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‑‑ First Sched., item 15‑A read with Explanation 6‑Levy of tax -Contention that Explanation 6 could not enlarge substantive provi sion of item 13‑A unequivocally laying down fabric with count of yarn less than 355 to be classified a medium fabric‑Explanation 6, held, a substantive provision complementary to definition of 'coarse', 'medium' and 'fine' fabrics and not an explanation to what precedes it‑Explanation 6 spells out formula for determining count of yarn and other explanations define fabrics for purpose of levying duty. [lnterpretation of statutes].

While, item 15‑A lays down the rate of duty, the first‑five explanations define fabrics for purposes of levying duty. But both these provisions remain incomplete unless the formula for determining the count of yarn used in them is spelt out. This purpose is served by the 6th Explanation. The 6th Explanation is a substantive provision complementary to the definition of 'coarse', 'medium' and fine fabrics and not an Explanation to what has preceded.

In other words, the law on the subject is in three parts. Part one pre scribes rate of duty to be levied on super‑fine, fine medium and coarse fabrics: part two defines what are superfine, fine, medium and coarse fabrics ; and part three lays down the formula by which the count of yarn used in each one of these fabrics is to be determined. The explanation and the rule of rounding off contained in it are thus to be interpreted as a com plementary provision to Item 15‑A of the Excises and Salt Act and not as an Explanation in the ordinary sense of the words which, generally speak ing, does not enlarge the scope of the substantive provisions of law which precedes it.

First Sched., item 15‑A, Explanation 6‑Words "wherever neces sary" in Explanation 6‑Indicate rule of rounding off to be applied only to cases where rounding off results in change of category Words, held, do not confer any discretion on Excise Authorities. [Word and phrases].

The expression 'wherever necessary' indicated that the rule of rounding off was to be applied only to cases in which it results in change of category. This view is not open to exception, otherwise the departmental authorities 'could exercise this power arbitrarily and discriminate between one variety of fabric and another without any rational basis for it.

Raza Kazim, Advocate and Musood Akhtur, Advocate‑on‑Record (absent) for Appellant.

MAammad Afzal Lone, Advocate for the Attorney‑General for Pakistan for Respondents.

Date of hearing : 22nd December 1975.

MUHAMMAD YAQUB ALI, C. J.‑The facts giving rise to this appeal by special leave of this Court are few and simple.

The appellant is manufacturer of textile goods. During 4th October 1965, and 14th December 1966, they manufactured long cloth bearing trade mark C S 16000. The count of yarn used in the cloth was declared under the relevant Rules as 34.7s. As medium fabric was defined in the Central Excises and Salt Act 1944, as fabric in which average count of yarn used is 17s, or more, but less than 35s, the Excise authorities treated C S 16000 as medium fabric and levied on it a duty of paisas 19 per sq. yd.

Later on it was revealed that excise duty on C S 16000 was short levied as instead of medium fabric it had to be treated as fine fabric under Explanation 6 to Item 15‑A of the First Schedule to the Central Excises and Salt Act, 1944, as amended by Finance Act, 1964. Under the Explanation, the result of count was to be rounded off wherever necessary by treating any fraction which is one half or more as one and disregarding any fraction which is less than one half.

By applying the rule of rounding off, the count of yarn used in the manufacture of long cloth C S 16000 was raised from 347s to 35s which changed its classification from medium to fine fabric and a duty of 31 paisas per sq. yd. was leviable on it.

A notice was, thereupon, given to the appellant and a demand of Rs. 1,15,695.03 raised for short payment of duty on the cloth in question.

The appellant challenged the legality of the demand by a writ petition in the Lahore High Court inter alia on the grounds :

(i) That Explanation (6) could not enlarge the substantial provision of Item 15‑A which laid down unequivocally that fabric in which count of yarn used was less than 35s was to be classified as medium fabric; and

(ii) that as the petitioner had charged the customers excise duty at 19 paisas per sq. yd. and the notice for enhanced duty was issued after the cloth had left the mills premises, it was not a fit case in which the rule of 'rounding off' should have been applied. Reliance in this connection was placed on the words 'wherever necessary' in the last clause of the 6th Explanation.

Both the contentions were repelled by the High Court and the writ petition dismissed in limine.

