Devi Prasad Singh, J. - (1.) PETITIONER Oudh Sugar Mills Ltd. Hargaon, District-Sitapur, U.P. is a public limited company registered under the Indian Companies Act, 1956 engaged in production, sale and business of rectified spirit/ absolute alcohol in its distillery situated in Hargaon. The distillery was established in pursuance to the licence granted by the Government of India in the year 1994. It is stated that later on the company was registered under the provision contained in Industries (Development and Regulation) Act, 1951 (in short I.D.R. Act). Certificate has been filed as Annexure No. 2 to the writ petition. It is pleaded that by an order dated 31.8.1962, the name of petitioner-company was substituted in place of M/s Cotton Agents Ltd. Certificate issued by Government of India dated 31.8.1962 is Annexure No. 3. It is admitted fact that the fermentation industry of alcohol has been declared and notified as a scheduled industry at Item No. 26 of the First Schedule of the I.D.R. Act.
(2.) ACCORDING to Dr. R.K. Srivastava, learned counsel for the petitioner, the alcohol industry on the basis of declaration of the Parliament by law is under control of the Central Government under Item No. 52 of the List 1 (Union List) of the Seventh Schedule of the Constitution of India. Union of India has authority to impose excise duty on alcohol which is unfit for human consumption. On the other hand, under the U.P. Excise Act, 1910, the State of U.P. exercises its power to control the production, sale and supply of excisable goods and to impose duty on alcoholic liquor meant of human consumption. Under Section 3 (22-a) of the U.P. Excise Act, 1910, the power of the State Government is limited to alcohol meant for human consumption excluding the jurisdiction conferred to Union of India under Entry 51 of the List 2 of Schedule 7 of the Constitution of India. The Excise Commissioner, U.P. Allahabad issued an export permit for supply of to M/ s Jai Chemical & Pharmaceutical works, Jaipur, Rajasthan for Rs. 10,000/- bulk litre (in short B.L.). Copy of the export licence issued to the petitioner dated 20.3.1998 is annexed as Annexure No. 4 to the writ petition. It shall be appropriate to re-produce the licence in its verbatim, which is as under: JUDGEMENT_625_ADJ9_2011Image1.jpg JUDGEMENT_625_ADJ9_2011Image2.jpg A plain reading of the licence reveals that the licence was granted subject to condition that within a period of 45 days, the licencee shall submit Pass PD 25 with due endorsement, to the office of Excise Commissioner. In the event of failure on the part of licencee-petitioner to return Pass PD 25 and 26 within 45 days after getting it verified by purchaser, penalty equal to the duty would be charged from the distiller. The licence was issued subject to execution of indemnity bond. While filing counter-affidavit, the photo stat copy of the indemnity bond has been filed by the respondents as Annexure No. CA-1. The indemnity bond has been duly signed by the petitioner as well as by the Excise Officer. Clause 3 of the indemnity bond provides that in case alcohol is not delivered at the destination as agreed between the parties, the distiller shall indemnify the Governor for any loss of duty which the Governor may suffer by reason of such non-delivery or short delivery by paying to him on demand the duty at the rate in force, on any quantity of spirit not so delivered after making the allowance aforesaid. The indemnity bond signed by the parties has been filed as Annexure No. CA-1. The indemnity bond is re-produced as under: "P.D. 15 (Paras 433 and 633) FORM OF GENERAL BOND TO BE EXECUTED FOR THE REMOVAL OF SPIRITS FROM DISTILLERIES FOR TRANSPORT/EXPORT WITHOUT PRE-PAYMENT OF DUTY THIS INDEMNITY BOND MADE THE Twentyth day of February, 1997 Between the Oudh Sugar Millss Distilleries, Hargaon (District-Sitapur) (hereinafter called the Distiller which expression shall include their heirs, representatives, successors and assigns) of the one part AND the Governor of Uttar Pradesh (hereinafter called 'the Governor" which expression shall include his successor and assigns) of the other part: WHEREAS under the rules of the Government of Uttar Pradesh in the Excise Department the distillers are permitted from time to time to transport/ export spirits from their distillery at Hargaon to all or any of the bonded warehouses mentioned in the passes covering such export without previous payment of duty on the distillers executing an indemnity bond on the terms and conditions hereinafter mentioned: NOW THIS BOND WITNESS and the distillers hereby covenant with the Governor as follows:: "1- That the distillers shall not at any one time so transport/export any quantity of spirits the duty on which at the rate prescribed therefor at the time or the aggregate of such duty and the duty at the afore aid rate on any quantity previously transported/exported and not yet delivered at destination shall exceed the sum of Rupees 5,00,00,000/- (Rupees Five Crores Only) provided that any allowance sanctioned for dryage and wastage and quantity not delivered at destination for which duty has been paid under Clause (3) hereinafter following shall not be included in the calculation of the quantity not delivered at destination. 2. That the distillers shall within the time mentioned in their pass issued by the officer Incharge of the distillery on further time as may be granted by way of extension by the Collector of transporting/exporting district, deliver or cause to be delivered the spirits so transported/exported on that occasion into custody of the officer-in-charge of the bonded warehouse mentioned in the pass. 3. That if the whole quantity of spirits transported/exported on any occasion after deducting such allowance for dryage and wastage as may be sanctioned shall not have been delivered at the destination as here-in-before agree, the distillers shall indemnify the Governor for any loss of duty which the Governor may suffer by reason of such non-delivery or short delivery by paying to him on demand the duty at the rate when in force on any quantity of spirits not so delivered after making the allowances aforesaid." IN WITNESS WHEREOF the distillers have hereunto set their hands hereunder on the day and the year first above written. JUDGEMENT_625_ADJ9_2011Image3.jpg It appears that Pass PD 25/26 was not returned to the respondent by the petitioner after exporting the bulk of alcohol at Jaipur, hence by the impugned notice dated 2.12.2002, the petitioner was informed that on account of breach of terms and conditions of the licence (supra) the penalty equivalent to excise duty to the tune of Rs. 3,98,000/- has been imposed and the petitioner was directed to deposit the same in Government Treasury.
(3.) FEELING aggrieved, the petitioner preferred the instant writ petition precisely challenging the impugned notice on the ground that the State of U.P. lacks jurisdiction to impose excise duty as it falls within the domain of Central Government under Entry 54 List 1 of the 7 Schedule. It is further stated that under Entry 84 (A) of List 1, Schedule 7 only Union of India has got right to impose duty on alcohol unfit for human consumption. Learned counsel has relied upon the cased in Deccan Sugar & Abkari Co. Ltd. and others v. Commissioner of Excise, Andhar Pradesh, (2004)1 SCC 243; Rampur Distillery and Chemical Co. v. State of U.P. and others, 2003(1)AWC 790; Union of India and another v. Girja Shanker and others, 2003(1) AWC 791; Memendra Pratap and another v. Deputy Registrar (Registration), Lucknow and others, 2010 (28) LCD 1744; Upton India Ltd. Ghaziabad v. State of U.P. and others, 2009(4) ADJ 99 (DB)(LB) and Dhirendra Kumar Rai v. State of U.P., 2010 (28) LCD 1248. On the other hand, Shri H.P. Srivastava, learned Additional Chief Standing Counsel submits that the petitioner has voluntarily signed the indemnity bond and accepted the terms and conditions of the licence for export of alcohol to Rajasthan. Once the petitioner accepted the terms and conditions, he has got no right to go back from its own words. It is further submitted that the State of U.P. has not imposed duty but it is a penalty. He relied upon a case in Pratibha Processors and others v. Union of India and Others, (1996) 11 SCC 101.;