Messrs LUCKY CEMENT LIMITED vs C. B. R. and others

ABDUR RAUF KHAN LUGHMANI.---J. Writ Petitions Nos.1144 and 1526, both filed in 1997, by Messrs Lucky Cement Limited, and Messrs Cherat Cement Limited, respectively, are proposed to be disposed of by one judgment as law points and facts involved therein are common.

2. As is known by their names, the petitioners, which are public limited Companies incorporated under the Companies Ordinance, 1984, are engaged in manufacture/production as well as supply of cement which is excisable. The case of the petitioners is that excise duty is to be charged in accordance with section 4(2) of the Central Excises Act, 1944 on the basis of retail price which is inclusive of all charges and, taxes, other than sale tax, but the respondents claim that retail price must not only include all other charges and taxes including excise duty and the amount so calculated is to be subjected to the excise duty. Thus the petitioners for example have to pay 15% duty of excise on retail price including 15% of excise duty, with the result that the respondents are charging more illegally and in violation of section 4(2) of the Central Excises Act, 1944. The petitioners want this Court to declare that duties of excise on cement must not form part of retail price and they are to pay excise duty on retail price without including excise duty.

3. The stand of the respondents is that "retail price" includes excise duty and thereafter exercise duty is to be recovered. The controversy between the parties is over the interpretation of subsection (2) of section 4 of the Central Excises Act, 1944 which reads as under:-- "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 articles should be sold to the general body of consumers or, if more than one such 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."

"Duty" has been defined in section 2(1)(17) of the Central Excises Act, which means additional duty, regulatory duty or any amount payable under the Act or the rules made thereunder. It will be seen that ingredients of the retail price are that it shall be fixed by the manufacturer; it shall be the price at which the particulars brought is to be sold; if more than one such price is fixed for the same brand the highest of such price and it shall include all charges and taxes but not sale tax. Charges mean and include the money spent by the manufacturer himself or any intermediary of the manufacture. Packing, re-packing, transport advertising etc. Are included. The word "Tax" has been used and it is to be taken as a tax whether of Central or Provincial Government. For revenue realization the terms used and in vogue are tax, charge, fee and duty. The Legislature was fully aware of these terms and in subsection (2) of section 4 for inclusion in the retail price two terms, namely, charges and taxes have been used. But certainly the word "duty" has not been used and this omission is significant so as to indicate intention of the law makers. If the intention was to include excise duty in the retail price, it could have been easily done by adding duty or excise duty.

It was conceded before us by the learned counsel for the respondents as well as the Law Officer of the respondents (Mr. Ishtiaq Ahmad) the "duty" is different from "charges" and "Tax". If the retail price includes "duty" that would amount to double taxation which indeed is not the intention of the law. The object is to impose excise duty once and not twice. It is well-settled that fiscal statutes are to be interpreted liberally in favour of subject. The petitioners are liable to pay 40% excise duty according to the calculation of the respondents as under:--- 7(i)Declared retail price, including Excise Duty, per bag isRs.169.25 (ii)40% Excise Duty on it is Rs.67.70 (iii)Retail price per bag excluding Excise Duty Rs.101.55 (iv)Percentage of Excise Duty actually charged. Rs.66.67 Although, as stated earlier the Excise Duty levied by the respondents is 40% but in fact they are charging @ 66.67%.

The calculation will be different if Excise Duty is calculated without including Excise Duty in the retail price. The position becomes as under:--- 7(i)Declared retail price, including Excise Duty, per bag isRs.169.25 (ii)Retail price per bag excluding Excise Duty Rs.120.89 (iii)40%'Excise Duty on it would be Rs.48.36 (iv)Percentage of Excise Duty paid. Rs.40%

4. Learned counsel for the respondents argued that the petitioners are showing Excise Duty as part of retail price and thus the duty is to be charged on the said retail price inclusive of Excise Duty.

However, learned counsel for the respondents as well as Law Officer of the respondents agree in principle that no excise duty can be levied or collected on excise duty. It is on the insistence of the respondents that the petitioners have to include in the retail price Excise Duty and for this very reason they have filed writ petitions so as to pay Excise Duty on retail price inclusive of all charges and taxes, but not the sale tax and the excise duty. The object of the Excises Act, 1944 or for that matter section 4(2) thereof is not double taxation. Introduction of retail price was to stabilize prices and to prevent price hike.

For the reasons we are of the view that Excise Duty is not to be treated as part of "retail price" for the purpose of duty of excise payable under the Central Excises Act of 1944.

For the reasons we accept the petitions declare, that present system of realization of duties of excise on the "Retail Price" inclusive of excise duty is illegal and without lawful authority, the duties of excise on cement must not form part of retail price and the petitioners are not liable to pay duties of excise forming part of the retail price of cement.