Excise duty on non-potable spirit cannot be levied by the State; demand notices were unsustainable in law.

The State lacked authority under the Bihar and Orissa Excise Act, 1915 to levy excise duty on weak spirit or wastage arising during re-distillation where the product was chemically unfit and unsafe for human consumption. The governing constitutional and statutory position is that State excise power extends only to alcoholic liquor fit for human consumption, while duty on industrial alcohol or non-potable spirit falls outside that power. On that basis, the demand notices were unsustainable in law and the challenge to them could not succeed.

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Issues: Whether the State could levy excise duty on weak spirit or wastage generated during re-distillation when the sample was found unfit and unsafe for human consumption.

Analysis: The governing provisions in the Bihar and Orissa Excise Act, 1915 confined the State's power of duty to excisable articles, and "excisable article" was limited to alcoholic liquor for human consumption or intoxicating drugs. The weak spirit generated in the manufacturing process was chemically found unfit and unsafe for potable use. The controlling constitutional position, as settled earlier, is that the State lacks authority to levy duty on alcohol not fit for human consumption, and that power lies only with the Centre. The statutory scheme was therefore insufficient to support the impugned demand notices.

Conclusion: The State had no authority to levy excise duty on the weak spirit or process loss that was not fit for human consumption, and the challenge to the demand failed.

Final Conclusion: The demand notices were unsustainable in law, and the appeals were without merit.

Ratio Decidendi: A State can levy excise duty only on alcoholic liquor fit for human consumption, and not on industrial alcohol, weak spirit, or wastage generated in the course of distillation when it is unfit for potable use.

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