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1992 Supreme(Del) 314
High Court Of Delhi
MODI INDUSTRIES LIMITED - Appellant
Versus
LIEUTENANT GOVERNOR DELHI - Respondent
Civil 1189 of 1980
Decided On : 05/27/1992
D.S.Narula, S.K.MAHAJAN
Headnote:Punjab Excise Act, 1914 - Section 16 Delhi country liquor Bonded Warehouses Rules 1976 - Rule 31 - Excise duty is payable u/s. 16, on the import of, liquor into Delhi Payment of duty can not be avoided on the ground that there was loss of liquor on account of breakage/leakage in the bonded warehouse when there is no case that the leakage/breakage had occurred on account of fire, theft or any other accident.
Held: The 'excusable article' under the Act means any alcoholic liquor for human consumption or any intoxicating drug. The petitioners contended that the liquor contained in leaked/broken bottles cannot be said to be liquor for human consumption and thus excise duty is not payable. It was never the case of the petitioners that the liquor contained in leaked/broken bottles was not fit for human consumption. The liquor, on which excise duty has been levied by the impugned orders/notice, was imported into Delhi. The breakage/leakage did not take place during transit from distillery to Delhi where the warehouse is located. Petitioners had not set up the case that the liquor was destroyed because it was not fit for human consumption. It cannot therefore, be held that the liquor in leaked/broken bottles was not excisable article. (Para 10)
Further held: The excise duty is payable, under Section 16 of the Act. on the import of liquor into Delhi. The postponement of the time and the manner of the payment of the excise duty because of liquor having been kept in the bond does not mean that the payment of excise duty can be avoided on the ground that there was loss of liquor on account of breakage/leakage in the bonded warehouse. (Para 11)
Result: Petitions dismissed.
( 1 ) BY public notice dated 2nd March 1978 the Commissioner of Excise, Delhi, invited applications from only the working distilleries for the grant of licences in Forms CLW1 and L-9, for running the bonded wharehouses in Delhi for supply of ordinary spiced country liquor during the period from 1. 4. 1978 to 31. 3. 1979. The terms and conditions for grant of licences, inter-alia, were that the licencee shall be bound to observe Delhi Country Liquor Bonded Warehouses Rules 1976, as amended from time to time (for short the Rules ) the Punjab Excise Act, 1914 (I of 1914) as enforced in the Union Territory of Delhi (forhort "the Act and other rules and) regulations framed under the Act and instructions issued by the Excise Commissioner, Delhi, from time to time. The terms also provided that the licencee shall be allowed to import country liquor into Delhi only on execution of a bond for payment of the excise duty on the consignment.
( 2 ) M/s. MODI Industries Ltd (Petitioner in C. W. No. 1189/80) and M/s. Co-operative Company Limited (Petitioner in C. W. 1634/80) filed applications for grant of the licences. By letter of the Collector of Delhi dated 29th March 1978 the petitioners were informed that the Lt. Governor of Delhi had accepted their tenders subject to petitioners executing bonds as required under Section 16 of the Act and on complying with other formalities by the petitioners in terms of the letter of acceptance of tender. The petitioners executed the necessary bonds and completed the other formalities and thus the requisite licences were issued.
( 3 ) DURING the licence period certain quantity of consignment of country liquor imported into Delhi by the petitioners was not issued from the licenced bonded warehouses as the said quantity was found in leaked and broken bottles. There is no dispute about the quantity of such consignment of country liquor which was not issued from the bonded warehouse on account of it having been contained in leaked and broken bottles. The only dispute is whether excise duty is payable or not on such quantity of liquor which was not issued from the bonded warehouses but was part of consignment of country liquor imported into Delhi.
( 4 ) BY notice dated 22nd March 1980 the Collector of Excise informed M/s. Co-operative Company Ltd. that out of the country liquor imported during the period 1. 4. 78 to 31st March 1979 a quantity of 20686. 926 LPL of potable liquor was not issued from the licenced bonded warehouse since the same was found, according to records, to have been contained in leaked and broken bottles, each of 50 degree UP strength and consisting of 50,218 bottles of 750 ML, 8509 bottles of 375 ML and 2886 bottles of 180 ML and duty of Rs. 5,64,339. 35 was leviable under Section 31 of the Act on the said country liquor imported into Delhi and has been agreed by the licencee to be paid on demand. The licencee was called upon to pay the said amount failing which to show cause in writing why further legal action to enforce the recovery of dues may not be taken. The notice was replied by the licencee and the liability to pay was disputed. The Collector of Excise by order dated 19th July 1980 rejected the various pleas taken by the licencee and came to the conclusion that the licencee was liable to pay the excise duty. The appeal preferred by the licencee was dismissed by the Commissioner of Excise by order made on 24th October 1980.
( 5 ) THE petitioner M/s. Co-operative Company Ltd seeks quashing of the order of the Collector initiating the proceedings, impugned order of the Collector dated 19th July 1980 and the impugned order of the Commissioner of Excise dated 24th October 1980.
( 6 ) A show cause notice dated 22nd March 1980 on almost identical facts was also issued to M/s. Modi Industries calling upon it to pay duty of Rs. 4,27,897. 69p. The notice was replied by M/s. Modi Industries and it also disputed the liability to pay the amount. The notice dated 22nd M
