MALIK MUHAMMAD QAYYUM, J.- Messers National Bottlers (Pvt.) Ltd. The petitioner herein, is engaged in the manufacture and production of aerated water under the brand names of "Coca Cola", "Fanta" and "Sprite" under Franchise from Messers Coca Cola Export Corporation. These goods are liable to payment of excise duty under the Central Excise and Salt Act, 1944. The petitioner had submitted its return of production on the basis of which it was charged the excise duty.
2. It appears that during the course of audit, an objection was raised by the authorities that the production shown by the petitioner for the year 1986-87 was not in proportion to, and accordance with the mixing formula of Messers Coca Cola Export Corporation. Pursuant to that objection, a notice under rules 7 & 10 of the Central Excise Rules, 1944 and Section 3(4) of the Sales Tax Act, 1951, dated 8.4.1990 was served upon the petitioner to show cause as to why the evaded duty and tax alongwith the penalty and other charges be not recovered from it.
3. The petitioner contested this notice by giving its reply in which it was asserted that the plant of the petitioner was old and out-dated and, therefore, less efficient resulting in greater quantity of wastage and as such, the mixing instructions were not a proper yardstick for determining actual production.
4. The case was decided by the Deputy Collector on 27.4.1991 who held that the petitioner had evaded the sales tax and Excise duty on the actual production which was worked out after allowing 6% wastage to it and directed that the tax and duty along with a penalty of Rs. 2,00,000/- be recovered from the petitioner. Aggrieved, the petitioner went in appeal before the Collector of Customs, which was dismissed on 9.7.1991, whereafter the petitioner filed a revision petition, which too was rejected by the Federal Government on 24.11.1991. Hence this petition.
5. Mr. Ali Sibtain Fazli, Adv. For the petitioner has contended that the order passed by the Collector (Appeals) is not based upon any legal evidence but is conjectural in nature and that the Adjudicating Authority has failed to give effect to the plea of the petitioner that the plant of the petitioner was extremely old and out-dated resulting in lower efficiency and high wastage and as such, the petitioner was entitled to wastage at the rate of 12.06%. According to the learned counsel, this fact was borne out by the physical inspection carried out by the Staff of Directorate of Intelligence & Investigation (Customs & Excise) on 14.3.1987, in which it was found that the wastage in the plant of the petitioner was 12.6%. The learned counsel has also pointed out that this aspect of the matter has not been attended to either by the Collector or by the revisional Authority.
6. Mr. A. Karim Malik, Adv. For the respondents, on the other hand, has vehemently defended the impugned orders by contending that the Adjudicating Officer, namely the Deputy Collector had dealt with all aspects of the matter. In the submission of learned counsel for the respondents, the question of wastage already stands determined by the judgment of this Court in W.P. Nos. 7821, 7822 and 7966/89, in which with respect to the same plant, wastage allowed by the Department at the rate of 6% was upheld for the year 1977-78 to 30.6.1985. He has also pointed out that the judgment of this Court delivered on 16.2.1991 has been approved by the Supreme Court of Pakistan.
7. After hearing learned counsel for the parties and perusing the record, the conclusion, which inevitably flows therefrom, is that neither the appeal nor the revision petition filed by the petitioner has been decided in accordance with law by the Collector or the Federal Government. It is unfortunate that the orders passed by them are not only laconic and sketchy but show no application of mind by either of the two authorities.
8. The appeal was disposed of by the Collector by observing that: "I have examined the case records and considered the arguments given by the appellant. The wastage allowance has already been granted in the impugned order. The impugned order is, therefore, correct in law and on facts. The appeal fails and is rejected".
The revision petition dealt with the matter as follows: The record of the case has been examined and the arguments of the applicants have been carefully considered. It is found that the applicants have already been allowed wastage upto 6%.
Then- contention regarding rate of duty is not correct. The Federal Government after taking into consideration all the aspects of the case, finds that the impugned order is correct and in law and in fact and needs no interference. The revision application is accordingly rejected".
As is obvious from the bare reading of the two orders, no reason whatsoever except that the wastage allowance has already been granted to the petitioner has been given by the authorities concerned while deciding the appeal and revision.
9. By now, it is well-settled that an authority exercising statutory powers of appeal and revision affecting valuable rights of the parties act in quasi judicial if not judicial capacity' and it must pass a speaking order duly supported by reasoning showing due application of mind to the facts and the law applicable while disposing of the cause before it. The two impugned orders fall short of this legal requirement and are, therefore, not sustainable. The case of the petitioner mainly rested upon the plea that the plant of the petitioner was old and out-dated resulting in huge wastage during the production. Unfortunately, this aspect was ignored both by the revisional as well as the appellate authority.
10. As regards the contention of Mr A. Karim Malik, Advocate, for the respondents that 6% wastage has already been upheld by this Court in earlier constitutional petitions as also by the Supreme Court of Pakistan, no detailed comments need be made lest the same may prejudice the rights of the parties before the Collector to whom the matter is being remanded. Suffice it to say that the dispute in those petitions was with respect to the period earlier to 30.6.1985 while the report of the Staff of Directorate of Intelligence & Investigation (Customs & Excise) is 14.3.1987. This report was as such and as a matter of fact could not have been considered in the earlier petitions.
In view of what has been stated above, this petition is allowed, the impugned orders are declared to be without lawful authority and of no legal effect and the case is remanded to the Collector (Appeals) Customs Central Excise and Sales Tax, Lahore keeping in view the observations made above and after holding any further inquiry, if deems so necessary.
No order as to costs.