CENTRAL BOARD OF REVENUE, ISLAMABAD and anothers vs M/s. UNITED
This petition for leave to appeal concerns a dispute over the determination of the annual production capacity of a sugar mill for the purpose of levying excise duty. The Central Board of Revenue, exercising powers under the Central Excises and Salt Act, 1944, fixed the respondent's production capacity at 30,400 tons per year, a figure confirmed by the Standing Tribunal. The respondent challenged this determination in the High Court, which reduced the capacity to 22,800 tons based on a report from a committee constituted by the Board. The petitioner contended that the committee's report lacked legal basis under the Act and relevant rules, arguing that the 30,400-ton figure was correctly derived from the mill's actual crushing capacity and declarations made by the respondent for loan purposes. The Supreme Court found that the petitioner's submissions regarding the legal validity of the capacity determination and the irrelevance of the committee's report raised substantial questions of law requiring further consideration. Consequently, the Court granted leave to appeal and suspended the High Court's order pending the final adjudication of the appeal.
- Does a committee constituted by the Central Board of Revenue without specific statutory authority have the legal power to determine the production capacity of a sugar mill for excise purposes?
- Can the production capacity of a sugar mill be fixed based on its declared crushing capacity in loan applications rather than a committee's assessment?
- Is the determination of production capacity by the Standing Tribunal (Production Capacity) subject to judicial review if it conflicts with internal committee reports?
- Section 3(1), Central Excises and Salt Act, 1944
- Section 3(4), Central Excises and Salt Act, 1944
- Section 37, Central Excises and Salt Act, 1944
ORDER
' NASIM HASAN SHAH, C.J.---This is a petition for leave to appeal against the order dated 10th May, 1992 passed in Writ Petition No, 1317 of 1974.
2. The relevant facts briefly stated are that the Central Board of Revenue with prior approval of the Federal Government, in exercise of the powers conferred by section 3(4) of the Central Excises and Salt Act, 1944 read with section 37, thereof, framed the rules for the levy and collection of duties on the production capacity of plants and machinery of the factories manufacturing sugar, in lieu of the duty leviable on sugar under section 3(1) of the said Act.
3. Since the respondent Sugar Mills opted to pay duty on its production capacity. The Government by Notification No, SRO-329(I)/73 dated 10-3-1973 fixed the production capacity of the United Sugar Mills Ltd., at 30,400 tons per year under section 3(4) of the Central Excises and Salt Act, 1944 read with section 37 thereof. This was confirmed on 13-6-1974 by the Standing Tribunal Production Capacity, Lahore. The Central Board of Revenue, Islamabad took the view that crushing capacity of respondent Mill at the relevant time was 2,000 tons per day, and found that the duty should be levied on the respondent-Mills on the production capacity at 30,400 tons per year.
4. This determination was challenged by the respondent before the High Court who held that the production capacity of the Mills should have been assessed at 22,800 tons per year and not 30,400 tons per year because the Committee constituted by the Central Board of Revenue had confirmed that the production capacity of the Mills was Rs,22,800 tons per year. It is submitted on behalf of the petitioner that the report of the Committee constituted by the Central Board of Revenue was not relevant as there was no provision in the Act and the Production Capacity (Sugar) Rules for constitution of such Committee. The findings of this Committee fixing excisable Capacity, the sugar production of the Mill as 22,800 tons, has no legal basis. On the other hand the production capacity of the respondent-Mills fixed as 30,400 tons per year was fixed keeping in view the principle enunciated under section 3 of the Act, the Excise Duty on Production Capacity (Sugar) Rules and the production of the respondent-Mill. In this connection it was pointed out that the respondent in his application to the P.I.C.I.C. (Pakistan Industrial Credit Investment Corporation) for getting foreign currency loan had confirmed the above production capacity and the counsel of the respondent- Mills had also contended before the Standing Tribunal (Production Capacity) that the plant has a crushing capacity of 1,500 to 2000 tons per day". Moreover the manufacturer of this plant and machinery had its Crushing Capacity of 2,000 tons of sugarcane per day. Taking into all the above factors, the production capacity of the respondent had been rightly fixed as 30,400 tons per year.
5. These submissions require consideration. Leave is granted. The impugned order of the High Court dated 10th May, 1992 shall remain suspended during the pendency of the appeal.