Rectified spirit not liable to excise duty where it is not intended for human consumption at manufacture stage.

Rectified spirit was treated as outside the definition of excisable article under the U.P. Excise Act, 1910 because "for human consumption" was construed to mean intended or meant for human consumption at the stage when duty is sought to be levied. Spirit manufactured for pharmaceutical, medicinal, industrial or scientific use did not become alcoholic liquor for human consumption merely because it could later be diluted or misused to produce potable liquor. On that basis, rectified spirit was not liable to excise duty and the demand notices were unsustainable.

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Issues: Whether rectified spirit is an excisable article under the U.P. Excise Act, 1910 so as to attract excise duty.

Analysis: The expression "for human consumption" in the definition of excisable article under Section 3(22a) was construed to mean intended or meant for human consumption at the stage of manufacture, not merely capable of being converted into potable liquor later. Rectified spirit was shown to be produced in grades for pharmaceutical, medicinal, industrial and scientific uses, and not for direct sale to or consumption by the public. The fact that it may be misused after dilution, or can be converted into potable liquor at a later stage, did not make it an alcoholic liquor for human consumption at the point when duty was demanded. On that basis, rectified spirit was held outside the statutory description attracting excise duty.

Conclusion: Rectified spirit is not an excisable article under the U.P. Excise Act, 1910, and no excise duty could validly be levied on it; the demand notices were liable to be quashed.

Ratio Decidendi: An article is chargeable as alcoholic liquor for human consumption only if it is intended or meant for such consumption at the relevant stage, and mere capability of future conversion into potable liquor does not attract excise duty.

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