MAULVI ANWARUL HAQ. J. This Judgment shall decide several writ petitions categorized hereinafter. The reasons for the categorization will be forthcoming while we deal with each category of cases :- Category I
(1) Writ Petition No, 12519 of 1996, (2) Writ Petition No, 14750 of 1995, (3) Writ Petition No,5019 of 1996,
(4) Writ Petition No,18715 of 1995. (5) Writ Petition No,16999 of 1995, (6) Writ Petition No,16415 of 1995.
(7) Writ Petition No,7881 of 1994, (8) Writ Petition No,15647 of 1995, (9) Writ Petition No,1784 of 1995,
(10) Writ Petition No,2982 of 1996, (11) Writ Petition No,12976 of 1995, (12) Writ Petition No,15596 of 1995,
(13) Writ Petition No,15959 of 1996 and (14) Writ Petition No,12225 of 1997.
Category 11
(1) Writ Petition No,3858 of 1989. (2) Writ Petition No,4583 of 1989, (3) Writ Petition No,5299 of 1989,
(4) Writ Petition No,3857 of 1989. (5) Writ Petition No,5219 of 1989. (6) Writ Petition No,5069 of 1989 and (7) Writ Petition No,3856 of 1989.
Category No, III ( I) Writ Petition No,2709 of 1995, (2) Writ Petition No,7958 of 1991, (3) Writ Petition No,13801 of 1994, (4)
Writ Petition No,7686 of 1991, (5) Writ Petition No,8541 of 1991. (6) Writ Petition No,8542 of 1991. (7) Writ Petition No,8802 of 1991, (8) Writ Petition No,3048 of 1992. (9) Writ Petition No,6774 of 1992, (10) Writ Petition No,7908 of 1992 , (11) Writ Petition No,5382 of 1994 and (12) Writ Petition No,11376 of 1997.
Category-1 Cases
2. In all these cases the writ petitioners stated that they are engaged in the manufacture / production of cane sugar: that vide an S.R.O. No, 376(1)/94, dated 10-5-1994, the Federal Government Amended Notification S.R.O.No,500(l)/93, dated 14-6- 1993 whereby against Item 02.02 in the table of the said Notification dated 14-6-1993, the existing entries were substituted as follows :- (f)Sugar manufactured in a factory in excess of average production that factory in the preceding 3 years.One Rupee and eight paisas per Kg.
3. This was followed by a Notification bearing No, S.R.0.545(l)/94, dated 9-6-1994 granting an exemption in the same manner against heading 1701.000 in the 1st Schedule to the Central Excises and Salt Act, 1944. According to the writ petitioners they geared up the resources and by putting in extra efforts they produced sugar during the crushing season. 1994-95 in excess of the previous three years average production and thus becoming eligible for the said benefit i,e, the payment of duty at a rate 50% less than payable on the normal production, requested for clearance of the said excess stocks on payment of duty prescribed in the said Notification. The cases were processed and ultimately the clearance was allowed but later was withdrawn with reference to Notification No, S.R.O.476/95. Dated 14-6-1995. By virtue of the said Notification. The following amendment was made in the said S.R.O. No,545(I)/95, dated 9-6-1996 :- "Canesugar1701.1100 If manufactured in a financial year in excess of the average annualproduction of cane sugar in that factory in the preceding three financial years provided that the factory operated for a period not less than 150 days for crushing, in each of' the preceding financial years, for production of cane sugar.".One Rupee and fifty-eight paisa per Kg.
3. The ground taken by the respondent-Department for refusing the said benefits precisely was that since the petitioners Mills have not operated for a period of not less than 150 working days in each of the three preceding financial years, the excess stock of sugar cannot be cleared on the said concessionary rates.
5. The writ petitioners in these cases have denied the factual allegation that the mills had not operated for 150 days during the relevant three years. However, a common question arising in these writ petitions is as to whether or not the exemption granted vide an S.R.O. No,545(I)/94, dated 9-6-1994 be subjected to conditions retrospectively so as to derogate from the benefit available to the petitioners under the said former S.R.O.