After referring to the text of the 6th Explanation to Item 16‑A, the learned Judges remarked:

"The context, the language used, and the results sought to be achieved clearly indicate that it is not a mere Explanation of what proceeded but, in substance, it is a provision quite distinct and apart, for calculating average count of yarn which was made the basis of the levy."

The second ground was repelled likewise in the view that the use of the expression "wherever necessary" did not confer any discretion on the Excise authorities. On the contrary, it made provision for rounding off only in those cases in which classification of fabric is changed thereby from 'coarse' to 'medium' and 'medium' to 'fine' or 'super fine.

Leave to appeal was granted as the interpretation placed by the High Court on Item 15‑A and the 6th Explanation, to it was a matter of first impression to the Court.

We have heard Mr. Raza Kazim in support of the appeal and feel no hesitation in rejecting the interpretation placed by him on the 6th Explanation to item 15‑A of the First Schedule to the Central Excises and Salt Act, 1944.

Item 15‑A which was added by the Finance Act, 1964, and continued in the Financial years 1965‑66 made provision for levy of excise duty on fabrics as below:

(i) Fine fabrics‑Thirty‑one paisa per sq. yd.

(ii) Medium fabrics‑Nineteen paisa per sq. yd.

(iii) Coarse fabrics‑Six paisa per sq. yd.

(iv) Tapestry, curtain, fabrics bad‑covers and table‑covers‑Thirty‑one paisa per sq. yd

Item 15‑A is followed by 6 explanations which define count and count of yarn for purposes of levying excise duty on superfine, fine, medium and coarse fabrics in the following terms:‑

(1) 'Fine fabrics' means fabrics in which the average count of yarn is 35s or more;

(2) 'Medium fabrics' means fabrics in which the average count of yarn is 17s or more but less than 35s;

(3) Coarse fabrics' means fabrics in which the average count of yarn is less than 17s;

(4) 'Tapestry, curtain fabrics, bed covers and table‑covers' means fabrics commonly known as such, made from yarn of any count;

(5) 'Count' means count of grey yarn;

(6) For the purposes of determining the average count of yarn, the following rules shall apply, namely:‑

(a) yarn used in the borders or selvedges shall be ignored

(b) for multiple fold yarn, the count of the basic single yarn shall be taken and the number of ends per inch, in the reed or the number of picks per inch, as the case may be, shall be multiplied by the number of plies in the yarn;

(c) the average count shall be obtained by applying the following formula, namely:‑

(Count of warp x number of ends per inch in the reed) plus (count of weft x number of picks per inch)

(number of ends per inch in the .reed) plus (number of picks per inch) the result being rounded off, wherever necessary, by treating any fraction which is one‑half or more as one, and disregarding any fraction which is less than one half."

While, Item 15‑A lays down the rate of duty, the first five explanation define fabrics for purposes of levying duty. But both these provisions remain incomplete unless the formula for determining the Count of yarn used in them is spelt out. This purpose is served by the 6th Explanation to which Mr. Raza Kazam took objection. As we see it, the 6th Explanation A is a substantive complementary provision to the definition of 'coarse', 'medium' and 'fine fabrics and not an Explanation to what has preceded.

In other words, the law on the subject is in three parts. Part one prescribes rate of duty to be levied on super‑fine, fine, medium and coar fabrics; part two defines what are super fine, fine, medium and coars fabrics. and part three lays down the formula by which the count of yarn used in each one of these fabrics is to be determined. The Explanation and the rule of rounding off contained in it are thus to be interpreted as a complementary provision to Item 15‑A of the Excises and Salt Act and not as an Explanation in the ordinary sense of the words which, generally speaking, does not enlarge the scope of the substantive provisions of law which precedes it.

Mr. Raza Kazim next argued that the words 'wherever necessary' contained in Explanation 6 invest a discretion in the Excise authorities and since in the instance case, the appellant had charged the customers' duty at paisa 19 per sq. yd., it was a fit case in which discretion should have been exercised in their favour. As observed by the learned Judges of the High Court, the expression wherever necessary, indicated that the rule of rounding ,off was to be applied only to cases in which it results in change of category. The view taken by the learned Judges is not open to B exception, otherwise the departmental authorities could exercise this power arbitrarily and discriminate between one variety of fabric and another without any rational basis for it.

Both the grounds raised by the appellant have thus little merit to call for interference with the impugned orders passed by the Excise authorities.

In the result, the appeal is dismissed, but in the circumstances of the case we make no order as to costs.

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