Rectified spirit, being unfit for human consumption, cannot be subjected to excise duty under the Bihar Excise Act, 1915.

S.K.Katriar, J.

1. This writ petition is directed against the order dated 24.1.1995 (Annexure-1), passed by the Excise Superintendent, Mirganj Distillery, whereby it has been called upon to deposit a sum of Rs. 26,138.75p., being the penal duty in terms of Section 27 of the Bihar Excise Act, 1915 (hereinafter referred to as the Act), on rectified spirit.

2. A brief statement of facts essential for the disposal of this writ petition may be indicated. The petitioner: is the holder of licence in Form No. 28-A of the Act, and is, inter alia, engaged in manufacture of rectified spirit unfit for human consumption. The petitioner had sold and supplied 1,66,350.00 London Proof Litres (hereinafter referred to as the LPL), of rectified spirit to Serampur Distillery & Chemicals Co. Ltd., West Bengal. There was loss in transit on account of evaporation and leakage beyond the permissible limit, namely, 1045.55 LPL (wrongly states as 1065.55 LPL), which was allegedly in excess of the allowable wastage. The Excise Superintendent, therefore, served the impugned notice on the petitioner to deposit a sum of Rs. 26,138.75p. as penal duty, which was deposited under protest on 13.2.1995. A photocopy of the challan is marked Annexure-B to the counter affidavit.

3. Learned counsel for the petitioner submits that rectified spirit is unfit for human consumption and, therefore, no excise duty within the meaning of the Act is leviable thereupon. It is used as raw material for manufacture of alcohol fit for human consumption and can be subjected to the duties of excise under the Act. He relies on the following reported judgments:

(i) New Swadeshi Sugar Mills Ltd. V/s. State of Bihar, 1983 PLJR 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/s. State of Bihar and Others, 2006(4) PLJR 269 (paragraph 13).

4. We have perused the materials on record and considered the submissions of learned counsel for the parties. Identical issues came up for consideration before us in C.W.J.C. No. 8691 of 1994* (Mc Dowell Company Ltd. V/s. The State of Bihar and Others), which has been allowed with interest at the rate of 18%, and costs quantified at Rs. 25,000/- (Twenty-five thousand), by judgment dated 17.8.2010, on just the same grounds. The petitioner is also supported by a judgment of a learned Single Judge of this Court in S.K.G. Sugar Ltd. V/s. State of Bihar and Others, reported in 1992(2) B.L.J. 587 [ 1992(2) PLJR 765]. It is now well established that rectified spirit is unfit for human consumption and cannot, therefore, be subjected to the levy under the Act. In view of the well settled position by decisions of the Supreme Court and the High Court, the impugned notice is arbitrary and a case of purposive harassment.

5. In the result, this writ petition is allowed, and the impugned notice dated 24.1.1995, is hereby set aside. The Superintendent of Excise, Mirganj Distillery, is hereby directed to refund the said sum of Rs. 26,138.75p. alongwith interest at the rate of 18%, with effect from .13.2.1995, till the date of refund. The petitioner shall also be entitled to costs quantified at Rs.25,000/- (Twenty-five thousand), all to be paid together.

Birendra Prasad Verma, J.

6 I agree.