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1992 Supreme(Bom) 345
IN THE HIGH COURT OF BOMBAY
(NAGPUR BENCH)
H.D. Patel, J.
Ramon Distilleries Ltd. and another... Petitioners.
Versus
State of Maharashtra and others.... Respondents.
Writ Petition No. 3084 of 1989 Writ Petition No. 2607 2542 of 1990, decided on 21-7-1992.
Advocates appeared :
V.R. Manohar, A.G. M.G. Bhangde, for the petitioners.
D.N. Kukday, A.G.P., for the respondents Nos. 1 2.
S.A. Bobde, for the respondent No. 3.
Headnote:BOMBAY PROHIBITION ACT, 1949.
Sections 80, 105 & 106-Maharashtra Foreign Liquor (Import & Export) Rules, 1963, Rules 21, 22, 23 (v) Proviso-Levy of excise duty or fees upon agent of exporter-Validity-Interpretation of taxing institute-In absence of provision in substantive Act, not open to State Government to frame rule making agent liable jointly and severally with owner of goods-Such levy not permissible according to law and rules-Proviso held illegal.
The preamble of the Rules shows that the Rules are framed in exercise of powers conferred by Clause (b) of sub-section (2) of Section 143 read with Sections 11,26 (d) and 53 of the Bombay Prohibition Act. Section 11 comes under Chapter III which lays down the various prohibitions. That section deals with manufacture, etc. of intoxicants to be permitted in accordance with the provisions of the Act, Rules, etc. The section does not confer any power upon State Government to provide for levy of excise duty or fees by framing any Rules, upon an agent of the exporter. Section 26 (d) enables the State Government to establish or licence a warehouse, wherein intoxicant or any other exercisable article can be deposited and kept without payment of duty. Even this provision does not empower the State Government to frame a rule making the agent of the exporter liable to pay excise duty and fees. Section 53 provides for general conditions of granting licences etc. and is irrelevant for the controversy at hand.
Under provision of Section 143 (1) of Bombay Prohibition Act the State Government is empowered to make rules regulating the various activities in respect of excisable articles as detailed in the aforesaid clause. To regulate, would mean to control or direct by rules or regulations, to subject to guidance or restrictions. The expression regulate cannot mean conferral of power to impose tax or a fee. It contemplates procedures to be followed in different matters like import or export of IMPFL products and so on. The levy of excise duty and fees on the agent of the exporter can, in no circumstance, be included within the meaning of expression "regulating" used in the section.
Sections 105 and 106-Maharashtra Foreign Liquor (Import and Export) Rules, 1963 Rules 21, 22, 23, 24 and 25-C.P. Excise Rules-R. XII (ii) and (iii)-Indian made foreign liquor (IMEL)-Exported from Maharashtra State-Grievance of non-collection of excise duty by Maharashtra Government.
There being enough material to conclude that the consignments reached its destination in the State of Madhya Pradesh, the grievance for non-collection of the duty and fees could be of that State and the State of Maharashtra was not concerned with it The demand made for excise duty and fees under the impugned order was wholly misconceived and not tenable. The orders impugned deserved to be quashed on this Court.
C P. EXCISE RULES.
Rules XII (ii) and (iii).
See, Bombay Prohibition Act, 1949, Sections 105 and 106.
MAHARASHTRA FOREIGN LIQUOR (1MPORT AND EXPORT) RULES, 1963
Rules 21, 22, 23, 24 and 25.
See Bombay Prohibition Act, 1949, Sections 105 and 106.
Rules 21, 22, 23 (v) Proviso.
See Bombay Prohibition Act, 1949, Sections 80, 105 and 106.
Rule 25 (3) (4)-Demand for payment of excise duty-Non-issuance of
show-cause notice before making demand for giving explanation.
Held, such demand in violation of Circular No. ABD-1003/iv, dated 18-3-1983. Demand not liable to be sustained being void, illegal and non set on ground of violation of principles of natural justice.
2. In Writ Petition No. 3084 of 1989 the petitioners have prayed for quashing the order dated 29th August, 1989/20th September, 1989, passed by the Collector, Nagpur whereunder a sum of Rs. 1,17,14,025.00 on account of excise duty and transport fees was demanded for committing alleged breach of Rule 25(3)(4) and (6a) of the Maharashtra Foreign Liquor (Import and Export) Rules (hereinafter referred to as "the Rules"). Similarly, the petitioners have also challenged the order dated 16th October, 1989 also passed by Collector, Nagpur demanding the sum of Rs. 64,55,426.60 on account of Excise Duty and Transportation Fees for alleged breach of the rules referred to above. It is alleged in those notices that in enquiry held by the Special Enquiry Officer , it transpired that on the basis of Import permit submitted by the petitioners, export passes were obtained and Indian Made Foreign Liquor (for short 'IMFL') was exported on PLL licence. It is alleged that the import permits, the list of which is given in Appendix annexed produced by the petitioners and their agents for obtaining Export Passes are false and fake and not issued by the Officer of Collector, Hoshangabad (Madhya Pradesh), so also the acknowledgements of the Certificates in Form Certificate-3, regarding delivery of IMFL after obtaining false and forged signatures. It is further alleged that the goods were exported on the basis of false import permits and thereby violated the condition of Form 'H' Bond submitted for exporting IMFL.
3. In Writ Petition No. 2607 of 1990 the petitioner has prayed for quashing and setting aside orders dated 16-5-1989, 16-2-1990, 23-4-1990 and 27-7-1990. Under order dated 16-5-1989 the sum demanded was Rs. 8,17,425/- on account of Excise Duty and Transport fee for alleged breach of Rule 25(3) and (6) of the rules. Similarly, under order dated 16-2-1990 and 23-4-1990 the demand was for Rs. 13,85,579.00 and Rs. 6,76,774.00 respectively. The figure Rs. 6,76,774/- was, however, corrected to Rs. 4,50,774/- by order dated 27-7-1990. Identical allegations are made even in these orders that IMFL was exported under the forged import permits to different class of importers.
4. In Writ Petition No. 2542 of 1990 the petitioners prayed for quashing and setting aside the order dated 23-4-1990 whereunder the demand made was for Rs. 2,26,098/- for alleged breach of Rule 25(3),(4) and (6a) of the Rules.
5. In order to appreciate the challenge, some facts as they emerge from the records would be relevant. The petitioner No. 1 and respondent No. 3 entered into an agreement dated 10-1-1985, under which the petitioner No. 1 agreed to manufacture IMFL at its distillery in Nagpur and supply the same to respondent No. 3. On going through the agreement, it is clear that IMFL was to be prepared by respondent No. 3 at the distillery of petitioner No. 1, the main process of manufacture being carried out by their representatives posted at the distillery out of raw materials including spirit supplied by them. The bottling, labelling, sealing and packing was to be done by the respondent No. 3. The transportation of the packed IMFL products was to be done at the cost of respondent No. 3, whenever and wherever it was instructed by respondent No. 3.
6. The said agreement was sent to Commissioner of Prohibition and Excise followed by request from the petitioner No. 1 to approve the Bromides of the labels. The request was granted subject to certain conditions. One of them was regarding the words to be used on lables. The labels should specify in clear words "Blended and Bottled by......(name and address of Distillery) for Tilaknagar Distillery and Industries Limited." This clearly indicates that IMFL manufactured at the Distillery of petitioner No. 1 was for and on behalf of the respondent No. 3.
7. The first and foremost contention
