- (1.)The order of the Deputy Commissioner of Excise dated 17-6-1994 levying excise duty on storage wastage amounting to Rs. 1,57,26,260, was assailed by the appellant by filing a writ petition in the Allahabad High Court. One of the contentions of the appellant was that in the garb of levying duty on wastage of liquor, the authorities concerned are levying duty on rectified spirit even before the same has become fit for human consumption. The High Court by Judgement dated 8-4-1996, dismissed the writ petition on a finding that the levy is being imposed after complete manufacture of the liquor and the storage and bottling are subsequent to the process which arise after manufacture and therefore in view of the decision of this Court in State of U.P. V/s. Modi Distillery there is no infirmity with the impugned levy.
(2.)When the aforesaid Judgement of the High Court was assailed before this Court, a Judgement arising out of the Punjab and Haryana High Court on a similar point, at the behest of the State of Haryana, had also been assailed. A Bench of two learned Judges, on considering the earlier judgments in Vam Organic Chemicals Ltd. V/s. State of Uttar Pradesh as well as Modi Distillery case and several other decisions including the decision in Mohan Meakins Ltd. v. Excise & Taxation Commr., H.P. was of the opinion that the legislative power conferred upon the State by the Constitution and recognised even in Synthetics and Chemicals Ltd. V/s. State of Uttar Pradesh should include all incidental and ancillary powers and it is this aspect which was emphasised by the Court in Bihar Distillery V/s. Union of India. The Court was further of the opinion that the different decisions referred to thereunder having projected different points of view, to evolve a coherent and effective formula, the appeals should be placed before a Constitution Bench. Pursuant to the aforesaid order both the appeals arising out of the Judgement of the Punjab and Haryana High Court as well as the Judgement of the Allahabad High Court, with which we are concerned in the present appeal, were placed before the Constitution Bench. The Constitution Bench being of the opinion that it is impermissible for a Bench of two learned Judges to refer a matter to the Constitution Bench, directed that the matter be placed before a Bench of three learned Judges by order dated 13-12-2001. Pursuant to the said direction of the Constitution Bench, these appeals have been placed before us. Be it stated that the civil appeal filed by the State of Haryana arising out of the Judgement dated 22-7- 1996 of the Punjab and Haryana High Court has since been heard and disposed of by a Bench of three learned Judges by Judgement dated 12-2-2002.
(3.)Mr M.L. Verma, the learned Senior Counsel appearing for the appellant strenuously contended that the cryptic conclusion of the High Court in the impugned Judgement that the levy is being imposed after complete manufacture of the liquor is not supported by the materials on which the levy was being imposed. The learned counsel placed before us the order of the Deputy Commissioner dated 17-6-1994 as well as the report of the Excise Inspector in charge of Cooperative Company Limited, Bottling Unit, Sahibabad dated 24-5-1994 to indicate that the Excise Authorities are of the view that even excise duty can be levied on the wastage of rectified spirit before the same is made fit for human consumption and obviously this power, the Excise Authorities do not have in view of the two decisions already referred to, namely, Synthetics and Chemicals Ltd. and Modi Distillery case. Mr Rakesh Dwivedi, learned Senior Counsel appearing for the State of U.P. on the other hand contended that there is no dispute with the proposition laid down by this Court in Modi Distillery case but he vehemently contended that factually the levy is being made only on wastage of country liquor which is being manufactured at Sahibabad and the mode of ascertaining the wastage is in accordance with the Rules. Mr Dwivedi further urged that this position is now clear in view of the recent Judgement of this Court in Govt. of Haryana V/s. Haryana Brewery Ltd. wherein this Court has examined material provisions of the Punjab and Haryana Excise Rules and has recorded a conclusion as to how wastage in that case was being calculated. In the facts of that case the Court was concerned with the wastage in the manufacture of beer. In the case in hand, we are concerned with the so-called wastage in the manufacture of country liquor. According to Mr Dwivedi, the process of manufacture of country liquor is nothing but to dilute the rectified spirit with water and stirring to make it fit for human consumption. Even if we accept this contention of Mr Dwivedi, still then, until the rectified spirit becomes fit for human consumption as a country liquor any wastage of the rectified spirit as such would not be liable for levy of excise duty, as has been held by this Court in Modi Distillery case.