IRSHAD HASAN KHAN, C.J.- Through this common judgment we intend to dispose of the above eight petitions for leave to appeal, which have arisen out of consolidated judgment dated 12.4.2000 passed by the Lahore High Court, Multan Bench, Multan in Customs Appeal No. 41 of 1998.
2. Brief facts of the case as noted in the impugned judgment are that: "the staff of the Directorate of Intelligence and Investigation (Customs & Excise) Lahore informed that the respondent Companies have not shown the retail prices of their products as having paying the less excise duty to the department. The respondents were charged of the contravention of the provisions of Section 4(2) of the Central Excises Act, 1944 (hereinafter referred to as the Act) and action against the respondents under section 33(2) of the Sales Tax Act, 1990 was also proposed."
3. In consequence, the Additional Collector of Central Excise Multan adjudicated upon the matter and ordered the respondent-companies to pay the excise duty of variant amounts in each of the organizations separately. The respondent-companies challenged the above orders before the Collectorate of Customs Central Excise and Sales Tax (Appeal) Central Zone Lahore, which were dismissed vide orders dated 4.4.1997 (Civil Petition No. 1527-L-2000). However, respondents' Second Appeals before the Customs, Excise and Sales Tax Appellate Tribunal, Customs House, Lahore were accepted vide different orders including order dated 29.4.1998 (Civil Petition No. 1527-L/2000). The petitioner-department being aggrieved, among others, with the order dated 29.4.1998, approached the Lahore High Court, Multan Bench through Customs Appeal No. 41 of 1998, which has been dismissed vide the impugned consolidated judgment dated 12.4.2000. Hence these petitions.
4. A bare perusal of the impugned order shows that the case of the petitioner-department before the High Court was that the Federal Government had to issue the notification only in respect of the articles on which the excise duty would be fixed on the tariff sale including the tax and that the excise duty is a tax, therefore, it would be part of the retail price and when the articles come in the market, the excise duty will be charged second time on this price.
5. The case of the respondent-companies was that the excise duty cannot be levied twice firstly on the retail price fixed by the manufacturer and secondly on the market price of the goods.
6. As is apparent from paragraph No. 6 of the impugned judgment, the High Court also took the view that the crucial point for determination is whether the retail price for the purposes of levy of excise duty would be one at which price the goods were being sold in the open market, or the retail price would be that through which has been declared by the Federal Government through notification issued under sub-section (2) of Section 4 of the Act. According to the impugned judgment another question which arose for consideration before the High Court was whether the petitioner-department could re-determine the retail price and was entitled to impose the excise duty on the market price of the goods which had been once settled by the Federal Government by issuing the requisite notification under subsection (2) of Section 4 of the Act.
7. Mr. A Karim Malik, learned ASC appearing on behalf of the petitioner-department in all the petitions contended that the question for determination before this Court are the same as had been taken in the memorandum of Appeal No. 41 of 1998 by his clients before the High Court, but the learned Members of the Division Bench of the High Court while deciding the matter, fell into can error in placing implicit reliance upon the judgments of the Tribunal in all the cases. He has reiterated all the grounds taken by his clients before the High Court in C.A. No. 41/1998, which read thus:- "(i) That the crucial question that whether or not excises duty is a tax and that if it is tax then excise duty is not to be included in the retail price as per section 4(2) of the Central Excise Act, has been left unresolved. The said decision also fails to rebut the arguments put forth by the department in support of the fact that excise duty was a tax in view of decisions of various higher Courts and internal references of taxation systems of United States of America, Canada and India."
"(ii)Section 4(1) of the Act clearly mentions deductions of duty and Sales Tax from the wholesale cash price while in section 4(2), there is no mention of deduction of duty from the retail price while deduction of Sales Tax has been mentioned. The said order fails to take into account of the above fact."
