G.C. Mathur, J. - (1.) The main question which arises for consideration in this appeal is whether excise duty can be levied on rectified spirit under the U. P. Excise Act, 1910.
(2.) The appellants manufactured rectified spirit at their Factory at Daurala (U. P.). The rectified spirit was stored in bonded go downs. The appellants sent, in the year 1964, certain consignments of rectified spirit, under bond, to the Punjab Distilling Industries Ltd., Khasa, district Amritsar (Punjab). This was done after payment of export duty as required by Rule 631 of the Rules framed under the Act. On checking by the Punjab Excise Authorities it was found that in 7 cases the wastage was in excess of the maximum permissible limits. On this excess amount of wastage of rectified spirit excise duty was levied under Rule 814 at the highest rate. Seven demand notices were issued by the Excise Commissioner to the appellants for recovery of this duty. The demand notices are Annexures 1 to 7 to the writ petition. The appellants filed a revision before the State Government against the levy of excise duty, but the revision was rejected. The appellants thereupon filed a writ petition challenging the demand notices on various grounds. None of the grounds found favour with the learned Single Judge, who heard the writ petition, and he dismissed the same. Against the judgment of the learned Single Judge the appellants filed this appeal.
(3.) In support of the appeal two grounds were urged before us, namely:- (i) that rectified spirit is not an excisable article under the U. P. Excise Act, 1910; and (ii) that no excise duty can lawfully be levied on wastage. Having heard counsel for the parties, we have come to the conclusion that the appeal must succeed on the first ground. We, therefore, do not propose to deal with the second ground.;