Riyaz I. Chagla J. - (1.) The Petitioners in writ petition no. 8548 of 2004 challenge the Bombay Denatured Spirit Rules, 1959 ( for short "the Rules") in so far as they regulate the possession, use, sale, import, export and transport of denatured spirit after denaturation as being ultra vires and unconstitutional. The Petition also seeks directions from this Court that the Petitioners who are manufacturers of denatured spirit do not require license under the Bombay Prohibition Act, 1949 (now Maharashtra Prohibition Act and for short "the Act") for sale, purchase, transport, possession, storage, dehydration, import, export of denatured spirit under the Act. The other Petitions have similar challenges and hence these Petitions are decided by this common judgment.
(2.) The Petitioners are manufacturers of denatured spirit and have obtained a license for manufacturing under the Rules. The Petitioners claim that they have also obtained the license under the Rules for the re-distillation process of denatured spirit granted by the Government of Maharashtra under the Maharashtra Distillation Spirit and Manufacture of Potable Liquor Rules, 1966. The Petitioners are manufacturers of Ethanol by re-distillation process of denatured spirit. The Ethanol manufactured by the Petitioners is used as ad-mixture in motor spirit. The Petitioners have described denatured spirit as a basic raw material and after extracting water, the same is converted into absolute alcohol having purity of 99.5%. The manufacturing process of the denatured spirit is done in the distillery from where the Petitioners have brought the denatured spirit under excise supervision appointed under Condition No.2 of Licence in Form "I". The Petitioners supply the absolute alcohol in form of denatured, called denatured ethanol to various petrochemical companies either in the State of Maharashtra or outside the State of Maharashtra. The Petitioners also import denatured spirit from outside the State of Maharashtra. Petitioners are also exporting absolute alcohol outside the State of Maharashtra. The Petitioners state that under the Rules they have to obtain a pass issued by Respondent No.3 under 49 and 50 of the Rules for the import and export of denatured alcohol and this is granted only after paying import / export fees mentioned in Rule 52 and 59 of the Rules. The import of denatured spirit is governed by Rules 51 to 56 and the export of denatured spirit is governed by Rules 57 to 62 of the Rules.
(3.) The Petitioners have referred to the Industries (Development & Regulation) Act, 1951 which was amended in the year 1956 and particularly item 26 of schedule 1 which reads thus:- "26. Fermentation Industries :- 1. Alcohol 2. Other products of fermentation industries," The Petitioners have therefore, submitted that by declaration of fermentation Industries in the year 1956, the Union of India has taken alcohol and other products of Fermentation Industries under its control whereby the State has lost the power to make any law in respect of industries declared by the Union under its control to be taken over in public interest. Ethanol which is manufactured by the Petitioners is covered under Item 26 of the First schedule of the Industrial (Development and Regulation) Act, 1951 and hence the State has no powers to take regulatory measures, for manufacture, sale, possession of the industrial alcohol or Fermentation Industry. The Petitioners have claimed that the State has only power to levy duty or fees on alcoholic beverages for human consumption including regulating the rectified spirit, which can be diverted for potable purpose. The power of the State to regulate and control comes to an end, the moment the rectified spirit becomes denatured.;