1. ' JAMALUDDIN H. AHMED, J.-The petitioner, a private limited company dealing in the manufacture of Glass and Ceramics, was served with a show-cause notice dated 17-8-1970, by the 3rd respondent, saying that it had evaded payment of Central Excise duty, Sales-tax and Defence Surcharge amounting to Rs, 80,800 besides Rehabilitation Tax of Rs, 2,932 only, -which was calculated on 5252 gross, 8 dozens and 1 piece of glass bottles, valued at Rs, 2,63,840. It was argued that the petitioner had manufactured and removed these bottles from the factory during the period ,commencing from January 1968, up to December 1969. The petitioner explained that it had made a declaration of its complete stocks on 13-5-1966, the date of levy of the Excise duty and that included its stocks lying within as well as outside the factory premises. Further it again made a declaration as required under M. L. R. 32 promulgated on 16-4-1969. 'Under this regulation all concealed income for the period from 1-7-59 to 30-6-68, was to be declared, with the general amnesty that no proceedings shall be taken for the recovery of any income by evading excise duty and other taxes.
2. ' The petitioner's declaration of all its stocks had been examined by a committee formed under the said M. L. R. 32 and on 24-12-69, by agreement of the petitioner the Committee determined the excess income of the petitioner at Rs, 10 lass. The petitioner therefore claimed the benefit of the amnesty, as it admitted to have made supplies of goods during the period stated in the notice, but claimed that the same were either from the factory through regular clearance or from the outside stocks, which were held by them on 13-6-1966 and which had again been declared and assessed under M. L. R.
32. Petitioner also contended that its stocks of bottles held in godowns outside the factory at the time of the levy of Excise duty was legally not subject to Excise duty.
3. ' However, respondent No, 3, did not accept the petitioner's explana lion and by order dated 20-4- 1971, held that it had evaded Excise duty, Sales-tax, Defence Surcharge and Rehabilitation Tax amounting to Rs, 83,702. He, therefore, assessed the duty payable by the petitioner at Rs 26,384 and further imposed a penalty of Rs, 2,50,000 under rule 226 of the Central Excise Rules, 1944.
4. ' The petitioner filed an appeal before respondent No, 2 who after getting a fresh scrutiny of the petitioner's accounts done, passed an order on 19-12-1974, reducing the quantity of the bottles to be charged to 4875 gross, 4 dozens, 3 pieces only and also reduced the penalty to Rs, 75,000.
5. ' The petitioner challenged this order in revision before respondent No. 1 contending that the benefit of amnesty under M. L. R. 32 was being denied to it ; and though the 2nd respondent had reduced the quantity of bottles that escaped assessment, the order did not indicate their types. Res-- pondent No. 1 in its order agreed that there was force in all these-contentions and directed that "the Collector shall re-assess the quantity by effecting the above reductions under each type of bottles. Any bottle found to have been removed before 1-7-1968, shall also be excluded."
6. ' Subject to these modifications the first respondent confirmed the order of the 2nd respondent, which in effect meant that the petitioner was to pay the penalty of Rs, 75,000 as ordered by the 2nd respondent.
7. ' Now the only contention raised by Mr. Nusrat, learned counsel for the petitioner, is that on a plain interpretation of the finding of the 1st respondent, the matter is remanded for fresh assessment of the bottles that may be found liable to Excise duty, in the light of the directions given to the Collector of Central Excise. In that situation, confirmation of the order of the 2nd respondent amounted to imposition of penalty without real assessment of evasion of duty. He therefore argued that this part of the order needs to be set aside.
8. ' Mr. Yousuf Rafi, learned counsel for respondents candidly stated that the penalty of Rs, 75,000 could not be final and was likely to vary according to the ultimate finding of the authorities regarding the quantity of the duty-evaded bottles but he contended that this was not the petitioner's prayer. The petitioner had prayed for a declaration that the various orders passed by the three respondents were all without lawful authority and therefore not enforceable in law. This indeed is true, but I find that on a simple interpretation of the impugned order itself, the penalty imposed by the 2nd respondent and confirmed by the 1st respondent could not continue to be recoverable. As the first respondent had in fact remanded the matter for reassessment, the order about penalty of Rs, 75,000 would be inconsistent with that. As penalty is relateable to the actual evasion of duty, I find that the 1st respondent could not confirm it while remanding the matter. I would therefore declare that the order to the extent to which it confirms the penalty imposed by the second respondent is without lawful authority and of no effect. But this is not to be understood to affect the proceedings before the 3rd respondent to whom the matter is remanded.
9. ' The petition is thus allowed, as stated above, but with no order as to costs.
10. ' MUHAMMAD HALEEM, J.-I agree.