FEDERAL BOARD OF REVENUE vs DEWAN SALMAN FIBER LTD — 2023 PTD 1635 SUPREME-COURT

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FEDERAL BOARD OF REVENUE VS DEWAN SALMAN FIBER LTD. S. 3---Protection of Economic Reforms act (XII of 1992), S. 6---SRO 531(I)/88 dated 26.06.1988 ('SRO 531/88')---SRO 555(I)/79 dated 28.06.1979 ('SRO 555/79')---SRO 500(I)/93 dated 14.06.1993 ('SRO 500/93')---SRO Nos. 545(I)/94 and 546(I)/94, both dated 09.06.1994 ('SRO 545/94' and 'SRO 546/94' respectively)---SRO 477(I)/95 dated 14.06.1995 ('SRO 477/95')---Manufacturer of polyester staple fiber (PSF) in North-West Frontier Province (now Khyber Pakhtunkhwa)---Exemption from excise duty on raw materials mono-ethylene glycol (MEG) and pure terephthalic acid (PTa)---Removal of---Legality---Whether SRO 531/88 came within the ambit of section 6 of the Protection of Economic Reforms act, 1992---[Per Munib akhtar, J: SRO 531/88 amended a general exemption notification issued under the Central Excises act, 1944 ('1944 act'), SRO 555(I)/79 dated 28.06.1979 ("SRO 555/79")---Effect was to grant complete exemption from excise duty in respect of the manufacture of PSF---Now, before this notification (i.e., SRO 531/88) was issued, the position was that even under SRO 555/79 the manufacture of PSF was liable to the payment of excise duty, though at the exempted rate of Rs.2.50 per kg---Thus, when the respondent-company was incorporated (1989) and its units came into operation thereafter the complete exemption from excise duty was a relatively recent phenomenon---Practice adopted under the 1944 act was for general exemption notifications to be issued, encompassing a wide range and variety of manufactured goods---SRO 555/79 was replaced by another such general notification (SRO 500/93), which in turn gave way to two general notifications, both issued on 09.06.1994, being SRO 545/94 and SRO 546/94---For present purposes, the combined effect of all of this was that the (complete) exemption from excise duty on the manufacture of PSF provided by SRO 531/88 was continued---Then came SRO 477/95, which amended SRO 546/94 such that a 5% excise duty was imposed on the manufacture of PSF---Protection of Economic Reforms act, 1992 ('the 1992 act') did not as such apply to SRO 531/88 in and of itself---This is so for two separate and distinct reasons---Firstly, SRO 531/88 was issued before 07.11.1990, the date specified in the definition of "economic reforms" for purposes of the 1992 act---Secondly, neither it nor the general exemption notification that it amended (SRO 555/79), nor the general exemption notifications that came thereafter were time-bound notifications, i.e., the exemptions granted in terms of the general notifications did not operate over any specific period---High Court erred materially in coming to the conclusion that the company was entitled to the relief that it sought in respect of SRO 477/95---To such extent the impugned judgment of High Court was set-aside]---[Per Yahya afridi, J: as to SRO 477/95, the doctrines of vested rights and promissory estoppel do not affect the exercise of its legal power by the Government to withdraw the exemption of excise duty as the Government had not made the earlier exemption from excise duty conditional on establishing an industrial unit in the specified less developed areas, as it had done in regard to sales tax exemption]---appeals were partly allowed.

FEDERAL BOARD OF REVENUE vs DEWAN SALMAN FIBER LTD — 2023 PTD 1635 SUPREME-COURT

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