Kirpal, J. - (1.)The challenge in this appeal is to the decision of the High Court relating to levy of excise duty on the beer brewed by the respondent.
(2.)This appeal arises from the decision of the High Court which had allowed the respondent's writ petition and quashed the demand raised by the appellant in respect of the years 1986-87, 1987-88 and 1988-89. According to the appellant, this demand was raised because the wastage which was shown by the respondent in the brewing of beer was more than 10 per cent. prior to the year 1986-87 and 7 per cent. thereafter.
(3.)In order to understand the controversy, it is necessary to first examine the process in connection with the manufacture of beer. This process has been referred to by this Court in Mohan Meakin Ltd. vs. Excise and Taxation Commissioner, H.P. and others (1997) 2 SCC 193 and described at page 196 as follows :-
"The first stage brewing process is the feeding of malt and adjuncts into a vessel known as Mash Tin. There it is mixed with hot water and maintained at certain temperature. The objective of this process is to convert the starches of the malt into fermentable sugar.

The extracts is drawn from the Mash Tins and boiled with the addition of hops for one to two hours after which it is centrifuged, cooled and received in the receiving vats. At this stage, it is called 'Wort' and contains only fermentable sugars and no alcohol. After this, it is transferred to the fermentation tanks where yeast is added and primary fermentation is carried out at controlled temperature. After attenuation (diminution of density of 'Wort' resulting from its fermentation) is reached for fermented wort is centrifuged and transferred to the storage vats for secondary fermentation. After secondary fermentation is over in the storage vats, it is filtered twice - first through the rough filter press and then through the fine filter press and received in the bottling tanks. It is in bottling tanks that the loss of the carbon dioxide gas is made up and bulk beer is drawn for bottling. It is filled into the bottles and then last process of pasteurisation is carried out to make it ready for packing and marketing. Till the liquor is removed from the vats and undergoes the fermentation process as mentioned above the presence of alcohol is nil."