' This judgment shall dispose of W.Ps. Nos,3489 and 3490 of 1993 which arise under the same circumstances and involve the same questions for consideration.
2. M/s. Riaz Bottlers (Pvt.) Limited, the petitioner herein a company incorporated under the Companies Ordinance, 1984 is engaged in the manufacture and sale of beverages under franchise from Pepsi Cola International.
3. There is no dispute that on the goods produced by the petitioner, it is liable to pay excise duty levied under the Central Excises and Salt Act, 1944.
4. It appears that respondent No,2, who is Deputy Collector, Central Excises and Salt Tax, Lahore served two notices upon the petitioner alleging evasion of duty by it and calling upon it to show cause as to why the amount of evaded duty be not recovered. On 15th March, 1993, respondent No,2 held the petitioner guilty of the charges, directed recovery of duty and also imposed penalty upon the petitioner.
5. Aggrieved by that order, petitioner tiled an appeal before the Collector, Customs, Central Excises and Salt Tax (Appeals) under section 35 of the Central Excises and Salt Act, 1944, inter alia on the ground that the petitioner had not been heard by respondent No,2. While deciding the case.
Alongwith the appeal, an application was filed praying for stay of recovery. The petitioner was served with a notice by respondent No,2 calling upon it to deposit the disputed amount of duty within 10 days, failing which the appeal shall be dismissed in limine: This order is on a cyclostyled pro forma which bears the signatures of respondent No,3.
6. Mian Saqib Nisar, Advocate learned counsel for the petitioner has contended that the order of the Collector calling upon the petitioner to deposit the amount in question as a condition to the hearing of appeal is no order in the eyes of law as it has been passed mechanically without any application of mind to the facts of the case or law applicable. It is contended by the learned counsel that under section 35 of the Central Excises and Salt Act, 1944, a discretion vests in the Collector (Appeals) to dispense with the deposit of the amount in cases of hardships which necessarily call for examination of merits and decision of this question can only be made after hearing the parties.
7. Ch. Ejaz Ahmad, learned Deputy Attorney-General appearing for the respondents, has, on the other hand, contended that the Collector (Appeals) is competent in law to direct that dues, which have been found to be payable by the adjudication officer, must be deposited as a condition for hearing of appeal on merits.
8. Section 35-A of the Central Excises and Salt Act, 1944 which falls for interpretation in the present case reads as under:-- "Power of the Central Board of Revenue to call for and examine records. Etc.--(1) The Central Board of Revenue (or the Collector of Central Excises) may of its or his own motion call for and examine the record of any departmental proceedings under this Act or the rules made thereunder for the purpose of satisfying itself (or himself) as to the legality or propriety of any decision or order passed therein by an officer subordinate to the Board (or to the Collector and may pass such order as it or he) thinks fit: ' Provided further that no order imposing or enhancing any penalty or fine or requiring payment of a greater amount of duty shall be passed by the Board (or the Collector) unless the person affected by the proposed order has been given an opportunity of showing cause against it and of being heard.
(2) No decision or order shall be revised under this section after the expiry of three years from the date of such decision or order.
(3) No proceedings under subsection (1) shall be initiated in a case where an appeal under subsection (1) of section 35 is pending except after the disposal of such appeal."
9. Reference to the history of this provision would show as originally enacted that it conferred an unqualified right of appeal upon an appellant. By section 35 of Finance Act, 1968, subsection (1-A) was added which provided that if the duty under challenge related to goods which have ceased to be under the control of authorities constituted under the Central Excises and Salt Act, 1944, or to a penalty pending decision of the same duty or penalty levied shall be deposited by the appellant.
However, by virtue of the proviso, a discretion was vested in the appellate authority to dispense with such deposit conditionally or unconditionally if it is of the opinion that the deposit of the duty or penalty, as the case may be, shall cause undue hardships to the appellant before it.
10. It cannot be disputed that the power to dispense with deposit is discretionary with the Collector but that discretion like any other is to be exercised in a judicious, fair and reasonable manner. Right of appeal is one of the most valuable rights vesting in an affected person and the effect of this remedy cannot be whittled down except in accordance with clear mandate of law. Even in matters which are purely of administrative nature, the superior Courts have insisted that discretion vesting in an authority must not be exercised arbitrarily or capriciously. In the present case, this requirement was all the more accentuated as the power being exercised by the Collector was quasi-judicial, if not judicial in nature. It is a matter of regret that the Collector, without passing any speaking order, instructed one of his subordinates to direct the petitioner to make the deposit who did so by filing in cyclostyled pro formas.
11. There is also merit in the contention of the learned counsel for the petitioner that such an order could not have been passed without granting any opportunity to the petitioner of being heard. An opinion on the question, as to whether or not the deposit of disputed amount would operate as a hardship can only be formed on a tenative view of the case which necessarily entails at least a tentative consideration of the facts. This exercise clearly requires that an opportunity of being heard be provided to the appellant.
' In view of what has been stated above, this petition is allowed; impugned order of the Collector of Customs (Appeals) is declared to be without lawful authority and of no legal effect with the result that the appeal filed by the petitioner shall be deemed to be pending before respondent No,1 and shall be decided afresh after hearing the parties.