(iii) As per section 4(2) of the Act, Federal Government is only required to notify the items on which duty is to be assessed on the basis of retail price and not to notify the retail prices 'as such as held by the Appellate Tribunal. This point was not even agitated by any of the appellants at any of the appellate forums including the Appellate Tribunal."
"(iv) The said decision fails to take into account the CGO 14 of 1969 which deals with calculation of duty on the retail price and which is very much in line with section 4(2)."
8. After hearing the learned counsel for the petitioner- department at some length and going through the impugned judgment as well as other relevant material on record we find that the arguments taken in C.A. No. 41/1998 by the petitioner-department were duly considered by the High Court. The findings recorded by the High Court on the premises on which they are based do not suffer from any legal infirmity, In this view of the matter, we are not inclined to interfere with the impugned judgment dated 12.4.2000 to this extent.
9. However, we find from the copy of show-cause notice dated 23.2.1995 issued to one of the respondent- companies that it was brought to the notice of the Central Excise Authorities that the assessm ent of beverages of the respondent-companies had been made ad valorem and not on retail price basis as envisaged by Section 4(2) of the Act, which reads thus:- "[(2) Notwithstanding, the provisions of subsection (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 side price is so fixed for the same brand or variety, the highest of such price."
"Provided that the retail price shall be legibly, prominently and indelibly printed or embossed on each article, packet, container, package, cover or label, as the case may be.}"
It is stated in the show-cause notice that the Factory Management is assessing a create of 250 ml bottle as under:-- "Assessable price = 98.3188 per create Central Excise Duty @12.5%= 12.2899 Duty paid value = 110.6087 Sales Tax 15% = 16.5913.
Total: 127.2000 per crate."
Whereas the exact calculation should have been as under:-- "Retail price of 24 bottles 250 ml = 110.6087 (Inclusive C.E. Duty @12 Vi% Rs. 13.8260) Sales tax @ 15% on retail price = 16.59. The price structure on the basis of above should be given on bottle as under:-- Retail price Rs. 4.59 + 0.68 sales tax + octroi."
The opinion of the Central Excise Authorities throughout has been that the assessment was being made ad valorem causing loss to the Government exchequer.
10. Consequently, the respondent-companies were reassessed as is apparent from letter bearing C. No. 173, dated 19.3.1995 addressed to the Attorney, M/s. Shamim and Company (respondent in Civil Petition No. 1530- L/2000), operative part whereof reads as under:- "Your assessm ent of Central Excise Duty on retail price is not in accordance with the provisions of section 4(2) of Central Excises Act, 1944. The Central Excise Duty on beverages is on retail price inclusive of all charges excluding Sales Tax and Octroi, In the light of above letter, henceforth, you are directed to assess Central Excise duty on your own advertised retail price which comes as under:- Retail Price:250 ML Bottles Rs. 110.6087 per crate (Inclusive C.E. duty Rs. 13.8260 @ 12 %)
Retail Price:207 ML Bottles 73.6696 per crate (Inclusive C.E. duty Rs. 9.2087)
Retail Price:1000 ML Bottles.
Rs. 177.3924 per crate of 12 bottles (Inclusive of C.E. duty of Rs. 22.1740 @ 12 %)
The short assessm ent of Central Excise Duty w.e.f. 22.10.1994 on all varieties is being calculated which is also to be recovered from the factory."
11. When faced with this, Mr. Sibtain Fazli, learned ASC appearing on behalf of respondent-company in Civil Petition No. 1530-L/2000 submitted that his clients' case was not considered in its true perspective either by the High Court or by the Tribunal and this appears to be the case of other respondent-companies as well. Elaborating his submission about the amount fixed by the manufacturer as retail price on which the excise duty is to be charged, he argued that the cost of the product, including the profit margin and charges of all sorts, which also includes taxes and duties etc. Put together, is to be declared as retail price and on that retail price excise duty is to be charged. Mr. Fazli also took the plea that in Section 4(2) of the Act three distinct words, namely, 'duties', 'charges' and 'taxes' have been used and each of these words has a different connotation.
