' MUHAMMAD AFZAL LONE, J.--- Leave to appeal was granted to examine:-- "that despite the cigarette contained in the pouch marked as `Economy' remained the same as K-2 20's wrapped in cellophane, while the "Economy" pouch was not so wrapped and thus the difference in the cost of packing would not change the 'brand' or `variety' and as such it could be assessed on a higher rate prescribed under the rules."
2. The facts are that Premier Tobacco Industries Limited, respondent herein, is the manufacturer of different varieties of K-2 brand cigarettes. In February 1979, with the permission of the Central Excise and Land Customs Department the respondent introduced a new variety "K-2 Economy Plain 20's" and fixed its price at the rate of Rs,1.85 per packet of 20's, as against the other brand known as "K-2 plain 20's" wrapped in cellophane; the price whereof was slightly higher i.e, Rs,2 per packet contained 20 cigarettes. The economy brand was not so wrapped and reduction in its price was attributed by the respondent to the comparatively lower cost of the packing material/container. It appears that Economy brand, much against the expectations of the respondent did not catch the market, resultantly w.e.f, 29-3-1979 its further production was discontinued. By then 82,000 cigarettes had been cleared. Due to discontinuance of the manufacture of the Economy brand, the left over stock went to the tune of 14.52 million cigarettes. With the permission of the Deputy Collector of the Department this stock was repacked in the containers of K-2 plain brand.
3. The Deputy Superintendent, Central Excise and Land Customs, served a show-cause notice on the respondent under section 4(2) of the Central Excise Act, and Rules 9 and 52 framed under the Act. The department's case was that the quality of both the brands of the cigarettes remained the same, the sale of the Economy brand at a lower price during the period from February to March, 1970, resulted in less payment of excise duty to the extent of Rs,43,155. The Deputy Collector by his order dated 15-4-1980 treated it a case of evasion and directed the respondent to pay Rs,43,155 as duty alongwith penalty of Rs,4,31,550. On appeal the Collector reduced the penalty to Rs,1,00,000, but upheld the respondent's liability to pay the duty aforesaid. The respondent then invoked the revisional jurisdiction of the Federal Government. The revision petition was accepted to the extent that the payment of the entire penalty was excused but the order of the authorities below, requiring the respondent to pay Rs,43,155, as excise duty, was not disturbed.
4. The respondent sought the removal of the orders of the departmental authorities through judicial review. The writ petition was accepted by a D.B. Of the Peshawar High Court, vide judgment dated 11-7-1989, under challenge before us. The reasons which prevailed with the High Court are: "Section 4(2) of the Central Excises and Salt Act, 1944 provides that where any article is chargeable with duty at the rate dependent on the retail price of the article, the retail price shall be the price fixed by the manufacturer, inclusive of all charges and taxes at which any particular brand or variety of such articles should be sold or if more than one such price is so fixed for the same brand or variety, the highest such price."
"These charges will naturally include the cost of container or packet in which such goods are normally offered for sale. It was, therefore, quite conceivable that where a particular 'brand' of goods are offered in different types of packets/containers, the retail prices may vary. It was also noted that the Department had erroneously proceeded on the assumption that since the brand and quality of the cigarettes offered for sale in different types of packing was the same, the Company adopted two different retail prices for the same brand and as such they were liable to pay excise duty on the higher retail price. In the case in hand it also appears that retail price of 'economy' cigarettes fixed by the petitioner was rejected by the Department not for the reason that the packing material was not of inferior quality but on the ground that the quality of cigarettes in both the cases was the same. There is sufficient material on the record to show that the petitioners have been selling the same brand of cigarettes in different types of packing which had the effect of changing the variety of the cigarettes sold to the consumers. The petitioners were, therefore, competent to fix lesser retail price for conomy cigarettes on account of the inferior packing material for it constituted a different variety and the Department was not justified in demanding the excess duty from the petitioners on the basis of higher retail price of the same brand of cigarettes."
