' M/s. National Bottlers (Pvt.) Ltd. The petitioner herein, is engaged in the manufacturing and production of aerated water in the brand name of Coca-Cola, Fanta and Sprite under the franchise from M/s. Coca-Cola Export Corporation. These goods are liable to payment of Excise duty under the Central Excises and Salt Act, 1944. The petitioner had submitted its return on the production of which it has been charged the excise duty. However, the Deputy Collector, Central Excises and Sales Tax served the petitioner with a notice alleging evasion of Excise duty for the years 1984-86 and calling upon it to show cause as to why the duty and the tax evaded should not be recovered.
The notice was based upon the assertion that according to the mixing instructions/information supplied by the Coca-Cola Export Corporation, the number of bottles produced out of the raw material would be far in excess of the production shown.
2. 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 could not be the basis for determination of number of bottles of aerated water produced.
3. The Deputy Collector, Excise and Sales Tax after hearing the parties came to the conclusion that the evasion of excise duty in respect of Coca-Cola, Fanta and Sprite stood proved and even after allowing 6% of the wastage, the quantity produced by the petitioner must have been in excess of the recorded production. On these premises, the petitioner was asked to pay central excise duty.
The petitioner feeling aggrieved went in appeal which was, however, dismissed by the learned Collector (Appeals) on 28-7-1993. Feeling dissatisfied, a revision petition was filed by the petitioner which was rejected by the Federal Government on 10-11-1993. Hence this petition.
4. Mr. Ali , Sibtain Fazli, learned counsel for the petitioner has raised various contentions in support of this petition. The first contention raised by the learned counsel for the petitioner is that as regards the period prior to July, 1986, there was no requirement under the Central Excise Rules, 1944 to maintain any record with respect to consumption of Coca-Cola concentrate and, therefore, quantity of raw material used could not be taken as basis for determining the production.
5. This contention of the learned counsel is. Fully supported by the judgment of this Court in M/s. Shahi Bottlers Ltd., Lahore v. Government of Pakistan through the Secretary, Ministry of Finance , Islamabad and 2 others (PLD 1976 Lah. 1584), which was upheld by the Supreme Court of Pakistan in Government of Pakistan v. Shahi Bottlers (1987 PCr.LJ 57). It was held that the provisions of rule 226 of the Central Excise Rules, 1944 cannot be invoked in the absence of any requirement under rule 53-A that accounts record of raw material should also be maintained. Consequently, the demand of the respondents from the petitioner for payment of any duty with respect to the period up to 30- 6-1986 is clearly without lawful authority.
6. As regards the demand for the period from 1-7-1986 to 30-6-1987, Mr. Ali Sibtain Fazli, Advocate, for the petitioner has contended that the orders passed by the departmental authorities are not based upon any legal evidence but are conjectural in nature. It is pointed out by learned counsel for the petitioner that ,the main plea raised before the respondents that the plant of the petitioner was extremely old and outdated resulting in lower efficiency and high wastage, which was based upon the report of the Staff of the Directorate of Intelligence and Investigation (Customs and Excise) dated 14-3-1987 has not been duly attended to either by the Collector while deciding the appeal or by the Federal Government while disposing of the revision application.
7. Mr. A. Karim Malik, Advocate for the respondents, on the other hand, has vehemently defended the impugned orders by contending that the Adjudicating Officer, namely, the Deputy Collector had adverted to all the aspects of the matter. In the submission of the learned counsel, 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. He has also pointed out that the judgment of this Court delivered on 16- 2-1991 has been upheld by the Supreme Court of Pakistan.
8. After hearing learned counsel for the parties, I am of the view that neither the appeal of the petitioner nor the revision petition has been disposed of in accordance with law. Before the Collector, the case of the petitioner mainly rested on the plea that the plant of the petitioner was old and out-dated and the huge wastage resulting during the process of production has been A verified by the Staff of Directorate of Intelligence and Investigation vide their report dated 14-3- 1987, wherein wastage was found to be 12.06%. Unfortunately, while deciding the appeal this part of the argument completely escaped notice of the Collector who did not advert to the same at all.
This failure to consider the important piece of evidence cannot be countenanced and the order of the Collector stands vitiated on this account.
9. So far as the revisional order is concerned, the matter appears to be words as no application of independent mind is discernible from the order of the Additional Secretary, who has proceeded to reject the arguments of learned counsel for the petitioner by observing that the impugned order is correct in law and there was no reason to interfere with the same. The Additional Secretary was dealing with the valuable rights of the parties, indeed with the subject-matter of public revenue and was acting quasi if not in a judicial capacity. The disposal of such a cause in such a slipshod manner cannot be approved.
10. Before parting with the case, it may be stated that one of the grounds which prevailed with the Collector was that in the past the determination of wastage of 6% has been upheld by this Court and the Supreme Court of Pakistan. Same plea has been advanced before me by Mr. A. Karim Malik, Advocate for the respondents, However, I have purposely refrained myself from making any detailed comments on this aspect of the matter as the case is being remanded to the Collector and the rights of the parties might not be prejudiced in those proceedings. Suffice it to say that the dispute in those petitions related to the period up to 30-6-1985 while report of the Directorate of Intelligence and Investigation on which reliance was placed by the petitioner is of subsequent date namely, 14-3-1987 and was not considered in the earlier proceedings.
In view of what has been stated above, this petition is allowed, the impugned orders are declared to be without any 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 he deems so necessary.
No order as to costs.