MURREE BREWERY COMPANY LTD., RAWALPINDI Versus BOARD OF REVENUE PUNJAB (EXCISE AND TAXATION), LAHORE
MUHAMMAD AFZAL LONE, J .‑This judgment shall dispose of W: Ps. Nos. 661 of 1972 and 2422 of 1976 as common questions of law have been raised in both these cases.
2. The petitioner is a distillery licensed under the Punjab Excise Act, 1.914. In the year 1962 it manufactured Brandy. The imported con centrates, locally manufactured spirit and water were the components of these products. It came to the notice of the Excise Authority that during the period from 27‑9‑1962 to 28‑6‑1967, from the spirit issued to the petitioner on payment of duty, by addition of concentrates and water therein, it manufactured 10,748.99 L. P. gallons of Brandy but the relevant record accounted for only 10,035 L. P. gallons, the evasion of duty on 713.99 L. P. gallons amounted to Rs. 32,129.66. The Excise Authority therefore, called upon the petitioner to make good the short payment of Rs. 32,129.66. A notice dated 28‑4‑1979 was also sent to the company by the Director, Excise and Taxation, Rawalpindi on this behalf.
3. The petitioner challenged this demand through an appeal before the Commissioner, on the plea that concentrates were imported from abroad and duty was paid on importation; and that therefore, under the proviso to sec tion 31 of the Punjab Excise Act, 1914 no excise duty could be recovered from the petitioner in respect thereof. This contention was not accepted by the Com missioner who held that as the concentrates were not excisable article with in the meaning of section 3(6), the exemption claimed by the petitioner could not be allowed. He however, by his order dated 17‑9‑1969 remanded the case to the Director, Excise and Taxation, to ascertain as to whether the Company paid duty on removal of spirit and also to examine the question of payment of duty in the light of the provisions of West Pakistan Duty on excessive wastage of spirits in distilleries (Validation) Ordinance, 1969 which was promulgated, to remove the lacuna in the Punjab Distillery Rules. By his order dated 28‑4‑1977 he made certain corrections in this order. The peti tioner then invoked the revisional jurisdiction of the Member, Board of Revenue who rejected the revision on 12‑8‑1970 with the observation that the petitioner's contention that it was not liable to pay the duty, as the concentrates were imported and duty paid required verification by the Director, to whom the case had already been remanded by the Commissioner. It appears that the Director on re‑consideration of the case, declined to wipe of the demand, but after allowing the permissible wastage scaled it down to Rs. 17,647.65. The petitioner against went in appeal and this time the Commissioner took the view that the concentrates being intoxicating liquor, in contemplation of section 3(14), could be treated as excisable commodity and thus it earned exemption. On 20‑3‑1972 the Member. Board of Revenue in exercise of revisional jurisdiction set aside this order. He was of the view that the duty was not levied on the concentrates but on the liquor of which the concentrates were merely one of the ingredients. The correctness of this view has been assailed by the petitioner through Writ Petition No. 661/72.
4. During the period from the year 1962 to 1976, the, Excise Authorities levied and collected a sum of Rs. 2,57,855.67 as duty on the excisable articles manufactured .by the petitioner by blending imported concentrates with other ingredients. Through Writ Petition No. 2422/76 the petitioner has sought a declaration that no only can be imposed on the imported concentrates, used for compounding and blending of spirit: prayer has also been made to issue a direction to the respondents to refund the amount of Rs. 2,57,855.67, said to be wrongly collected from the petitioner.
5. The learned counsel for the petitioner reiterated the stand taken by the Company before the authorities below. It was argued that under section 31 of the Act read with rules 9.92, 9.105 of Volume II and paragraph 11.37 of Volume III of the Excise Manual, the duty paid on imported concentrates, used in the compounding and blending of spirit, could not be subjected to excise duty and the petitioner was entitled to the refund o the such duty wrongly collected from it and its claim in this respect made vide Annexure F. 1 to F. 7 of Writ Petition No. 2422/76 was turned down illegally by the Departmental Authorities. It was also contended that at least the petitioner's right to the grant of allowance for the duty already paid on the concentrates, could not be denied to it.
6. For the sake of facility of reference section 31 is reproduced below :‑‑
"An excise duty, or a countervailing duty, as the case may be, at such rate or rates as the Provincial Government shall direct, may be imposed, either generally or for any specified local area, on any excisable article :‑
(a) imported, exported or transported in accordance with the provisions of section 16 ; or
(b) manufactured or cultivated under any license granted under sec tion 20 ; or
(c) manufactured in any distillery established, or any distillery or brewery licensed under section 21 :‑‑‑
Provided as follows :‑
(i) Duty shall not be so imposed on any article which has been imported into Pakistan and was liable on importation to duty under the Traffic Act, 1894, or the Sea Customs Act, 1878. Now Customs Act (IV of 1969) which came into operation from Ist January, 1970.
(ii) Omitted.
It is to be seen that under the proviso only that article is exempt from excise duty which has already been subjected to duty under the Tarrif Act and the Sea Customs Act, on its importation. The expression "so imposed on any article" has reference to the levy on the excisable article. The term "excisable article" as per section 3(6) means
(a) any alcoholic liquor for human consumption ,
(b) any intoxicating drug ; or
(c) and medicinal or toilet preparation containing alcohol ; it cannot be claimed that the imported concentrates are "excisable article".
The concentrates would qualify 'for exemption only if these could be categorized as 'excisable article'. Union the wording of the interpretation clause, such a claim however, cannot be endured.
7. It is well established that a proviso is subordinate to the main section and as held in East & West Steamship Company v. Pakistan P L D 1958 S C (Pak.) 41: "the effect of a proviso is to except something out of the proceeding portion of the enactment or to qualify something enacted therein which but for the proviso would be within it."
It is thus obvious that under the proviso, only the excisable article on which import duty may have beers paid, is intended to be taken out of the per view of the charging provisions of section 31. A reference to rules 9.92 9.105 (Volume II) and rule 11.37 (Volume II) of the. Punjab Excise Manual would show that the petitioner's reliance on these rules is misplaced and these rules do not in any manner, advance its cause for exemption or the refund of the duty already collected.
8. There is also no warrant for the claim for allowance to the extent of the duty already paid on the concentrates. The imported concentrates, as already observed, constitute one .of the elements of the excisable article manufactured by the petitioner. By the manufacturing process, something new is brought into existence, by the petitioner which is different from the one already existing namely concentrates. Our attention has not been drawn by the learned counsel to any provision of law that if one of the ingredients of the excisable article, on its importation, is duty paid, the distillery would earn rateable exemption in the excise duty, chargeable on such excisable
9. As born out from Annexure `F' of the Writ Petition No. 2422/76 the petitioner has asked for refund of the amounts collected from it between the years 1962 and 1976. This writ petition was filed on 6‑10‑1976. We are of the view that the writ petition it respect of all the claims enlisted in Annexure 'F' except the one relating to the year 1975‑76 suffers from laches.
10. It may also be added that by our judgment delivered in Writ Petition No. 627/68 and other connected petitions, which were heard alongwith these writ petitions, we have upheld the validation of the West Pakistan Duty on Excessive Wastage of Spirit in Distilleries (Validation) Ordi nance, 1969.
11. As all the contentions raised by the petitioner's learned counsel have failed, both the writ petitions are dismissed with costs.
Appeal dismissed.