5. The controversy between the parties is confined to the application of subsection (2) of section 4 of the Central Excises and Salt Act, to the case in hand. This subsection is reproduced below:-- "(2) Where under this Act any article is chargeable with duty at a rate dependent on the retail price of the article, the retail price shall be the price fixed by the manufacturer, inclusive of all charges and taxes (other than octroi) at which any particular brand or variety of such article should be sold to the general body of consumers or, if more than one such price is so fixed for the same brand or variety, the highest such price."
' According to the department, the same quality of cigarettes was packed in the two types of containers, one labelled as "K-2 economy" and the other as "K-2 plain"; except that container of the latter type was wrapped in cellophane, both types of containers contained the same brand or variety and under subsection (2) ibid the duty had to be levied at the higher of the two prices i.e, Rs,2 per 20 cigarettes. On the other hand the respondent's stand is that the price fixed by them is inclusive of "all charges", which included the charges for packing material; since there was difference in the manufacturing cost of the two types of containers resulting in diversity of overall price thereof, they comprised separate variety.
6. It shall be seen that under subsection (2) the retail price on which duty is chargeable is fixed by the manufacturer and such price is inclusive of all charges and taxes. The charges include the cost of the container. Such retail price, in subsection (2), has been identified as the price at which a particular brand or variety of the goods is sold to the general body of the consumers. This provision further ordains, that when for the same brand or variety the manufacturer has fixed different prices, the duty is leviable on the highest of such prices. There is no doubt that in the case before us "K-2 economy" and "K-2 plain" carry different retail price and the price of latter category is comparatively higher which for the purposes of chargeability of duty has been applied by the department to "K-2 Economy" as well. It is important to note that the retail price of "K-2 Economy" was fixed by the respondent under intimation to the departmental authorities and six specimens of its container, as required by Rule 231-A of the Central Excise Rules, were also supplied to them.
Keeping in view the quality of the container, the fixation of the retail price of "K-2 Economy" slightly lower than that of "K-2 Plain" cannot be dubbed as arbitrary. Before us it has not been urged that the retail price of "K2 Economy" fixed by the respondent is not the retail price within the meaning of section 4(2). If this fixation conforms to the requirements of law, then under Item No,02.03(1.1)A(c) of the Schedule to the Act, the duty had to be charged, at the rate given therein, on the retail price printed on the packet. We feel that upon the language of subsection (2) the condition precedent for validity of the course adopted by the department is that two containers offered for sale to the general body of consumers consisted of the same brand or variety. In common parlance the term "brand" in relation to merchandise signifies a particular kind of goods and is also associated with a trade mark. On the other hand, the word `variety' implies a separate set of goods. There may be more than one variety of the same brand. In the instant case "K-2" is the brand of which "K-2 Economy" and "K-2 Plain" are two different varieties. But, whether or not "K-2 Economy" and "K-2 Plain" were the same or different varieties, is to be adjudged not on the footing of some scientific analysis of contents of their containers but from commercial angle, and with reference to the viewpoint of the general body of consumers to whom these were offered for sale. It is not disputed that according to the outlook, the labels put and the price printed on the containers, in contemplation of item No,02.03(ii)-A of the Schedule to the Act, the goods were intended to be passed on to the general body of consumers, as two different varieties. There is nothing on the record to show that the consumers did not treat "K-2 Economy" as a different variety. At least such is not the stand of the department before us. We have no doubt that the consumers are largely influenced by the outward appearance of the container and the label put thereon. The container of "K-2 Plaid for which a higher price B was fixed by the respondent, as already observed, is wrapped in cellophane, and because of the extra expenditure on packing its price was fixed at a higher rate.
It is, therefore, difficult to agree with the reasoning advanced on behalf of the appellants to categorise "K-2 Economy" and "K-2 Plain" for the purposes of chargeability, as the same brand/variety. The basis on which the departmental authorities came to the conclusion that the respondent was guilty of evasion of duty cannot be sustained. We are satisfied that the conclusion reached by the High Court is correct and does not call for interference.
' This appeal is, therefore, dismissed, but the parties are left to bear their own costs.