6. The matter has already been dealt with by the Supreme Court of Pakistan in case of Messrs Army Welfare Sugar Mills Ltd v. Federation of Pakistan 1992 SCM R 1652 while dealing with the similar question in the matter of withdrawal of exemption from payment of excise duty granted vide a Notification S.R.O. No, 555(1)/79, dated 28-6-1979. As amended by S.R.O. No, 560(1)/82, dated 14-6- 1982. By means of S.R.O. No, 555(1)/89, dated 3-6-1989, the relevant observations of the Honourable Supreme Court of Pakistan appear in paras.53 and 55 of the judgment at pages 1697 to 1699 of the said report. It was held that the said S.R.O. No, 560(1)/82 contains standing representation to the effect that if a factory would manufacture sugar in a financial year exceeding from the average production in that factory for the preceding two years. Such an excess quantity of sugar shall be exempted from the payment of excess duty. The relevant category of cases was disposed of in the following manner:- "In the present case, there is nothing on record to indicate, whether factually the appellants had passed on the additional burden to the purchasers under the above section or otherwise. The amount of the public revenue involved is very heavy. We are, therefore, of the view that it is a fit case in which the appeals are to be allowed but the cases are to be remanded to the Central Board of Revenue with the direction to inquire into the following aspects:-
(i) How much quantity of sugar manufactured by the appellant in the financial year in question upto the date of rescission of S.R.O. 560(1)/82 on 3-6-1989. exceeded the average production for the preceding two years of the factories under reference.
(ii) Whether the appellants had passed on the additional amount of the excise duty or part thereof which become due and payable on the above excess quantity of sugar on account of the rescission of S.R.O. 560(1)/82, to the purchase and/or to any other person or persons.
If the answer to the above second question is in the negative the Board of Revenue shall not charge any excise duty on the excess quantity of sugar, as determined in terms of above sub-para.
(i) of para.55."
7. Pursuant to the said remand the cases were dealt with by the departmental authorities. Against the decision by the ultimate appellate authority in the hierarchy of the Central Excises and Salt Act, 1944, the C.Ps. Filed by the respondent-Department were considered in the judgment in the case of Collector Customs and Central Excise, Government of Pakistan v. Bawany Sugar Mills Ltd. 2000 SCM R 1266 the propositions laid down in the said case of Army Welfare Sugar Mills were reaffirmed.
8. In the present case the petitioners acting on the said S.R.O. No,545(I)/94 proceeded with the manufacturing process resulting in production of excess stocks of sugar in juxtaposition to the average production in the previous three financial years. The cases have been processed by the departmental Authorities and the excess sugar had been ordered to be cleared on the concessionary rates. The department has proceeded to withdraw the orders on the ground that the mills had not operated for a period of less than 150 days in each of the three preceding years.
The factual controversy, as to whether or not the mills operated for not less than 150 days, aside what has to be seen as to whether the exemption could have been made subject to the said condition by issuing a notification. The answer to the said question in the light of the law laid down in the said case of Army Welfare Trust is. In our opinion to be in the negative for the simple reason that adding a condition to the grant of exemption at a point of time when the mills have already produced the excess stocks acting on the basis of average production for the three previous years set down in S.R.O.No,545(I)/94 may well be impossible for the mills to meet with at the point of time when the latter notification was issued. Thus, for all purposes it will be withdrawal of exemption when the representation had already been made to the mills that stocks in excess of the said three years average production would be cleared at the concessionary rates and acted upon.
Category II
9. The cases falling in this category are squarely covered by the judgment of the Honourable Supreme Court of Pakistan in the said case of Army Welfare Sugar Mills Ltd. And are accordingly decided strictly in terms thereof as stated in para.55 of the said judgment.
Category-III
10. In these cases vide S.R.O. No, 505(1)/90, the Federal Government amended S.R.O. No,555(I)/79, dated 22-61979, inasmuch as the following entry was added against Item No,02.02 in the Schedule to the said Act:- "
(g)Sugar manufactured in a factory in a financial year which exceeds the production for the preceding year in that factory provided the factory had worked for a full crushing season in the preceding year."One Rupee and eight paisa per Kg.
