V.N. Malhotra, J. - (1.) THIS petition has been filed by the petitioner under Article 226 of the Constitution challenging the levy of Excise Duty on the wastage of country spirit during the course of transit from distillery to the bonded warehouse. The petitioner is a Company incorporated under the provisions of Companies Act, 1965. It was granted licence in Form P.D. 2 to operate a distillery situate at Cantt. Meerut. Under this licence the petitioner Company is permitted to manufacture spirit and to carry on its import, export and transport subject to the provisions of the U.P. Excise Act and Rules framed thereunder.
(2.) IN the year 1988 -89 the petitioner was granted the contract for supply of country spirit to bonded ware house situate at Meerut. The petitioner supplied spirit in poly packs or pouches to the bonded warehouse after execution of a Bond in Form P.D. 15. It is alleged that there was wastage of the sprit during the course of transport from the distillery to the bonded warehouse. The levy of duty on the amount allegedly wasted during the course of transport to the bonded warehouse, has been challenged by the petitioner. It has been asserted on behalf of the petitioner that levy of duty on the spirit is on the point it is issued from the bonded warehouse and not at the point it is manufactured in the distillery. It is asserted that no duty could be levied on the spirit which was never issued from the warehouse as the same was wasted during the course of transit. It is further asserted that in any case the petitioner was entitled to allowance in respect of wastage under the provisions of the U.P. Excise Act and the Rules framed thereunder.
(3.) ON behalf of the State of Uttar Pradesh and other respondents it is contended that the levy of excise duty is on the manufacture of the country liquor though under the provisions of the Act and the Rules framed thereunder it is being lived at the time it is issued from the bonded warehouse. It is further contended that the spirit is transported from the distillery to the bonded warehouse by and under the supervision of the manufacturer after requisite bond in Form P.D. 15 is executed by him. It is asserted that under the terms of this bond as well as under the U.P. Excise Act and Rules framed thereunder the petitioner was liable to pay excise duty in respect of the alleged wastage also. It has also been argued that Rule 14 provides for allowance not exceeding 5% in respect of transport of spirit in wooden casks or Metal vessels but no allowance is provided under this rule in respect of the spirit transported in. bottles or poly -packs or pouches. No wastage allowance will be admissible to the petitioner in this case where the spirit has been transported in poly -packs or pouches. It has also been asserted on behalf of the respondents that in the present case actually there was no wastage during the transit but the shortage was found when the poly -packs were counted at the bonded warehouse.;