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TMI Blog1995 (8) TMI 300X X X X Extracts X X X X X X X X Extracts X X X X ..... MENT BHARUCHA. J. Leave granted. These are appeals filed by the State of Uttar Pradesh against judgments and orders of the Allahabad High Court dated 9th March 1979 and 11th October,1979, and orders that followed the same. The High Court allowed writ petitions filed by the respondents, who are manufacturers of Indian made foreign liquor, and quashed the orders impugned demanding excise duty from them. The High Court in the judgment dated 11th October,1979, categorized the demands into four groups. In Group A the demands for excise duty were on the wastage of Indian made foreign liquor (IMFL) which was exported outside the State of Uttar Pradesh. Group B related to demands made for excise duty on wastage, during transportation in containers, of high strength spirit, of 80 to 85%, from distillery to warehouse. Group C related to the demand of excise duty on obscuration . Group D related to excise duty sought to be levied on pipeline wastage. The judgment of the High Court dated 9th March, 1979, related only to duty on obscuration (i.e.,Group C ). It is convenient to state immediately that the issue relating to Group A that is, the demands for excise duty on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt shall direct, may be imposed, either generally or for any specified local area, on any excisable article- (a) imported in accordance with the provisions of Section 12(1); or (b) exported in accordance with the provisions of Section 13; or (c) transported; or (d) manufactured,cultivated or collected under any licence granted under Section 17; or (e) manufactured in any distillery established, or any distillery or brewery licensed, under Section 18: Provided as follows- (i) duty shall not be so imposed on any article which has been imported into India and was liable on such importation to duty under the Indian Tariff Act, 1894, or the Sea Customs Act,1887. Explanation - Duty may be imposed under this section at different rates according to the places to which any excisable article is to be removed for consumption. or according to the varying strength and quality of such article. (2) The State Government shall, in imposing an excise duty or a countervailing duty as aforesaid and fixing its rate, be guided by the directive principles specified in Article 47 of the Constitution of India. (3) Such duty shall not exceed the maximum as provided hereinafter :- (a) Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd sophisticated or coloured so as to resemble in flavour or colour liquor imported into India; and rectified spirit- (a) Ale, beer, porter, cider and other fermented liquors 5per litre. (b) Perfumed spirit (other than medicinal and toilet preparations) 15per litre. (c) Wines 8per litre. (d) Liquors, cordials, mixtures and other preparations containing spirit not otherwise specified (other than drugs and medicines) 70per litre. (e) Brandy , gin, whisky, rum, rectified spirit and other sorts of spirit not otherwise specified 60per litre of alcohol. 3. Ganja 300 per kg. 4. Bhang 25 per kg. (e) Excise duty on excisable articles manufactured in any distillery establsihed, or any distillery or brewery licensed, under Section 18- 1. Country liquor 20 per litre. (excepting tari and other fermented alcoholic beverages) 2. Liquor manufactured in India and sophisticated or coloured so as to resemble in flavour or colour liquor imported into India; and rectified spirit- (a) Ale, beer, porter, cider and other fermented liquors 5per litre. (b) Perfumed spirit (other than medicinal and toilet preparations) 15per litre. (c) Wines 8 per litre. (d) Liquors, cordials, mix ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ohol. Dictionaries and technical books showed that rectified spirit (95 per cent ) was an industrial alcohol and not potable as such. It appeared, therefore, that industrial alcohol, which was ethyl alcohol (95 per cent), by itself was not only non-potable but was highly toxic. The range of potable alcohol varied from country spirit to whisky and the ethyl alcohol content thereof varied between 19 to about 43 percent, according to the ISI specifications. In other words, ethyl alcohol (95 per cent) was not an alcoholic liquor for human consumption but could be used as a raw material or input, after processing and substantial dilution, in the production of whisky, gin, country liquor, etc. In the light of experience and development, it was necessary to state that "intoxicating liquor" meant only that liquor which was consumable by human beings as it was. What the State seeks to levy excise duty upon in the Gruop B cases is the wastage of liquor after distillation, but before dilution; and in the Group D case, the pipeline loss of liquor during the process of manufacture, before dilution. It is clear, therefore, that what the State seeks to levy excise duty upon is not alcoholic l ..... X X X X Extracts X X X X X X X X Extracts X X X X
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