' Plaintiff-petitioners are manufacturer and producer of vegetable ghee, the Plant having been installed at Mangla-Mirpur. On October 14, 1991, a notice for the recovery of excise duty in the sum of Rs,15,96,799.20 was issued and was directed to the Collector, District Mirpur, for undertaking recovery under the provisions of Land Revenue Act. The plaintiffs were asked by the Collector to pay the amount. The letter was issued on December 21, 1991. A sum of Rs,100,000 was paid under protest as, according to the plaintiffs, the alleged excise duty was not recoverable from them. The suit was instituted in the Court of Sub-Judge, Mirpur, on June 9, 1992, wherein the validity and propriety of the notice of recovery of excise duty was challenged. It was averred that the proceedings pertaining to imposition and recovery of excise duty in dispute, were illegal, unlawful and mala fide, for the following reasons:---
(i) That the excise duty was leviable on excisable goods produced or manufactured in Azad Jammu and Kashmir;
(ii) that the excise duty was sought to be collected on raw material (palm oil) imported w.e.f. July 1, 1985 to December 31, 1985. The raw-material was not subject to excise duty as it was not used for production or manufacturing of Ghee in the mills;
(iii) that the raw material and its conversion into production of Ghee was not verified by the staff of the defendant-respondents posted in the mills;
(iv) that the whole proceedings of defendant-respondents are mala fide; and
(v) that despite best efforts of the plaintiffs, the defendant-respondents failed to admit the claim of the plaintiffs, as such the plaintiffs were left with no other remedy but to invoke the jurisdiction of the Civil Court, in the shape of civil suit.
' The plaintiffs also applied for interim injunction. The application was accompanied by an affidavit.
The interim injunction was initially issued. On filing of objections by the opposite party, it was recalled on June 23, 1992. An appeal before the learned District Judge, also failed. These orders are assailed in the present petition.
2. It was argued by the learned Counsel for the petitioners that in order to seek relief in the shape of interim injunction, it was admittedly enjoined upon the plaintiffs to satisfy the Court: (i) for presence of prima facie case; (ii) balance of convenience; and (iii) irreparable loss likely to be caused. In the present case, it was emphasised that all the pre-conditions conceived by the provisions of Order 39, Rules 1 and 2, C.P.C. Were present, as such, the subordinate Courts misdirected themselves in rejecting the claim of the plaintiffs. The learned Counsel, in support of his contentions, referred to 1974 SCM R 356; PLD 1965 SC 698; AIR 1957 Mad. 110 and AIR 1958 Pat.
439. Ch. Muhammad Afzal, the learned Counsel for the opposite party, controverted the aforesaid points and argued that the suit was barred under section 11 of the Code, as the matter was previously disposed of in writ jurisdiction by this Court as well as by the Supreme Court. Moreover, there was a complete bar to the jurisdiction of the Civil Court under section 40(1) of the Central Excise and Salt Act. He also challenged the maintenance of suit on the ground of limitation as, according to him, the suit was barred by time under Article 14 of the Limitation Act. Reference was also made to Rules 225 and 226(2) of the Central Excise and Salt Rules, in support of the impugned order.
3. It is agreed to both the learned Counsel for the parties that the question in dispute was previously raised in this Court by invoking its writ jurisdiction/The writ petition was dismissed on October 1, 1989. An appeal before the Supreme Court also failed on May 26, 1990. However, an exception was taken to the proposition raised previously that the matter in dispute in the present suit, was not resolved in its true spirit and substance. The points resolved previously were incidental to the proposition under consideration, as such, it was argued that it was wrong to suggest that the matter was finally disposed of by this Court as well by the Supreme Court.
