Central Excise - Excisability of ethyl alcohol/ rectified spirit/ special denatured spirit/ ordinary denatured spirit for the period prior to 1-3-1989 - Clarification regarding - Central Excise - 65/90

Central Excise - Excisability of ethyl alcohol/ rectified spirit/ special denatured spirit/ ordinary denatured spirit for the period prior to 1-3-1989 - Clarification regarding Circular No. 65/90 Dated 27-12-1990 [From F. No. 83/3/90-CX.3 (Pt.)] Government of India Ministry of Finance (Department of Revenue) Central Board of Excise and Customs, New Delhi Subject : Central Excise - Excisability of ethyl alcohol/ rectified spirit/ special denatured spirit/ ordinary denatured spirit for the period prior to 1-3-1989 - Clarification regarding. Reference Board's Circular No. 55/89-CX.3 dated 18-9-1989 (F.No. 83/12/89-CX.3), advising therein that the show cause notices issued with regard to the demand of Central Excise duty on ethyl alcohol/rectified spirit/special denatured spirit/ordinary denatured spirit, for the period prior to 1-3-1989 are not to be adjudicated till the writ petitions filed before the Hon'ble Supreme Court in this regard are disposed of. 2. The Hon'ble Supreme Court in the meanwhile, have given their verdict and in paras 88, 89 and 90 of their judgments dated 25-10-1989 [(1990) 1 SSC] in the case of M/s. Synthetics and Chemicals. Ltd. and Other v. State of U.P. and Others, has observed as under :- "88. On an analysis of the aforesaid decisions and practice, we are clearly of the opinion that in respect of industrial alcohol the States are not authorised to impose the impost they have purported to do. In that view of the matter, the contentions of the petitioners must succeed and such impositions and imposts must go as being invalid in law so far as industrial alcohol is concerned. We make it clear that this will not affect any impost so far as potable alcohol as commonly understood is concerned. It will also not affect any imposition of levy on industrial alcohol fee where there are circumstances to establish that there was quid pro quo for the fee sought to be imposed. This will not affect any regulating measure as such... "89. We must however, observe, that these imposts and levies have been imposed by virtue of the decision of this Court in Synthetics Chemicals Ltd. case. The States as well as the petitioners and manufacturers have adjusted their rights and their position on that basis except in the case of State of Tamil Nadu. In that view of the matter, it would be necessary to state that these provisions are declared to be illegal prospectively. In other words, the respondents States are restrained from enforcing the said levy any further but the respondents will not be liable for any refund and the tax already collected and paid will not be refunded. We prospectively declared these imposts to be illegal and invalid, but do not affect any realisations already. made. The writ petitions and the appeals are disposed of accordingly. The review petitions, accordingly, succeed though strictly no grounds as such have been made out but in the view we have taken, the decision in the Synthetics Chemicals Ltd. case cannot be upheld. In the view we have taken also, it is not necessary to decide or to adjudicate if the levy is valid as to who would be liable, that is to say, the manufacturer or the producer or the dealer... "90. With regard to Writ Petition No. 4051 of 1978 (Chemicals Plastics India Ltd. v. State of Tamil Nadu), certain orders were passed by this Court on November, 1, 1978, September 1, 1986, October 1, 1986 and October 10, 1986. It is stated that the present demand of the Central Excise Department from March 1, 1986 on alcohol manufactured by the company in their captive distillery is over Rs. 4 crores. This Court by its order dated October 1, 1986 as confirmed on October 16, 1986 had permitted the State Government to collect the levy on alcohol manufactured in company captive distillery subject to adjustment of equities and restrained the central excise authorities from collecting any excise duty on such alcohol. It is, therefore, necessary to declare that in future no further realisation will be made in respect of this by the State Government from the petitioners. So far as the past realisations made are concerned, we direct that this application for that part of the direction, should in accordance with our decision herein be placed before a Division Bench for disposal upon notice both to the State Government and the Central Government." 3. In this connection, with regard to the demand of duty raised on the goods in question for the past period prior to 1-3-1989, that the Collectorates located in all States except the State of Tamil Nadu, may take action according to paras 88 and 89 of the above-mentioned Supreme Court Judgment. All Collectorates located in the State of Tamil Nadu are advised to wait for the decision of the Division Bench of the Supreme Court referred to in para 90 of the above judgment.