JUDGMENT MALIK MUHAMMAD QAYYUM, J.- This judgment shall dispose of W.P. No. 15188/99 and W.P.
No. 14794/99, both of which involve the same controversy.
2. In these two petitions, the petitioners are manufacturing beverages, In W.P. No. 15188/99, the petitioner manufactures beverage under the brand name of Pepsi Cola, Mirinda & Team while in the other petition, the petitioner is manufacturing aerated water under the brand name of 7-up and Pepsi Cola.
3. There is no dispute that the goods manufactured by the petitioners are subject to levy and payment of excise duty under the Central Excise Act, 1944 at the rate of 12.5% of the retail price and further that these goods fell under the heading 22.01 and 22.02 of the Harmonized Customs Tarif.
The dispute is, however, limited to the question as to whether the respondents are within their right to require the petitioners to add chilling charges in the retail price on which serrated water is sold.
4. It is common ground between the parties that the case of the petitioners is covered by section 4(2) of the Central Excise Act, 1944. Earlier, the Central Board of Revenue issued a letter bearing NO. 1(20)-BEB-94 dated 9.10.1994 to the effect that chilling charges will not be include in the retail price of the aerated water and the same shall be excluded. However, after about 5 years thereafter another letter was issued by the Central Board of Revenue, whereby the earlier letter has been withdrawn and a direction has been issued to all Collectorates that the chilling charges shall now be included while calculating retail price of the product. The petitioners represented to the respondents against this decision but the representation was rejected by the respondents on 4.8.1999. Hence these petitions.
5. Mr. Ali Sibtain Fazli, Advocate and Raja Muhammad Akram, Advocate, learned counsel for the petitioners in these two petitions have vehemently argued that under Section 4(2) of the Central Excise Act, the manufacturer is entitled to fix the retail price on the basis of which the Central Excise duty is to be charged and as the petitioner was supplying beverages in un-chilled form to the general body of consumers the respondents are not competent to direct that the chilling charges be maulded in the retail price.
6. Mr. A Karim Malik, learned counsel for the respondents has rejected to the maintainability of these petitioners by arguing that the petitioners should have availed of departmental remedies before filing these petitions, ithas also been argued that the dispute between the parties also involves determination of the questions of facts and that the petitioner in W.P. No. 15183/99 has already filed an appeals before the Collector (Appeals) in respect of part of dispute where the matter is still pending and as such this petition cannot be maintained.
7. The objection raised by the leaned counsel for the respondents is not well founded. The dispute in the present petition is limited to the question as to whether the chilling charges should be included in the retail price. The answer to this question depends upon the interpretation of section 4(2) of the Central Excise Act, 1944. The Central Board of Revenue has while issuing letter dated 12.6.1999 and by rejecting the petitioners representation opined that the chilling charges should be included while determining the retail price. Appeals this decision of the Central Board of Revenue, the petitioner has no remedy except to invoke remedies before the Department when the highest forum in the departmental hierarchy has already taken a decision, In support of the maintainability of these petitions, the learned counsel for the petitioners has relied upon Attock Cement Pakistan Ltd. v. Collector of Customs, Collectorate of Customs and Central Excise, Quetta & others (1999 OTD 1892), Edilji Dinshaw Ltd., v. Income Tax Officer (1990 PTD 155), and M/s. Julian Hoshang Dinshaw Trust and others v. Income Tax Officer, Circular XVIH, South Zone, Karachi & others (1992 SCMP 250).
These authorities support the petitioners contention that the constitutional petition under the circumstances is maintainable before this Court.
8. Coming now to the merits, the learned counsel for the petitioners have argued that under Section 4(2) of the Central Excise Act, 1944, it is for the manufacturer to fix the retail price which has to be printed or embossed on the goods being sold, though retail price should include all the charges incurred by the manufacturer in respect of such goods. According to the petitioners, as the beverages are supplied in an unchilled form by the petitioners, the respondents cannot compel the petitioners to include the chilling charges, In this respect, the learned counsel for the petitioner emphasised that the Central Board of Revenue had itself issued a notification on 9.10.1994, that he chilling charges could not be included in the retail price and the aforesaid notification could not have been rescinded by the Central Board of Revenue after 5 years on 12.6.1999.
9. Mr. A. Karim Malik, learned counsel for the respondents has, however, maintained that the clarification issued by the Central Board Of Revenue on 9,10.1994 was not a notification but was merely a letter and the same was withdrawn and rescinded when the Central Board of Revenue found that the earlier clarification was in violation of section 4(2) of the Central Excise Act, 1944.
