Law: Central Excise Act, (I of 1944)

Section: FirstSched

Central Excise Act (1 of 1944)---First Sched., Part-II, Item 14.14 [as inserted by Finance Act (XXII of 1991] and replaced by Heading 9813.0000 by Finance Act (XII of 1994)---Insurance Ordinance (XXXIX of 2000), S.89---Life Insurance Company---Company allowing its policy-holders to withdraw upto 90% of their paid-up premium as surrender value of their policies---Treating such withdrawal as services provided or rendered by company in respect of advances and loans and its liability to payment of excise duty under Item 14.14 or Heading 9813.0000 of Part-II of First Sched. to Central Excise Act, 1944---Validity---Such transaction between company and its policy-holders was not similar to that of Bank and its customer---In case of Bank, customer after withdrawing money from his account was not obliged to refund same to Bank nor was he liable to pay any mark-up thereon to Bank while in case of Insurance company, its policy-holders were obliged to refund such amount to company with mark­up---Such services provided by company to its policy-holders were liable to levy of excise duty---Principles. Hirjina & Company v. Islamic Republic of Pakistan and another 1993 SCMR 1342 and ICC Textile Ltd. v. Federation of Pakistan and others 2003 PTD 1017 ref. ICC Textile Ltd. v. Federation of Pakistan 2003 PTD 101 and Federation of Pakistan v. Muhammad Sadiq and others PLD 2007 SC 133 fol. ORDER IRFAN SAADAT KHAN, J---The applicant is aggrieved by the order dated 4-5-2007 passed by Customs, Excise and Sales Tax Appellate Tribunal, Karachi in Central Excise Appeal Nos.K-110/2001/ 16053 and through the instant Reference Application (R.A) has referred the following questions of law for determination by this Court: (1) Whether the cash withdrawal which the petitioner allows to the policy-holders, out of their own funds paid by them to the petitioner in the form of premiums (upto.90% of the surrender value of their polices), can be treated as services provided or rendered in respect of advances and loans and liable to payment of Excise Duty under item 14-14 of Part-II of the First Schedule to Central Excise Duty Act, 1944 (hereinafter called "the Act, 1944)? (2) Whether the cash…

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