JUDGMENT

Kirpal, J.-The challenge in this appeal is to the decision of the High Court relating to levy of excise duty on the beer brewed by the respondent.

2. This appeal arises from the decision of the High Court which had allowed the respondent s writ petition and quashed the demand raised by the appellant in respect of the years 1986-87, 1987-88 and 1988-89. According to the appellant, this demand was raised because the wastage which was shown by the respondent in the brewing of beer was more than 10 per cent prior to the year 1986-87 and 7 per cent thereafter.

3. In order to understand the controversy, it is necessary to first examine the process in connection with the manufacture of beer. This process has been referred to by this Court in Mohan Meakin Ltd. v. Excise and Taxation Commissioner, H.P. and Ors. [1997(2) SCC 193] and described at page 196 as follows:-

"The first stage brewing process is the feeding of malt and adjuncts into a vessel known as Mash Tin. There it is mixed with hot water and maintained at certain temperature. The objective of this process is to convert the starches of the malt into fermentable sugar.

The extract is drawn from the Mash Tin and boiled with the