Full Judgment Text
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PETITIONER:
MOHAN MEAKIN BREWERIES LTD.
Vs.
RESPONDENT:
COMMISSIONER OF EXCISE, BIHAR & ORS.
DATE OF JUDGMENT:
17/10/1968
BENCH:
BACHAWAT, R.S.
BENCH:
BACHAWAT, R.S.
HIDAYATULLAH, M. (CJ)
SIKRI, S.M.
MITTER, G.K.
HEGDE, K.S.
CITATION:
1970 AIR 1171 1969 SCR (2) 457
ACT:
Bihar & Orissa Excise Act (2 of 1915), ss. 27, 28 and r.
147--Increase in duty on liquor--Increased rate whether
leviable on goods imported after payment of duty before date
from which increased duty payable--Rule 147, proviso whether
justifies realisation of enhanced levy in such case.
HEADNOTE:
The petitioner was a company manufacturing Indian made
foreign liquor in Himachal Pradesh and Uttar Pradesh.It had
depots for sale of its products at Patna and Ranchi in the
State of Bihar. Before October 13, 1967 it .imported
foreign liquor into the State of Bihar from Himachal Pradesh
and Uttar Pradesh for purposes of sale at its Patna and
Ranchi depots on payment of duty at the then current rate.
Duty on liquor from Himachal Pradesh was paid upon or before
importation by making deposits in the State Bank of India at
Patna and Ranchi. Duty on liquor from Uttar Pradesh was paid
on importation by making deposits with the government of
that State. By notification dated October 13, 1967 duty
on foreign liquor was enhanced with. effect from November 1,
1967. The Superintendent of Excise, Patna directed the
company to pay the, difference in duty on the opening
balance of Indian made foreign liquor in its stock on
November 1, 1967. The company challenged the demand in a
writ petition under Art. 32 of the Constitution. Apart from
ss. 27 and 28 of the Act the respondent State relied on the
proviso to r. 147 of the Rules made under s. 90 of the Act.
HELD i (i) The foreign liquor was imported before November
1, 1967 on payment of duty at the current rate in the manner
indicated in s. 28(a)(i). Duty on imported foreign liquor
was enhanced with effect from November 1, 1967. Sections 27
and 28 did not authorize the levy of the enhanced duty on
the liquor imported before November 1, 1967 but lying with
the importer on that date.
(ii) A close scrutiny of r. 147 reveals that the main part
and the proviso deal with the same subject-matter. The
expression "an excisable article" in the proviso means
foreign liquor imported under .bond and other articles on
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which duty is payable. before removal from the excise
warehouse or distillery where they are kept. It is for this
reason that under the proviso the difference of duty is
realised from or credited to the licensee to whom the
article has been issued from the excise warehouse or
distillery on payment of duty prior to such revision.
The proviso does not apply to all imported foreign liquor.
It applies only to foreign liquor imported under bond, that
is to say, foreign liquor on which duty has been levied
under s. 28(a)(ii) by payment upon issue, for sale from an
excise warehouse. It does not apply to foreign liquor not
imported under bond upon which duty has been levied under
s. 28(a)(i). The petitioner’s foreign liquor was not
imported under bond. The petitioner was therefore not
liable to pay under the proviso
3 Sup.C.I./69--12
458
to r. 147 the difference of duty in respect of its stock of
foreign liquor on November 1, 1967. The demand for payment
of the difference of duty in respect of this stock was not
authorized by the Act or the proviso to r. 147. [460 C--F]
JUDGMENT:
ORIGINAL JURISDICTION: Writ Petition, No. 14 of 1968.
Petition under Art. 32 of the Constitution of India for
enforcement of the fundamental rights.
M.C. Chagla, S.K. Mehta, K.L. Mehta and S.K. Khanna, for the
petitioners.
C.K. Daphtary, Attorney-General and D.P. Singh, for the
respondents.
The Judgment of the Court was delivered by
Bachawat,J. The petitioner company, Mohan Meakin
Brewenes Ltd., manufactures and soils Indian made foreign
liquor. Its distilleries are situated at Solan in Himachal
Pradesh and at Lucknow and Mohan Nagar in Uttar Pradesh. It
has depots for sale of its products at Patna and Ranchi in
the State of Bihar. Before October 13, 1967 it imported
foreign liquor into the State of Bihar from Solan, Lucknow
and Mohan Nagar for purposes of sale at its Patna and Ranchi
depots on payment of duty at the then current rate of Rs.
14.40 L.P. litres. Duty on the liquor from Solan was paid
upon or before importation by making deposits in the State
Bank of India at Patna and Ranchi. Duty on the liquor from
Lucknow and Mohan Nagar was paid upon importation by making
deposits with the Uttar Pradesh Government.’
By a notification, dated October 13, 1967 duty on
foreign liquor was enhanced from Rs. 14.40 to Rs. 26.20 per
L.P. litres with effect from November 1, 1967. By an order,
dated January 3, 1968 the Superintendent of Excise, Patna,
directed the Company to pay by January 31, 1968 the
difference in duty on the opening balance of India made
foreign liquor in its stock on November 1, 1967. In this
writ petition under Art. 32 of the Constitution the Company
challenges the legality of the levy.
