S.K.Katriar, J.

1. This writ petition is directed against the order dated 5.9.1994 (Annexure-2), passed by the learned Excise Commissioner, 3 Government of Bihar, whereby he has affirmed the Demand Notice dated 12.5.1994 (Annexure-1), issued under the signature of the In-charge Superintendent of Excise, Mc Dowell Distillery, Hathidah, and the petitioner has been called upon to pay penalty of Rs.29,961 OOP for non-payment of the duties of excise under the Bihar Excise Act, 1915 (hereinafter referred to as "the Act"), read with the Rules dated 29.4.1919, framed by the Board of Revenue under Section 90 of the Act (hereinafter referred to as "the Rules"), for not paying duties of excise on the loss in transit beyond the permissible limit.

2. A brief statement of facts essential for disposal of this writ petition may be indicated. The petitioner is a Public Limited Company having its manufacturing unit at Hathidah, District-Patna. It relates to manufacture of Extra Neutral Alcohol (ENA in short), which is an improved version of spirit, is an industrial product, and is also used as a raw material for manufacture of alcohol fit for human consumption. During the period 1992-93, it had transported 1,85,476.00 L.P. Litres of ENA to Serampore Distillery and Chemicals Cooperative Ltd., West Bengal (hereinafter referred to as the Bengal Distillery). Its excise register under the Act and Rules jointly maintained by the Department and the petitioner disclosed supply of 1,85,476.00 London Proof Liters (L.P.L. for short), of ENA to the Bengal Distillery during the period 1992-93. It further disclosed that 1,83,801.90 LPL was stored at the destination. There was thus a total wastage of 1674.10 LPL in transit. According to the authorities, Rule 33 of the Rules permits admissible wastage of .5% only i.e., 1,008.30 LPL. There was thus an excess wastage of 665.80 L.P.L. occasioned by evaporation and leakage in the tanker during the course of transit. This was detected during the course of audit of the register maintained jointly. Extract of Audit No. 78/93-94 (Item No. 5), is marked as Annexure-1A, which, inter alia, stated that penal duty of Rs.29,961 OOP (Rs. 45/- per L.P.L.), was imposed upon the petitioner. This was followed by the demand notice bearing memo No. 328, dated 12.5.1994 (Annexure-1).

2.1. The petitioner challenged the same by preferring an appeal in terms of Section 8(2) of the Act, which was rejected by the learned Excise Commissioner by the impugned order. The Department had taken the stand that the penalty has been imposed for not paying the requisite prescribed duties on the amount of wastage beyond the prescribed permissible limit of wastage. The concluding portion of the impugned order is reproduced hereunder: "Finally the petitioner has challenged the right to levy excise duty by the State. The contention is that State can levy duty only on potable liquor and not on rectified spirit. In this case the Extra Neutral Alcohol was exported under bond for manufacture of IMFL. The purpose of export was to manufacture potable liquor. Thus, it was not duty on rectified spirit but on potable spirit."

Hence this writ petition.

3 While assailing the validity of the impugned order, learned counsel for the petitioner submits that no duties of excise is payable on ENA because it is not fit for human consumption. He has taken us through the relevant provisions of the Constitution of India, the Act, and the Rules.

He has also relied upon the following reported judgments : (i) New Swadeshi Sugar Mills Ltd. V/s. State of Bihar, 1983 P.L.J.R. 105.

(ii) The same was upheld by the Supreme Court, by its order dated 24.8.1994, in State of Bihar V/s. New Swadeshi Sugar Mills Ltd. & Anr.(2003)11 SCC 478.

(iii) State of Bihar V/s. Industrial Corporation Pvt. Ltd. and Others (2003)11 SCC 465 [: 2003(4) PLJR (SC)231], (paragraph 24).

(iv) State of U.P. and others V/s. Modi Distillery and Others (1995)5 SCC 753, and

(v) McDowell & Company Ltd. V