10. As already noted, this controversy between the parties revolves around the interpretation of section 4(2) of the Central Excise Act. It will be noted that though under Section 4(1) of the .Central Excise Act, excise duty is payable on the value of the goods which can be determined by the Central Excise Authorities but under Section 4(2), the duty is to be paid on the bail, the fixed by the manufacturer, which however, must include all the charges incurred by it. This sub-section was added to the Central Excise Act by Finance Ordinance, 1969, w.e.f. 28.6.1969. It was amended by the Finance .Act, 1993 and was substituted by Finance Act, 1994 in the present form. This provision reads as under- section 4(2): Notwithstanding the provisions of sub-section (1), the Federal Government may, by notification in the official Gazette, declare that in respect of any goods or class of goods the duty shall be charged on the retail price fixed by the manufacturer, inclusive of all charges and taxes, other than sales tax levied and collected under Section 3 of the Sales Tax Act, 1990, at which any particular brand or variety of such article should be sold to the general body of consumers or, if more than one such price is so fixed for the same brand of variety, the highest of such price: Provided that the retail price shall be legibly, prominently and indelibly printed or embossed on each article, packed, container, package, cover or label, as the case may be."
11. It is interest to state that both the parties in support of their respective contentions has relied upon the pronouncement of the Supreme Court in the case of Atlas Battery Ltd. v. Superintendent, Central Excise and Land Customs Circle C', Karachi & others (PLD 1984 SC 86). The learned counsel for the petitioners has also cited another judgment of the Supreme Court in support of their contention which is reported as Deputy Collector of Central Excise and Land Customs, Peshawar & 2 others v. Premier Tobacco Industries Ltd. Peshawar (1993 SCM R 447).
According to Mr. A Karim Malik, however, the latter present is not relevant in the present case and is distinguishable.
12. In the case of Atlas Battery's cited above, the dispute between the parties was in respect of retail price of batteries sold by the petitioner in that case. Apart from the general body of consumers, M/s. Atlas Battery Ltd. Was Supplying batteries to Ministry of Defence of Govt, of Pakistan and Ghandhara Industries Ltd. Under special terms and conditions on a lesser price, itwas held by the Supreme Court that for the purpose of Section 4(2) of the Central Excise Act, the retail price would be the price on which the goods were being supplied to the general body of consumers and not the concessionary price on which the goods were being sold to the Government of Pakistan and Ghandhera Industries. The Supreme Court while interpreting section 4(2) observed that upon a proper analysis of the provisions of Section, it would appear that for the levy of excise duty, the retail price should constitute the following ingredients:-
(i) It shall be the price fixed by the manufacturer.
(ii) itshall be inclusive of all charges and taxes.
(iii) itshall be the price at which the particular brand or variety of such article should be sold to the general body of consumers.
(iv) If more than one such price is to fixed for the same brand or variety, it shall be the . Highest of such price.
It was further observed that while it was correct that it was for the manufacturer to determine the retail price in order to print the same on goods, it will not be entirely correct to contend that he can do so arbitrarily as its discretion is not without any fetters of law.
13. In the present case, it is clear that the retail price fixed by the petitioners is embossed and printed on the bottles, itis that price on which the goods are required to be sold to the consumers.
The petitioners manufactured the bottles in an un-chilled form. However, the bottles are sold in chilled form and the retailer or middle man incurs some additional charges those cannot be considered to be the charges incurred by the petitioners and cannot be added to the retail price fixed by the manufacturer in respect of the bottles being manufacturer to fix the retail price on which the goods are to supplied to the general body of consumers. While it is true that this price cannot be fixed arbitrarily as held by the Supreme Court in Atlas Batteries' case supra, it is not the case of the respondents that the chilling charges are incurred by the petitioners or that the petitioners supplied bottles in chilled form after incurring some extra expenditure. The petitioners cannot, therefore, be forced to ad chilling chares not incurred by them in the retail price. According to the learned counsel for the petitioners, it is common knowledge that the bottles are being supplied in creates by the petitioners in un-chilled form and are available for purchase by the general body of consumers at the rates printed on the bottles. If some other person sells the bottles at higher price than the one printed on the bottles, the petitioners, who are incurring any extra expenditure and supply the goods in chilled form.
15. The other case relied upon by the learned counsel for the petitioners is also helpful to them, In that case, K-2 cigarettes wee being manufactured and sold in two different of different prices. The department contended before the Supreme Court that as the goods were the same, it was entitled to charge excise duty at the higher price. This contention was repelled by the Supreme Court by observing that the Company in that case was justified in fixing two different prices for the same goods in view of difference in packings,
16. It is also to be noticed that the respondents themselves had been accepting this interpretation for a period of more than 5 years. The aforesaid letter may not be in the nature of notification but still it was the interpretation which was followed by the Department for a period of 4/5 years. While rescinding the aforesaid clarification, it was stated by the Central Board of Revenue was that the earlier clarification was at variance with the definition of retail price provided in section 4(2) of the Central Excise Act, 1944. The reason for coming to that conclusion was, however, not mentioned.
17. Tt follows from the above that the respondents are not justified to force the petitioners to include the chilling charges in the retail price of aerated beverages as the clarification issued in the letter dated 12.6.1999.
18. In view of above, both these petitions succeed and letters dated 12.6.1999 and 4.8.1999 issued by the respondents are declared to the without any lawful authority and of no legal effect.
No order as to costs.