2011 (7) TMI 1122 - HC - Central Excise

Summary

Issues Involved:
The judgment involves a challenge to a notification regarding increased overtime fees for staff at a distillery, based on the U.P. Excise (Establishment of Distillery) Rules, 2007. The issues raised include lack of statutory backing for the amendment, lack of correlation with services rendered, violation of legal precedents, and excessive imposition of charges.

Grounds of Challenge:
1. The petitioners challenge the notification on the grounds of lack of statutory backing for the amendment in overtime fees.
2. They argue that the enhancement of overtime charges lacks basis and does not correlate with services provided by the State Excise Department.
3. The petitioners cite legal precedents, such as the Bimal Chand Banerjee case, to support their claim against the notification.
4. Reference is made to a case involving J & K Distillery Rules being declared ultra vires, further supporting the challenge.
5. The petitioners also rely on legal precedents like The Indian Mica and Micanite Industries Ltd. case to contest the notification.
6. The petitioners argue that overtime charges can only be levied under specific conditions, as per Rule 12.

Judicial Analysis:
The judgment refers to the Gupta Modern Breweries case, which quashed a similar notification and directed for fee refund, highlighting the lack of statutory backing and arbitrariness in such rules. The legal principles governing supervision charges in liquor trade are discussed, emphasizing the need for regulations to be non-arbitrary and non-discriminatory.

Legal Framework:
The judgment delves into the U.P. Excise Act, 1910, which grants powers to the Excise Commissioner to make rules regarding fees, licenses, and privileges related to intoxicants. Sections 41 and relevant rules are cited to establish the legal basis for imposing fees and regulations on distilleries.

Rule Amendments and Justification:
The judgment explains the amendments to Rule 9 and Rule 12, which govern the appointment of officers at distilleries and the payment of overtime fees. It argues that the rates of overtime fees had not been changed for 45 years, and the current rules are not ultra vires the act.

Decision and Rationale:
The court dismisses the writ petitions, stating that the rules are not ultra vires the act and are not excessive. It emphasizes that the overtime fees are a condition of the license and are connected to the privilege of operating a distillery. The judgment concludes that the rules are reasonable and do not cause undue hardship to distillers.