2004 (3) TMI 812 - HC - Central Excise

Summary

Issues:
Interpretation of Rule 9 and Rule 36A of the Bihar Excise Act regarding establishment charges for licensees.

Analysis:
The judgment dealt with licensees under the Bihar Excise Act who were granted licenses in various forms. The key issue revolved around the demand for establishment charges by the Respondents-authority, which was contested by the Petitioners. The demands were made under Rule 9 and Rule 36A of the Rules under the Bihar Excise Act. Rule 9 pertains to the appointment of officers and establishment by the Commissioner for the charge of a distillery. The judgment referred to a previous case where it was held that Rule 9 is valid but applies only to distilleries licensed solely for the manufacture of denatured spirit or commercial spirit unfit for human consumption. For distilleries licensed for manufacturing potable liquor along with denatured spirit, Rule 9 cannot be used for charging establishment fees.

Regarding specific cases of the Petitioners, those holding composite licenses for manufacturing potable liquor were found not liable to pay establishment charges under Rule 9. However, for Petitioners engaged in compounding and blending of potable foreign liquor, the demand for establishment charges under Rule 36A was deemed valid. The judgment cited precedents where the demand for establishment charges was considered as a price or consideration for granting privileges to licensees.

The Court upheld the validity of Rule 36A and clarified that establishment charges could only be demanded for employees solely engaged in compounding and blending activities. The demand notices in some cases were quashed due to lack of clarity on the excise staff exclusively engaged in these activities. The authorities were directed to determine the number of staff engaged for this purpose and issue fresh demands accordingly. The judgment concluded by allowing all the writ applications with the specified directions for further action.