TaxTMI 
TaxTMI 
2010 (8) TMI 1065
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....d the permissible limit. 2. A brief statement of facts essential for disposal of this writ petition may be indicated. The petitioner is a Public Limited Company having its manufacturing unit at Hathidah, district Patna. It relates to manufacture of Extra Neutral Alcohol (ENA in short ), which is an improved version of spirit, is an industrial product, and is also used as a raw material for manufacture of alcohol fit for human consumption. During the period 1992-93, it had transported 1,85,476.00 L.P. Litres of ENA to Serampore Distillery and Chemicals Cooperative Ltd., West Bengal (hereinafter referred to as the Bengal distillery) . Its excise register under the Act and Rules jointly maintained by the Department and the petitioner disclosed supply of 1,85,476.00 London Proof Liters (L.P.L. for short), of ENA to the Bengal Distillery during the period 1992-93. It further disclosed that 1,83,801.90 LPL was stored at the destination. There was thus a total wastage of 1674.10 LPL in transit. According to the authorities, Rule 33 of the Rules permits admissible wastage of .5% only i.e., 1,008.30 LPL. There was thus an excess wastage of 665.80 L.P.L. occasioned by evaporation and leak....
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....o- fold informations, namely, the date of delivery of the product in question at the destination, and the extent of loss in transit. 5. We have perused the materials on record and considered the submissions of the learned counsel for the parties. We have to examine the relevant provisions cited by the learned counsel for the parties in respect of their respective stand. The issues are not Res Integra, have been decided by a Division Bench of this Court, and upheld by the Supreme Court. Just the same issues fell for consideration of this Court as well as the Supreme Court, which have been relied upon by the petitioner. Except the case of State of U.P. Vrs Modi Distillery (Supra), the other four judgments dealt with the Act and Rules and the Constitution. 6. The first judgment on this point is of a Division Bench of this Court in New Swadeshi Sugar Mills Ltd. Vrs. State of Bihar (Supra ). That was a case where rectified spirit was sought to be subjected to levy under the Act on the ground that it was converted into liquor fit for human consumption at a later stage. The Division Bench rejected the contention and held as follows:- "18) Rule 33, in order to protect the interest....
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.... (c) of section 13, or (f) any excisable article manufactured in any distillery or brewery licensed, established, authorized or continued under this Act." (2) A duty, at such rate or rates as the State Government may direct, may be imposed, either generally or for any specified local area, on any tari drawn under any license granted under section 14, sub-section (1)" 7.1 It was further held therein that ENA , an industrial item not fit for human consumption, can be put to diverse commercial use other than human consumption, and is rendered fit for human consumption after it is used as raw material. The Division Bench examined various constitutional provisions and reached the conclusion that no duties of excise under the Act and Rules can be levied on ENA before it is rendered fit for human consumption. The judgment of this Court was handed on 13.10.1982, and the impugned order was passed on 05.09.1994. This judgment was clearly indicated in the petitioner's memorandum of appeal before the learned Excise Commissioner. He was bound by the same and ought to have followed the same. The relevant portion of the memorandum of appeal is reproduced herein below: ....
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....), and approved the legal position enunciated by this Court. Paragraph- 24 of the judgment is reproduced herein below : "How far and to what extent the said observations are correct need not be considered by us but suffice it to point out that this decision had not noticed the earlier decision given by a Bench of three learned Judges in Modi Distillery. Modi Distillery applies on all fours to the facts of the present case and we are bound thereby. Even otherwise, it appears that the question as to whether any excise duty can be levied by the State upon the industrial alcohol or rectified spirit usable for industrial purposes is concluded by a decision of this Court in State of Bihar v. New Swadeshi Sugar Mills Ltd. which arose out of a judgment of the Patna High Court in New Swadeshi Sugar Mills Ltd. v. State of Bihar." 10. Identical issues under the U.P. Excise Act 1910, read with U.P. Excise Act 1910, fell for the consideration of the Supreme Court in the case of State of U. P. Vs. Moddi Distillery and others ( Supra). The Supreme Court took the same view as in the aforesaid case, namely, ENA is an industrial product, unfit for human consumption, and cannot as such be....
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....y judgments of the Apex Court cited on behalf of the petitioner on the basis whereof it can safely be held that State cannot levy excise duty on rectified spirit or other kind of alcohol unfit for human consumption and it cannot do so even by resorting to levy penalty on the ground of alleged loss or inefficiency in the system of a distiller engaged in manufacture of industrial alcohol, rectified spirit or any alcoholic liquor unfit for human consumption. 12. It is thus evident that duties of excise under the Act and the Rules is not leviable on ENA because it is unfit for human consumption. In that view of the matter, no duty can be imposed on the losses for the product in transit, and is beyond the scheme of the Act and Rules. Penalty follows assessment. When assessment cannot be done, there cannot be the question of imposition of penalty. When the foundation is gone, where is the question of the superstructure. Putting the same thing in other words, borrowing an expression from criminal jurisprudence, the question of sentence arises only after conviction. 13. We would like to observe that the authorities under the Act and the Rules should promptly implement pronouncements ....