He referred to Article 260 of the Constitution to contend that the term 'taxation' has been defined therein to include the imposition of any tax or duty, whether general, local or special, and it further states that "tax" shall be construed accordingly. His precise submission was that "tax' and "duty' are two separate and distinct words each having its own meaning and 'tax' shall not include 'duty', It was contended that, in the facts and circumstances of the case, the petitioner-department was tying to define the word 'tax' inclusive of 'duty' by incorrectly construing the provisions of Section 4(2) of the Act. He submitted that this aspect of the matter was not attended to by the High Court while rendering the impugned judgment.
12. It appears that question which now requires consideration is whether the respondent- companies while charging duty have mis-calculated the retail price of their products as envisaged under sub-section (2) of Section 4 of the Act. As to the scope of Section 4(2) of the Act, guidance may be sought from Atlas Battery Ltd. v. Superintendent, Central Excise and Land Customs, Circle C'
Karachi (PLD 1984 SC 86) wherein it was observed:-- "7. Now the concept of retail price as the basis for determination of the excise duty as against the original basis of 'value' as incorporated in section 4 of the Central Excises and Salt Act, 1944 was introduced under a scheme, by means of the insertion of a new provision in sub-section (2) in the original Section 4 of the said Act, by the Finance Ordinance, 1969, which also substituted the schedule making consequential changes, whereby the scheme was applied to goods of every day use having a direct bearing on the cost of living, such as tea, cigarettes, vegetable products beverages, petroleum, lubricating oils, paints, soaps fabricated yarn, batteries and bulbs, etc. The object underlying price hike and to simplify the matter of the payment of excise duty so as to obviate the cumbersome procedure for the determination of the value for the purpose of duty. The two concepts are apparently distinct and operate entirely on different basis as observed in the order of the learned Secretary to Government of the Pakistan dated 31.10.1975: "where such duty is levied at ad valorem basis, the basis of assessment would be value as defined in sub-section (1) of section 4, where such duty is levied on retail price, the basis of assessment would be the retail price as defined in sub-section (2) of section 4". The plain reading of the sub-section shows that the retail price of the article chargeable with duty at a rate dependent on the retail price of the same, is to be fixed by the manufacturer himself if he wishes to take advantage of the scheme. But if he does so, the equally plain requirement of law for him is to include all charges and taxes while fixing such retail price and further such retail price should be the one at which the article is intended by the manufacturer to. Be sold to the general body of consumers. Upon a proper analysis of the provisions of the subsection it would appear that for the assessment of excise duty "retail price" has been defined to constitute the following ingredients:--
(i) It shall be the price fixed by the manufacturer.
(ii) It shall be inclusive of all charges and taxes.
(iii) It shall 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 so fixed for the same brand or variety, it shall be the highest of such price.
"Item No. 53 of the First Schedule to the Act prescribes the rate at which duty is payable in regard to storage batteries as under:- (a)If retail price is legibly, prominently and indelibly printed on each battery.25% of the retail price.