4. The contention, prima facie, appears convincing as the operative part of the finding of the Supreme Court leaves the issue open. The relevant finding is reproduced:--- "Next, it has been contended by the learned Counsel for the appellant that excise duty could not be imposed on Palm Oil because it could only be levied on manufactured goods. The perusal of the record shows that no excise duty was imposed on Palm Oil. The respondents found that the appellant had purchased certain amount of Palm Oil for manufacturing the Ghee but the appellant contends that he had sold a part of Palm Oil purchased in Pakistan and as such he was not bound to maintain the record of the quantity which was not brought into Azad Kashmir. The perusal of Annexure 'A' to the writ petition shows that it has not been the case of the respondents that the appellant was bound to bring the total amount of Palm Purchased by him to Azad Kashmir; rather the appellant was called upon to satisfy the authorities concerned that a certain amount of Palm Oil was sold in Pakistan as was alleged by him, but the appellant could not satisfy the authority concerned and it was for this reason that the said authority presumed that the whole quantity of Palm Oil purchased by the appellant must have been brought to Azad Kashmir. Whether such a presumption was justified in the circumstances of the case is the discretionary matter with respondents Nos. 1 and 2 and this aspect of the matter is not open to challenge in exercise of writ jurisdiction: ' It is evident that prima facie the attention was adverted to the point as to whether the plaintiffs brought Palm Oil to Azad Kashmir and used it for manufacturing the Ghee. Thus, it was discretionary to presume that the quantity of Palm Oil imported in Pakistan, was subject to accountability, as such was leviable to tax. The question was left open whether the presumption was justified in such circumstances or not. It was held that matter being discretionary, was not subject to examination in exercise of writ jurisdiction.
5. In order to satisfy that a prima fade case was made out; the perusal of provisions of section 3 of the Central Excise and Salt Act is relevant. Section 3(1), prima fade, postulates that there shall be levied and collected duties of excise on all excisable goods, produced or manufactured, and on all excisable services, provided or rendered in Azad Jammu and Kashmir. The controversial point raised in the suit is in line with these provisions that the excise duty was leviable only on excisable goods produced or manufactured in Azad Kashmir and not on the raw material purchased or imported.
6. Rule 225, as framed under the Central Excise Rules, laid down that the excisable goods shall not be removed from the place where they are produced, manufactured or wharehoused. In case these are removed, the producer shall be responsible to be dealt with according to the provisions of law. Rule 226(2) further provides that when the manufacturer of any excisable goods leviable to duty, fails to render proper account regarding the manufacture, storage or disposal of such goods or of the receipt, storage, utilization or disposal of the raw materials, the officer shall determine the amount of duty payable in respect of such goods, in his discretion: provided that the accounts show a lesser quantity of goods manufactured than it ought to have been shown on the basis of the quantity of raw material, the manufacturer may be asked to pay the duty as in the judgment of the officer it was payable.
7. The aforesaid provisions of law, prima facie, lead to the conclusion that the excise duty is leviable on excisable goods produced or manufactured in Azad Jammu and Kashmir. The manufacturer has to account for the manufactured goods, in the light of the material brought into Azad Jammu and Kashmir. In the present case, the controversy is to the effect that the raw material on the basis of which presumption was drawn against the manufacturer, was not imported in Azad Kashmir.
Thus the presumption was patently arbitrary, capricious and mala fide. For unless the raw material was imported in Azad Jammu and Kashmir, the plaintiff-manufacturer of Ghee was not under obligation to account for the same. This is the substance of the controversy in the present dispute.
The penalty imposed upon the plaintiff, prima facie, reflects that the presumption was made against the plaintiff by the defendants. On the basis of raw material imported in Pakistan and not in Azad Jammu and Kashmir. It was emphasised that under law, import of raw material in Pakistan cannot be deemed as an import in Azad Jammu and Kashmir and vice versa. It is, therefore, rightly suggested that the plaintiff has got an arguable case in his favour at this stage.
