1981 (3) TMI 89 - HC - Central Excise

Summary

Issues Involved:
1. Legality of the restriction on the manufacture of restricted preparations using more than 10% of the annual alcohol quota.
2. Compliance with the previous court judgment (W.P. 100 of 1977).
3. Authority of the licensing authority to impose additional conditions on the license.

Detailed Analysis:

1. Legality of the Restriction on the Manufacture of Restricted Preparations Using More Than 10% of the Annual Alcohol Quota:
The respondent, holding a license in form L-1 under the Medicinal and Toilet Preparations (Excise Duty) Rules, 1956, was restricted by a circular dated 13-11-1975, which stated that L-1 licensees should not manufacture any restricted preparations by using more than 10% of the annual quota of alcohol allotted to them. This restriction was challenged in W.P. 100 of 1977, and the court held that such restrictions were not in accordance with the Act and the Rules made thereunder. The court referenced the decision in M/s. Enoch Pharma v. State of Kerala, AIR 1965 Ker. 280, which held that the Act did not confer any power on the licensing authority to impose such restrictions. The court observed that the restrictions imposed were measures to prevent the misuse of medicinal preparations to enforce the prohibition policy, which is not warranted under the Act and the Rules.

2. Compliance with the Previous Court Judgment (W.P. 100 of 1977):
Despite the judgment in W.P. 100 of 1977, the appellants did not implement the court's direction, leading to the respondent filing W.P. 558 of 1980. The court in W.P. 558 of 1980 reiterated that the authorities are bound to obey and implement the judgment in W.P. 100 of 1977. The appellants' subsequent actions, including the endorsement in the respondent's license stating that the 10% ceiling was not applicable for 1980-81, were inconsistent with the court's judgment. The court emphasized that the restrictions imposed were beyond the powers vested in the appellants and were opposed to the decision in W.P. 100 of 1977.

3. Authority of the Licensing Authority to Impose Additional Conditions on the License:
The appellants argued that the 10% limitation was in the public interest and within the powers of the authority acting under the Act and the Rules. They contended that the order in W.P. 100 of 1977 could not prevent the proper authority from exercising its powers and that the licensing authority could impose additional conditions at the time of issuing or renewing the license. However, the court found that the Act and the Rules did not provide any authority for the Board to levy such a ceiling. Rule 84(2) and Rule 142 were cited, but the court concluded that these rules did not support the imposition of the 10% restriction. The court held that such restrictions were unwarranted and were made only to effectively implement the prohibition policy, which was not justified under the Act and the Rules.

Conclusion:
The court dismissed the writ appeal, holding that the restrictions imposed by the appellants were not warranted under the Act and the Rules made thereunder. The court reiterated the decision in W.P. 100 of 1977 and the ruling in M/s. Enoch Pharma v. State of Kerala, AIR 1965 Ker. 280, and awarded costs to the respondent.