R.11 of the Kerala Rectified Spirit Rules authorizes duty levy only on imported rectified spirit, and the levy is just and reasonable, advancing the object of the Act.

Malimath, C.J.

This appeal is by the State Government, Board of Revenue and the Circle Inspector of Excise, challenging the judgment of the learned single judge in O.P.No. 9755 of 1985, which is the common judgment in O.P.No.4498 of 1983 as well. The relevant facts necessary for the disposal of this case may briefly be stated as follows: The respondent, M/s. McDowell & Company Limited, Varanad, Sherthallai, Alleppey District, is a company engaged in the manufacture of liquor at their distillery at Varanad, Sherthallai. They function under the relevant license issued under the relevant provisions of the; Act and the rules made there under. In connection with their manufacturing activities, the respondent imported certain quantities of rectified spirit from the State of Maharashtra during the years 1980-81,1981-82 and 1982-83 under a permit, presumably under R.4 of the Kerala Rectified Spirit Rules, 1972 (hereinafter referred to as the rules ). When the imported rectified spirit was actually measured on its arrival in Kerala, it was found that there was excess shortage in/transit above the admissible quantity of wastage prescribed by the relevant rules. The appellants demanded duty on excess wastage as per Ext.P2. A request made for not levying duty on excess wastage on an earlier occasion appears to have been rejected as per Ext.P4 dated 25-5-1984 on the ground that there is no merit in the request. It is in this background that the respondent presented O.P.No. 9755 of 1985 challenging Exts.P2 and P4 and further praying for declaring that rule 7(5) of the Kerala Foreign Liquor (Compounding, Blending and bottling) Rules, 1975 and R.11 of the Kerala Rectified Spirit Rules are contrary to the provisions of the Kerala Abkari Act and beyond the rule making power of the Government under S.29 of the said Act. The learned Single Judge by his judgment dated 25-11-1986 allowed the writ petition and quashed Exts.P2 and P4 and directed the Board of Revenue to re-consider the entire matter with notice to the respondent and to pass final orders within a period of two months from the date of receipt of the copy of the judgment. It is the said judgment that is challenged in this appeal.

2. The learned single judge has taken the view that the appellants were not able to justify the levy of duty on excess wastage of rectified spirit beyond the admissible limit on of any statutory provision. On behalf of the appellants, it appears that S.6 of the Abkari Act and R.7(5) of the Kerala Foreign Liquor (Compounding, Blending and bottling) Rules, 1975 and R.55(4) of the Kerala Distillery and Warehouse Rules were invoked. The learned single judge has come to the conclusion that none of these provisions authorize the levy of duty on excess wastage.

3. The principal submission of Smt. Seemanthini, the learned High Court Government Pleader, appearing for the appellants is that rule 11 of the Rules is the relevant provision which authorizes levy of duty on excess wastage and not the various provisions pressed into service before the learned single Judge. We shall briefly advert to the relevant provisions of the Abkari Act, in this connection.

4. S.3(10) of the Abkari Act defines 'liquor' to include 'spirits of wine, methylated spirits, spirits, wine, toddy, beer all liquid consisting of or containing alcohol'. Rectified Spirit being admittedly liquor consisting of alcohol it answers the definition of the expression 'liquor' in S.3 of the Act. S.3(1) of the Act defines the word 'import' as meaning "to bring into the State". Sub-section (1) of S.(6) Provides that "No liquor or intoxicating drug shall be imported unless the permission of the Government or any officer authorized by the Government in this behalf is obtained for the importation of such liquor or intoxicating drug and unless the duties, taxes, fees, and such other sums as are due to the Government under this Act, in respect of such liquor or intoxicating drug, have been paid". S.17 of the A