V.M.SAHAI,J. - (1.) THE question that arises for consideration in these petitions is whether excise duty could be levied against the petitioners if the security holograms which were to be affixed by the distilleries on the bottles, pouches and canes under bound were wasted and could not be produced by the distillery before the excise department for verification.
(2.) THE petitioner distilleries have filed these writ petitions for quashing of the policy decision issued by the State Government dated 3 -2 -2001 and the circulars issued by the Excise Commissioner in pursuance of it, as arbitrary, invalid and against law. Civil Misc. Writ petition No. 1204 of 2004 is treated to be the leading writ petition. The petitioner, M/s. Saraya Industries Ltd., manufactures Indian Made Foreign Liquor (in short IMFL). It has license for manufacture of potable liquor and carries on manufacturing activities at its distillery unit at Sardarnagar, District Gorakhpur. The petitioner had been paying excise duty, in accordance with the provisions of U.P. Excise Act 1910 as amended in 1950 (in short the Act). The State Government on 3 -2 -2001 took a policy decision, for the excise year 2001 -02 which commenced from 1 -4 -2001, that the distilleries were under obligation to obtain and affix security holograms (in short holograms) issued by the department to prevent evasion of duty and smuggling of liquor. In pursuance of the policy decision taken by the State Government, the Excise Commissioner issued a circular on 21 -2 - 2001 which provided that every distillery shall receive holograms from his office for which plant had been established in his office. The Excise Commissioner issued another letter on 24 -3 - 2001 that the holograms on bottles, pouches and canes shall be affixed by the distillery/brewery etc. when the liquor is stored under bound. The excise duty was payable on the bottles, pouches and canes etc. on which holograms had been affixed. Different kinds of holograms were provided for different quality of country made liquor and IMFL. On the same day on 24 -3 -2001 another circular was issued by the Excise Commissioner that provided the procedure to be followed for obtaining, transporting and picking up of holograms by the distilleries. The distilleries were to obtain holograms from the office of Excise Commissioner, in sealed packets under a removal pass and deposit the entire holograms with the excise inspector, in -charge of the distillery, who was to ensure that the sealed packets covered by the removal pass were intact. In case of loss or tampering with the seal the excise inspector was to report the matter to the Excise Commissioner and an F.I.R. was to be lodged and excise duty involved on the quantity of liquor that could have been issued under the holograms was to be worked out and charged from the distillery. It was further provided that the distillery would be entitled to receive holograms from the in -charge excise inspector on day -to -day basis and a register H.G. -6, would be maintained with regard to the stock of the holograms issued, the number of holograms wasted and the closing stock of the holograms. It provided that excise duty shall be got deposited before the issuance of bottles, pouches and canes affixed with holograms. It was also provided that excise duty shall be chargeable on the wasted holograms and wasted holograms shall be destroyed under the order of the Excise Commissioner.
(3.) ON 8 -11 -2001 the Excise Commissioner came out with a new policy of bond in Form PD -16 -A to be executed by the distillery to make it responsible for indemnifying the Governor of the State for any loss of excise duty or such other payment awarded as compensation or damages by any Court of law or tribunal or Commissioner established under the law for any accident, death or illness, etc. caused by consumption of spurious liquor carrying misused holograms. This circular dated 8 -11 -2001 further provided that the holograms that were returned to the excise department as damaged or wasted and verified by the authorized committee shall not be liable to any excise duty. However, if the wasted holograms were not produced for verification, then it shall be presumed that it had been misused and the distillery would be liable to pay excise duty on the quantity of country liquor or IMFL, as the case may be, which could have been charged, if the holograms had not been wasted and the distillery was made liable to compensate the Governor for the loss of duty on the quantity of liquor which could have been issued under the missing security holograms.;