( 1 ) IN all these matters, amongst others, one of the important questions which falls for consideration is whether the appellants-distilleries which are manufacturing rectified spirit could be asked to pay excise duty on manufactured rectified spirit by the authorities functioning under the Andhra Pradesh State Excise Act.

( 2 ) SHOW-CAUSE notices were served on the appellants-distilleries by the authorities acting under the said Act alleging that the appellants did not manufacture rectified spirit as required to be manufactured in the light of the norms alleged in the show-cause notices based on utilisation of molasses. The notices were replied to by the appellants and ultimately orders were passed by the Commissioner of Excise, A. P. State computing the alleged loss in the manufacture of rectified spirit and on that basis excise duties were computed and were directed to be paid by the appellants concerned. They went in writ petitions before the High court. The writ petitions were heard and ultimately dismissed. By obtaining special leave to appeal under Article 136 of the Constitution of India the present appeals have been filed.

( 3 ) WE were informed that these appeals reached hearing before a bench of this court earlier and were heard for a couple of days. Thereafter, hearing could not be completed and the matters were not treated as part-heard. These appeals again reached hearing before us and were heard for a day and half. Amongst other points, learned Senior Counsel, Mr. Sanghi, submitted in the forefront one contention relying upon a Constitution bench judgment of this court in the case of Synthetics ami Chemicals Ltd. v. State of U. P. especially placing emphasis on the observations of the Constitution bench in paras 74, 85 and 86 of the report. He submitted that the State authorities had no power to levy excise duty on rectified spirit manufactured by the appellants-distilleries as rectified spirit which was ethyl alcohol has to be treated as industrial alcohol and it is not fit for human consumption. Consequently, it was outside the legislative powers of the State to levy excise duty on such manufactured rectified spirit. Reliance was also placed in this connection on a three-Judge bench decision of this court in the case of State of U. P. v. Modi Distillery (at p. 761 especially on observations of paras 10,11 and 12 of the said judgment. However, a later judgment of this court rendered by a bench of two learned Judges in the case of Bihardistillery v. Union of India speaking through Jeevan Reddy, J. was also brought to our notice. At pp. 743-744 dealing with rectified spirit manufactured by the distilleries the following observations were made in the said judgment: The line of demarcation can and should be drawn at the stage of clearance/removal of the rectified spirit. Where the removal/clearance is for industrial purposes (other than the manufacture of potable liquor), the levy of duties of excise and all other control shall be of the Union but where the removal/clearance is for obtaining or manufacturing potable liquors, the levy of duties of excise and all other control shall be that of the States. This calls for a joint control and supervision of the process of manufacture of rectified spirit and its use and disposal. We proceed to elaborate: (1 So far as industries engaged in manufacturing rectified spirit meant exclusively for supply to industries (industries other than those engaged in obtaining or manufacture of potable liquors), whether after denaturing it or without denaturing it, are concerned, they shall be under the total and exclusive control of the Union and be governed by the IDR Act and the rules and regulations made thereunder. In other words, where the entire rectified spirit is supplied for such industrial purposes, or to the extent it is so supplied, as the case may be, the levy of excise duties and all other control including establishment of distillery shall be that of the Union. The power