Excise duty on beer applies only after full manufacture; wastage allowance is merely a computation aid.

Excise duty on beer under the Punjab Excise Act, 1914 attaches only when beer is fully manufactured and fit for human consumption, because the taxable event is the completed manufacture of the excisable article. Rule 35 of the Punjab Brewery Rules, 1956, read with the proviso to Section 32, operates only as a computational formula for determining the quantity of beer produced from brewing records and raw materials. The 7 per cent wastage allowance is part of that method of calculation and does not create a separate levy on wort or any earlier stage of the brewing process. The statutory formula is therefore an enabling mechanism, not an independent charge.

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Issues: Whether excise duty on beer under the Punjab Excise Act, 1914 and Rule 35 of the Punjab Brewery Rules, 1956 is leviable only on beer after it is fully manufactured and fit for human consumption, and whether the 7 per cent wastage allowance is an invalid levy on an earlier stage of the brewing process.

Analysis: Section 32 of the Punjab Excise Act, 1914 authorises levy of duty on excisable articles manufactured in or issued from a brewery, which shows that the taxable event is the completed manufacture of beer. The proviso to Section 32, read with Rule 35 of the Punjab Brewery Rules, 1956, provides only a method for computing the quantity of beer manufactured by reference to raw material used, brewing records, and an allowance for wastage. The allowance is part of the formula for arriving at the manufactured quantity and is not a second deduction from an already determined end-product. The rule therefore operates as a rough and ready mechanism to ascertain the quantity of beer actually produced and does not authorise levy on wort or on a stage before beer becomes potable.

Conclusion: The levy is valid only on beer after manufacture, and Rule 35 is an enabling provision for computation rather than an invalid charge on a pre-manufacture stage.

Final Conclusion: The High Court's view was set aside, and the matter was sent back for fresh decision on the basis that excise duty is chargeable on the manufactured beer, with the statutory formula used only to determine that quantity.

Ratio Decidendi: Where a fiscal statute levies excise duty on an excisable article manufactured in or issued from a brewery, any wastage allowance prescribed by rule is a computational aid for determining the manufactured quantity and not an independent levy on an intermediate brewing stage.

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