11. In a later Notification No,S.R.O.823(I)/91. Dated 20-8-1991, the crushing season was defined as 160 days qua the Province of the Punjab.
12. The claims filed by the petitioners for clearance of the sugar at the said concessionary rates are pending with the Collector of Central Excise and Sales Tax. The learned counsel for the petitioners, in these cases contend that the crushing season having not been independently defined in the said S.R.O., dated 7-6-1990, the definition specifying the parties of the said season to be 160 days in the latter notification cannot be imported into the said notification. Dated 7-6-1990. The learned counsel for the respondent on the other hand, argues that crushing season as prescribed in Sugar Factories Control Act. 1950 will have to be adopted.
13. The proviso to the said clause (g) lays down that the said concessionary rates would be available in case the factory had worked for a full crushing season in the preceding year. Section 2(h) of the said Sugar Factories Control Act, 1950 defines crushing season "to mean a period beginning on the 1st October in any year and ending on the 30th June, next following". Section 8 of the said Act mandates an occupier of a factory to start crushing by a date not later than 30th November each year. Going by the provisions of the said Sugar Factories Control Act, 1950. The crushing season would be of 9 B months and consequently of as many days as there are in the said 9 months. The day of commencement of the said crushing season can either be 1st October but not later than 30th November while concluding date is 30th June.
14. Another aspect of the matter is that in a sugar factory only crushing operation is not conducted but further manufacture process is also undertaken and the working of the factory would not be dependent upon merely on the crushing of the sugarcane. The wording of the said proviso does give impression that the working of the factory is not relatable to the crushing process only rather the intent appears to be that the factory must have been working during the said full crushing season.
15. Mr.Ashtar Ausaf Ali. Advocate appearing in some of these cases is of the opinion that term "crushing season" cannot be interpreted strictly with reference to the definition contained in the Sugar Factories Control Act, 1950. For this he relies on the very Notification impugned herein defining the said season with reference to the number of days i,e, 160 days. He relies on Pakistan Sugar Journal. Vol.V-2, according to which the commencement of the crushing season is to be adjusted dependent upon the available quantity of the cane. Thus according to the learned counsel the cases have to be dealt by the respondent-Department on individual basis with reference to the said circumstances. We find ourselves unable to agree with the learned counsel inasmuch as the said proviso does not refer to the working of the factory with reference to the crushing operation rather it says that the factory must have been working for the full crushing season that is to say that a factory must have been operational during the said season.
16. We, therefore, hold that for the purpose of the said proviso in the said S.R.O. No,505(I)/90, dated 7-6-1990, crushing period will mean a period starting from 30th of November and ending on 30th June the next following year. However, we find that the respondent-Department is treating the said crushing season to mean 160 days which is less than the period of the crushing season as held by us. The petitioners shall, therefore, be entitled to the benefit of the said departmental interpretation.
17. In view of the above discussion the writ petitions falling under Category-I above are allowed and it is declared that subject to the fulfilling of the conditions laid down in para.55 of the judgment of the Honourable Supreme Court of Pakistan in the case of Messrs Army Welfare Sugar Mills Ltd. And others v. Federation of Pakistan and others 1992 SCM R 1652 as reaffirmed in the case of Collector of Customs and Central Excise, Government of Pakistan v. Bawany Sugar Mills Ltd. And others 2000 SCM R 1266. The petitioners shall be allowed to clear the excess stocks on payment of duty prescribed in S.R.O. No, 545(1)/94 and the conditions mentioned in S.R.O. No,476(I)/95 as to the operation of the mills for the period prescribed therein shall not be applicable to the stocks that were manufactured in excess in terms of S.R.O. No, 545(1)/94.
18. The writ petitions falling under Category-II are allowed in terms of para.55 of the said judgment in the case of Messrs Army Welfare Sugar Mills Ltd. And others v. Federation of Pakistan 1992 SCM R 1652.
19. The writ petition falling under Category-III inasmuch as controversy regarding the period of crushing season is concerned, are dismissed.