S.L.Saraf, J. - (1.) The petitioner holds a licence P.O. 2 granted by the Excise Commissioner, U. P., Allahabad for manufacturing Industrial Spirit including rectified spirit and denatured spirit in their distillery at Ghosi, district Mau. The industrial alcohol produced by the petitioner distillery is supplied within the State to persons holding licence under the Excise Rules. It is also exported outside U. P, when export authorisation is granted by the Commissioner of Uttar Pradesh. The petitioner sells its product both for industrial use as also for manufacturing potable liquor. On 21st March. 1995 at about 10 p.m., the Distillery Manager was informed that rectified spirit is flowing outside of storage warehouse of the Distillery. The Distillery Manager and other officials immediately rushed to the spot but due to lock of storage of the warehouse, immediate check on flowing of spirit could not be taken. The said warehouse was locked by the Excise Inspector Incharge of Distillery and the keys of all the locks were with him. The Excise Inspector came to the Distillery at about 12.30 p.m, and opened the lack and repair work was done of the storage tank from which the rectified spirit was flowing. The General Manager of the Distillery informed the Excise Commissioner, U. P., Allahabad regarding the aforesaid incident. The total wastage of rectified spirit was to an extent of 31331 bulk litres of ethal alcohol (Le., rectified spirit). Admittedly, the strength of rectified spirit stored out was 94.4% V.V.
(2.) Proceedings were initiated by the Central Excise Department who alleged that ethal alcohol (Le., rectified spirit) was cleared without the payment of Central Excise duty and in contravention of Rule 9 of the Central Excise Rules, 1994 (hereinafter referred to as the Rules). It was alleged that the said quantity of ethal alcohol has not been cleared for the purposes of alcohol liquor for human consumption as such attracted the Central Excise Duty at the rate of 20% ad valorem. Accordingly, the Central Excise authorities on the loss of 31331 bulk liters of rectified spirit levied the Central Excise duty of Rs. 47.072 under Rule 9 of the Rules read with Section 11A of the Central Excise and Salt Act, 1944. They also levied a sum of Rs. 5.000 by way of penalty for violation of Rules 9, 50, 50A, 173B and 173G of the Rules.
(3.) Proceedings were also initiated by the Additional Excise Commissioner, Licensing, Industrial Development U. p., under the U. P. Excise Act, 1910 for leakage and wastage of rectified spirit which was found to be 94.4% V. V. strength. According to the report of the Excise Inspector, it was found that there was leakage or stock wastage 36,512.3 alcohol litres. It was alleged that there was loss of revenue due to such leakage. The same was calculated at Rs. 45 per alcohol litre on the wastage of 34.124.3 alcohol litres amounting to Rs. 15,35,593.50 P. The said loss of revenue was estimated to be the loss which was likely to be Incurred by conversion of rectified spirit amounting to Rs. 36,512.3 per alcohol litres for potable purposes. It was stated that the quantity of rectified spirit which was lost was due to sheer negligence of the appellant and the same was likely to be used for the manufacture of Indian made foreign liquor. In that view of the matter, the petitioner was asked to pay a sum of Rs. 15,35,593.50 P, by way of loss of revenue.;