble Supreme Court repelled the contention of the Federation that SRO-814(I)/85, dated 29th of August, 1985 was void ab initio, so far it purported to grant exemption retrospectively being contrary to the well-settled law that a notification cannot have retrospective effect. It was concluded by the Supreme Court that the Sindh High Court was wrong in placing reliance on the general proposition that a notification cannot operate retrospectively without realizing that there is a marked distinction between a notification which purports to impair existing/vested rights or imposes new liability or obligations retrospectively and a notification which purports to confer benefit retrospectively.
5. ' It this view of the matter, this petition merits to succeed on the strength of the judgment of the Supreme Court. We have, therefore, no alternative but to declare the notice dated 19-4-1989 issued to the petitioner as illegal without lawful authority and of no legal effect. Before parting with this judgment, we may, however, notice that on the previous date of hearing learned Standing Counsel had contended that power to grant exemption available under section 12-A of the Central Excise and Salt Act, 1944 is exercisable in respect of "duty leviable" under the Act and not where the duty has not only been levied but has also been quantified and paid. It was added that by allowing exemption years later when the duty levied has already been recovered and adjusted in the annual receipts in a budget would amount to allowing refund of duty and thus disturbing the entire budgetary provisions.
6. ' These contentions need not be examined by us as the same appear not to have been advanced before the Supreme Court in the above-referred case. We would, therefore, respectfully follow the judgment of the Supreme Court and leave the Federal Government to raise the aforenoted pleas in an appropriate case. The petitions accordingly succeed and are allowed leaving the parties to bear their own costs.