SAIDUZZAMAN SIDDIQUI, J.--1. Leave was granted in the case to consider whether the exemption from Sales Tax availed to clocks would equally be available to manufacture of the cases/bodies in which the clocks are housed.
2. Respondent company in the above appeal manufactures wall clocks. In the process of manufactured of wall clock they also produce bodies/cases of wall clocks. Wall clocks manufactured in Pakistan were exempted from payment of Sales Tax thereon, vide S.R.O. No. 666(I)/81 dated 25.6.1981 as amended by S.R.O. 563(I)/82 dated 14.6.1982. The respondent company vide their letter dated lst September, 1986 sought clarification from CBR whether the plastic bodies/cases of wall clock manufactured by them for being used in the manufacture of clocks are exempted from payment of sales tax. The Central Board of Revenue (CBR) vide their letter dated 17th December, 1986 clarified that clock bodies/ case were subject to levy of tax under section 3(4)
(iv) of the Act.
3. The bodies/cases of wall clock manufactured by the respondent undoubtedly fall within the definition of "partly manufactured goods" and therefore, just for the reason that they are assimilated into the end product e.g., wall clocks, it would not get them out of the levy of sales tax.
However, if the partly manufactured goods leads to the production of a different manufactured goods, the tax is to be charged only on the end product, as sales tax cannot be charged at to stages of the same manufacturing process. The learned counsel for appellant does not dispute that if the bodies/cases manufactured by the respondent are finally incorporated in the end product wall clock, then the amount of sales tax recovered on the bodies/cases has to be refunded as the end product is exempted from payment of sales tax.
4. We are, therefore, of the view that if the cases/bodies of the wall clock manufactured by the respondent are not incorporated in the end product (wall clock) or it is sold by them it will be subject to payment of sales tax.
5. In the instant case, however, the High Court has recorded a categorical finding that the bodies/cases of the wall clock manufactured by the respondent are not sold by them separately and they are used only in the end product wall clock manufactured by them. In view of this categorical finding, the sales tax can only be charged on the end product, namely the wall clocks.
As it is not disputed before us that the wall clocks manufactured by the respondent is a exempted from payment of sales tax, the High Court rightly held in the facts and circumstances of this case, that no sales tax can be recovered on the bodies/cases of wall clock separately so long as the to notification referred to above hold the field. No case for interference is made out. The appeal is- dismissed but we will make no order as to costs.