8. The attention of the Court was invited to section 40 of the Central Excise and Salt Act, to seek exclusion of jurisdiction of Civil Court. Section 40 postulates that no suit shall be brought in any civil Court, to set aside or modify any order passed or any assessment, levy or collection of any duty, under the Act. Ordinarily, these provisions exclude the jurisdiction of the Civil Court in all such matters which have been carried in accordance with the provisions of the Act. This rule is, however, subject to an exception. Whenever the propriety of an action purported to have been taken under the Act, is challenged on the plea that such action was not taken in letter and spirit in accordance with the C Act, the Civil Court was competent, despite the restriction, to examine the disputed acts of the authorities or Tribunal, allegedly taken under the Act. Unless it was accepted that the disputed act was carried in accordance with law, the Civil Court was not deprived of its jurisdiction to review the questioned proposition in exercise of its general jurisdiction. This proposition was examined in Muhammad Jamil Asghar's case PLD 1965 SC 698. The proposition was primarily raised under the provisions of Displaced Persons (Compensation and Rehabilitation) Act. Under the provisions of that Act, the jurisdiction of Civil Court like the provisions of Central Excise and Salt Act, was expressly excluded. Mr. Justice B. Z. Kaikaus, the eminent Judge who spoke for the Court, examined the proposition in its depth and arrived at the conclusion as mentioned above. The relevant observation is: "It is possible, of course, that a special tribunal may be made the Judge of its own jurisdiction, but this would be a very exceptional provision and one which should be made by altogether in clear words. However, with respect to mala fides the jurisdiction of the Civil Court can never be taken away for a mala fide act is in its very nature an illegal and void act and the Civil Court can always pronounce an act to be mala fide and therefore void.---We are of the opinion that the Civil Court has jurisdiction to try a suit."
' The aforesaid view was followed in Hamid Hussain's case 1974 SCM R 356. It was observed:-- "It is a well-established principle that even where the jurisdiction of Civil Court is barred and conferred upon special tribunals, Civil Courts being Courts of ultimate jurisdiction will have the jurisdiction to examine the acts of such forums to see whether their acts are in accordance with law or are illegal or even mala fide."
' In Union of India's case AIR 1958 Pat. 439, it was observed that the Civil Court was competent to pass a decree for the recovery of amount received from the plaintiff, in exercise of powers under the Central Excise and Salt Act and Central Excise Rules, mentioned above. The authorities on the point lend support to the contention of the learned Counsel for the petitioners to hold that the Civil Court was vested with jurisdiction to examine the proposition wherein it was alleged that the disputed acts taken under the pretext of Central Excise and Salt Act and Rules, were ultra vires of the law and that such acts were mala fide.
9. The subordinate Courts turned down the prayer of the petitioners under the influence of previous decision of this Court as well as Supreme Court coupled with the fact of part payment. Both the Courts failed to appreciate the proposition raised in exercise of writ jurisdiction as well as the verdict of the Supreme Court. It was averred in the pleadings of the plaintiff that part payment was made under protest. The payment made under protest, ordinarily, does not bring the case of a party within the ambit of estoppel or acquiescence. At this stage, these aspects of the proposition are examined only to appreciate whether a prima facie case was made out, and not in depth.
10. The objection of limitation, as argued by the learned Counsel for the respondents, is immaterial at this stage as in case it is ultimately found that the impugned orders passed by the defendant- respondents were without jurisdiction, in that situation, the whole exercise being nullity in the eye of law, was not subject to limitation enunciated under Article 14 of the Limitation Act. Since the proposition has yet to be appraised at stage, at this stage the objection is not found weighty so as to dispose of the suit on this plea.
11. The balance of convenience, prima facie, is in favour of the plaintiffs. The payment of the amount under consideration, ordinarily, was likely to put them under financial pressure and not vice versa.
Thus, in presence of prima facie case in their favour, it is deemed expedient to hold that the tilt of balance of convenience is in favour of the plaintiff-petitioners.
12. The aforesaid reasons lead to the satisfaction that the impugned orders are not valid, as such these are set aside. The petition is accepted. The defendant-respondents are directed to refrain from making recovery of the amount in dispute, from the plaintiff-petitioners, till the decision of the civil suit. revisions by the competent authorities. Therefore, it is advisable to consult the official sources or legal professionals for the most up-to-date and accurate information.