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Issues: Whether excise duty under the U.P. Excise Act was leviable on bottling wastage at the stage of manufacture or only at the point of issue from the warehouse, and whether a licence condition could validly authorise recovery of duty on such wastage.
Analysis: The levy was tested against Sections 28 and 29 of the U.P. Excise Act. The scheme of the Act, the proviso to Section 29, the duty notifications, and the departmental practice showed that excise duty was a single-point levy and, in the case of warehouse issue for sale, became payable at the stage of issue rather than at manufacture. The proviso to Section 29 linked the rate of duty to the date of issue from the warehouse, and the notifications fixed different rates with reference to the destination of the liquor, which was inconsistent with a levy at manufacture. The clause in the bottling licence purporting to recover duty on wastage could not sustain the demand because a tax can be imposed only by statute and not by a licence condition unless the statute authorises it.
Conclusion: Excise duty was not recoverable on bottling wastage, and the impugned demand was unsustainable.
Ratio Decidendi: Where the statute and duty notifications fix excise duty as a single-point levy at issue from warehouse, a licence condition cannot authorise recovery of duty on bottling wastage in the absence of statutory sanction.
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