Actual cost recovery for excise supervision must be proportionate, with Rule 9 and Rule 36A limited to specified units.

A levy for deployment of excise staff was confined to the State's actual expenditure on salary, allowances and related supervision costs, so the demand could not exceed actual cost. Where one employee was deployed across more than one unit, the cost had to be apportioned proportionately and could not be recovered in full from each unit. Rule 9 was construed to apply only to distilleries licensed solely for denatured spirit or other commercial spirit unfit for human consumption, and Rule 36A only to compounding and blending plants of foreign liquor. The impugned demands were therefore kept in abeyance and remitted for fresh determination within those limits.

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Issues: (i) Whether the State could recover only the actual cost of excise staff deployed in the petitioners' units, including proportionate recovery where the same staff was deployed in more than one unit; (ii) Whether the operation of Rule 9 and Rule 36A was confined to the categories of units to which those rules, on their proper construction, applied.

Issue (i): Whether the State could recover only the actual cost of excise staff deployed in the petitioners' units, including proportionate recovery where the same staff was deployed in more than one unit.

Analysis: The levy under the relevant rules was held to permit recovery only of the actual expenditure incurred by the State on salary, allowances and related costs of the excise staff deployed for supervision. The demand could not exceed the actual cost, and where a single employee was deployed in more than one unit, the cost had to be apportioned proportionately among the units concerned. Recovery of the entire cost from each unit separately would amount to unjust enrichment and would go beyond the authority conferred by the rules.

Conclusion: The State could recover only the actual cost, and where staff was shared, only proportionate cost could be recovered; recovery beyond that was impermissible.

Issue (ii): Whether the operation of Rule 9 and Rule 36A was confined to the categories of units to which those rules, on their proper construction, applied.

Analysis: Rule 9 was construed to apply only to distilleries licensed solely for manufacturing denatured spirit or other commercial spirit unfit for human consumption. Rule 36A was construed to apply only to compounding and blending plants of foreign liquor. The rules were read as authorising recovery of actual supervision cost only within those limited fields, and the demand notices were required to be reconsidered in light of that construction after hearing the petitioners.

Conclusion: The scope of Rule 9 and Rule 36A was limited as above, and the demand had to be redetermined accordingly.

Final Conclusion: The writ applications were allowed in part by keeping the impugned demands in abeyance and remanding the matter for fresh determination of the fees or costs in accordance with the stated limits and safeguards.

Ratio Decidendi: A levy for deployment of excise staff under such rules can extend only to the actual cost incurred by the State, and where the same staff serves more than one unit, the cost must be apportioned proportionately rather than recovered in full from each unit.

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