V.N. Mehrotra, J. - (1.) THIS writ petition has been filed under Article 226 of the Constitution of India, praying that the orders dated 27 -10 -1980 and 24 -11 -1980 (Annexures 2 and 3) passed by the Deputy Excise Commissioner, U.P. Gorakhpur, levying excise duty to the amount of Rs. 39,401/13p. for Storage wastage on spiced country liquor be quashed. The petitioner has alleged that it has been granted licence in Form P.D. 2 and manufactures spirit of high strengths and Indian made foreign liquors. The transport, possession manufacture, imports and exports of liquor is controlled under the U.P. Excise Act and the rules framed thereunder. Under Section 28 of the Act the State Government has the power for imposing excise duty or countervailing duty on the liquor manufactured in the distillery. It has been provided that duty will be collected at the time when excisable article is issued either from the Brewery, distillery or bonded warehouse for sale. There is no provision under the Act which empowers levy of duty when there is wastage in storage.
(2.) SECTION 29 of the U.P. Excise Act provides that in the case of spirit manufactured in any distillery, the duty will be leviable/charged on the quantity provided or issued from the distillery. The various Notifications which prescribe the rate of duty clearly show that the duty is collected according to the place where the article is removed for consumption. Rule 813 provides for wastages in respect of different kinds of spirits stored in a distillery. This rule has been amended by a Notification dated 8 -2 -1978. Under this provision wastages in respect of Sophisticated spirit and rectified spirit has to be taken into account. The Excise Commissioner and the officers subordinate to him have been calculating the wastages in accordance with the provisions of the aforesaid rules. Accordingly when stock taking was done the storage wastage have been arbitrarily calculated. The petitioner's distillery was inspected by the Audit Party and they interpreted the aforesaid rule contemplating that the permissible wastage in respect of Sophisticated spirit be taken separately and the wastages be calculated in respect of each kind of spirit. On the basis of this objection the Excise Inspector, Incharge of the petitioner distillery, directed the petitioner to pay excise duty on the excess storage wastage by his order dated 19 -5 -1980. On the basis of the letter by the Excise Inspector wastages had been calculated and the Deputy Excise Commissioner, Gorakhpur has levied a sum of Rs. 39,401/13 paisa towards the alleged storage wastage on the spiced country liquor by his order dated 27 -10 -1980. The petitioner asserts that no excise duty could be levied on the liquor allegedly wasted during storage as the duty could be levied only in respect of the liquor which was issued for human consumption and the Excise Commissioner could not be empowered to levy duty on the wastage. The provisions of Rule 813 as amended by Notification dated 8 -2 -1978 were ultra vires.
(3.) ON behalf of the respondents it is contended that under the provisions of Rule 813 certain allowance has been granted in respect of wastage for different kinds of spirit stored in a distillery. Under this rule, actually, the duty is not levied by the Excise Commissioner but it provides for some relief to the distilleries in respect of wastage during storage. It is contended that the rule could not be said to be ultra vires or invalid. It has also been contended that the excise duty can be levied on excess wastage in respect of spiced spirit stored in the distillery.;