(b)If not covered by clause (a) 200 % ad valorem "Reading Item No. 53 with section 4(2) of the Central Excises and Salt Act, 1944, it would appear that if the retail price is printed on each battery the duty is to be asserted at the reduced rate of 25 per cent, of such retail price, otherwise the duty would be assessed at 200 per cent, ad valorem. The argument of the learned counsel looks at merely the provisions of Item No. 53 requirements for attracting clause (a) of Item No. 53 to his case. While it is correct to say that it is for the manufacturer to determine the retail price in order to print the same on his goods, it will not be entirely correct to contend that he can do so arbitrarily at his discretion without any letters of law upon his discretion. This is because Item No. 53(l), which provides for the changeability of duty in respect of storage batteries at a rate dependent on the retail price has a nexus with section 4(2) of the Central Excises and Salt Act, as that provision of law defines "retail price" which is referred to in batteries of a particular brand or variety, can become the basis for the assessment of the duty it has to constitute "retail price" in terms of section 4(2). Clearly, therefore, it is for the assessing officer to determine the question whether such retail price has been printed on each item of battery, so as to attract the beneficial provisions of clause (a) of Item No. 53. It is only when the retail price is fixed by the manufacturer in conformity with the requirement of this sub-section as analysed above, that the mechanics of the economic forces at work in the market will itself take care of the arbitrariness of the manufacturer. Otherwise by merely printing the retail price on the goods the manufacturer would be entitled to determine the assessment of duty on his goods, even if the printed price does not constitute the retail price within the meaning of section 4(2) of the Central Excises and Salt Act. To my mind Such could not be the intention of the Legislature nor indeed is the meaning of the plain language employed, in a fiscal statute of the nature under consideration, In view of the aforesaid. If the assessing officer finds that the price printed by the manufacturer on his goods cannot constitute retail price within the meaning of the said provision of section 4(2), the case would not then fall under the category of articles chargeable with duty at a rate dependent on the retail price, but would fall under sub-section (1) of the section 4 and would be assessed on the value of the article.
"8. The clear import of the language of Item No. 53 (a) of the Schedule to the Act, is that storage batteries shall be chargeable at 25 per cent, of the retail price "provided such retail price is printed on each item of goods". But what can constitute retail price in relation to the goods of a particular brand or variety is to be determined by the standard laid down in section 4(2). The dominant element at the foundation of the concept of retail price is the price at which the goods are offered to the general body of consumers. Therefore, fixation of the price of an article by the manufacturer implies that the article is of such a nature as to be capable of being offered to the general body of consumers, which means it is open to a general offer to all persons willing to purchase the article at the price fixed thereon, It is in this context that availability of the article at such price is an essential ingredient of retail price to be fixed by the manufacturer. This would also clearly stipulate to exclude any artificial or arbitrary price fixation by the manufacturer, having no reference to the general body of consumers, as in the case of a contract based on special business relationship between the parties.
"9. In the present case, however, the controversy between the parties was confined to the question whether the appellants were entitled to deduct from the retail price the cost of packing and special marking, money value of special warranty for replacement of returned defective batteries and cost of transportation. Admittedly for the purpose of excise duty the appellants fixed the price after deducting the aforesaid charges from the contract price. However, even if the manufacturer is held to have the absolute discretion to fix any price of his products, the clear import of section 4(2) of the Central Excises and Salt Act is that in fixing retail price "all charges and taxes are to be taken into account and included". Therefore, if sale by special contract is considered as a sale to the general body of consumers, since admittedly all charges were not included in the retail price fixed and printed, the appellants were not entitled to be assessed at the reduced level and would have been properly assessed on the ad valorem basis under Item No. 53 (b) read with section 4(1).
In this regard case reported as Deputy Collector of Central Excise and Land Customs, Peshawar v.
Premier Tobacco Industries Limited, Peshawar (1993 SCM R 447) may also be referred wherein it was observed:-- "6. It shall be seen that under sub-section (2) the retail price on which duty is chargeable is fixed by the manufacturer and such price is inclusive of all charges and taxes. The charges include the cost of the container. Such retail price, in sub-section (2), has been identified as the price at which a particular brand or variety of the goods is sold to the general body of the consumers........ We feel that upon the language of sub-section (2) the condition precedent for validity of the course adopted by the department is that two containers offered for sale to the general body of consumers consisted of the same brand or variety."
13. The plea noted in the immediately preceding paragraph does not appear to have been argued by either side before the learned Members of the Division Bench of the High Court, In the interests of justice they are allowed to do so now.
14. Resultantly, with the consent of the learned counsel for the parties and in order to avoid multiplicity of proceedings, we convert these petitions into appeals and while allowing the same remit the cases to the High Court for decision on the questions noted above on merits and in accordance with law as expeditiously as possible.