Duty on foreign liquor imported into the State of "Bihar
is chargeable under s. 27(1)(a) of the Bihar and Orissa
Excise Act, 1915 (Bihar and Orissa Act H of 1915). Subject
to any rules made under s. 90 clause (12), the duty may be
levied under s. 28 (a) in two ways. The first method as
indicated in s. 28 (a) (i) is by payment upon or before
importation either in the State of Bihar or in the State or
territory from which the article is brought. This method is
followed when the liquor is not imported under bond. The
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second method as indicated in s. 28 (a)(ii) is by payment
upon issue for sale from a warehouse established, authorized
or continued under the Act. In view of the first pro-
459
viso to s. 28 the payment is made at the rate of duty in
force on the date of issue of the article from the
warehouse. This method is followed when the liquor is
imported under bond. The form the bond at page 215 of the
Bihar and Orissa Excise Manual, Vol. II, Part I, issued in
1957 shows that foreign liquor imported under bond is kept
without payment of duty in a warehouse established with
the approval of the Excise Commssioner under s. 15. In view
of s. 17 no article can be removed from the warehouse unless
duty has been paid or a bond has been executed for the
payment thereof.
In the present case, the foreign liquor was imported
before November 1, 1967 on payment of duty at the current
rate in the manner indicated ins. 28(a)(i). Duty on
imported foreign liquor was enhanced with effect from
November 1, 1967. Sections 27 and 28 do not authorize the
levy of the enhanced duty on the liquor imported before
November 1, 1967 but lying with the importer on that date.
Section 28, however, is subject to any rules that may be
made by the Board of Revenue, Bihar, under s. 90 clause
(12). The State of Bihar seeks to justify the levy of the
enhanced duty on the stock of imported foreign liquor lying
with the petitioner on November 1, 1967 under the proviso to
Rule 147 ,framed by the Board of Revenue. That Rule is as
follows :--
"147. The duty imposed on
(i) foreign liquor and country spirit--
(a) imported under bond, or
(b) manufactured in a distillery, and stored
in a distillery or excise warehouse;
(ii) Ganja and Bhang--
(a) imported under bond, or
(b) stored in ’an excise warehouse,
shall be paid before removal from the distillery or
excise warehouse unless a bond has been executed for such
payment.
Provided that in case of any revision in the rate of
duty on an excisable article, the difference of duty shall
be realised from or credited to the licensee, to whom such
article has been issued on payment of duty prior to such
revision, according as the revised rate of duty is higher or
lower than the old rate and the ’calculation of the
difference of duty shall be made on the quantity of such
article that may remain in possession of such licensee when
the revised rate of duty comes into force."
460
The main part of Rule 147 applies to foreign liquor
imported under bond which, as already stated, is kept in an
excise warehouse established under. the Act. It provides
that’ duty imposed on foreign liquor imported under bond
shall be paid before removal from the excise warehouse
unless a bond has been executed for such payment. Under
the proviso to Rule 147 in case of any revision of the rate,
of duty on an excisable article, the license to whom the
article has been issued on payment of duty prior to such
revision is liable to pay the difference of duty on the
quantity of such article that may remain in his possession
when the revised rate of duty comes into force. The proviso
must be construed with reference to the main part of the
Rule. A close scrutiny of the Rule reveals that the main
part and the proviso deal with the same subject-matter. The
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expression "an excisable article" in the proviso means
foreign liquor imported under bond and other articles on
which duty is payable before removal from the excise
warehouse or distillery where they are kept. It is for this
reason that under the proviso the difference of duty is
realised from or credited to the licensee to whom the
article has been issued from the excise warehouse or
distillery on payment of duty prior to such revision. The
proviso does not :apply to all imported foreign liquor. It
applies only to foreign liquor imported under bond, that is
to say, foreign liquor on which duty has been levied under
s. 28(a)(ii) by payment upon issue for sale from an excise
warehouse. It does not apply w foreign liquor not imported
under bond upon which duty has been levied under s. 28 (a)
(i). The petitioner’s foreign liquor was not imported
under bond. The petitioner is not, therefore, liable to pay
under the proviso to Rule 147 the difference of duty in
respect of its stock of foreign liquor on November 1, 1947.
The demand for payment of the difference of duty in respect
of this stock is not authorised by the Act or the proviso to
Rule 147.
The petitioner also challenged the constitutionality of
s. 27 and the rites of the proviso to Rule 147. In view of
our conclusions aforesaid, it is not necessary to decide
these questions.
In the result, there will be an order in terms of
(a) (iii) and (b) of the petition. The order of the
Superintendent of Excise, Bihar, dated January 3, 1968, copy
whereof is Annexure B,to the petition is quashed and set
aside and the respondents are prohibited from enforcing the
aforesaid order. The respondents shall pay to the
petitioner the costs of the petition.
G.C. Petition allowed.
461