Basheer, J.

These three appeals are being disposed of by this common judgment since a common issue is involved in all of them.

2. The short question that arises for consideration is whether the State can levy excise duty on rectified spirit which is not fit for human consumption.

3. In Writ Petition No.32187/2005, which is the subject matter of W.A.No.71/2008, a learned Single Judge of this Court answered the above question in the negative and held that Rule 55(4) of the Kerala Distillery & Warehouse Rules 1968 is ultravires and unenforcible in so far as it deals with levy of duty “on wastage exceeding 0.5%. Later, the above decision was followed in two other writ petitions, which are impugned in the other two writ appeals.

4. Before we refer to Rule 55(4) of the Kerala Distillery & Warehouse Rules 1968, it may be profitable to take a look at Chapter 5 of Abkari Act which deals with duties, taxes and rentals. For the sake of convenience, relevant clauses of Section 17 and 18 of the Act (unamended) are extracted hereunder:

“Section 17: Duty on liquor or intoxicating drugs:- A duty of excise or luxury tax or both shall, if the Government so direct, be levied on all liquor and intoxicating drugs –

a) permitted to be imported under Section 6 or

b) permitted to be exported under Section 7 or

c) permitted under Section 11 to be transported or

d) manufactured under any licence granted under Section 12 or

e) manufactured at any distillery, brewery, winery or other manufactory established under Section 14 or

f) issued from a distillery, brewery, winery or other manufactory or warehouse licenced or established under Section 12 or Section 14 or

g) sold in any part of the State

Provided that no duty or gallonage fee or vend fee or other taxes shall be levied under this Act on rectified spirit including absolute alcohol which is not intended to be used for the manufacture of potable liquor meant for human consumption.

Explanation: For the purpose of this Section and Section 18, the expression “duty of excise”, with reference to liquor or intoxicating drugs, include countervailing duty on such goods manufactured or produced elsewhere in India and brought into the State.

Section 18 – How duty may be imposed:-

1) Such duty of excise may be levied:

(a) in the case of spirits or beer, either on the quantity produced in or passed out of a distillery, brewery or warehouse licensed or established under Section 12 or Section 14 as the case may be or in accordance with such scale of equivalents, calculated on the quantity of materials used or by the degree of attenuation of the wash or wort, or on the value of the liquor as the case may be, as the Government may prescribe:

b) in the case of intoxicating drugs on the quantity produced or manufactured or issued from a warehouse licensed or established under Section 14;

c) Omitted by Section 6(1) (iv) of Presidents Act 1 of 1964.

d) Omitted by Section 6(1)(iv) of Presidents Act 1 of 1964.

e) in the case of toddy, or spirits manufactured from toddy, in the form of a tax on each tree from which toddy is drawn, to be paid in such instalments and for such period as the Government may direct; or

f) by import, export or transport duties assessed in such manner as the Government may direct”.

5. A perusal of the above provisions will unambiguously show that the power of the State to levy duty is confined only to potable liquor and not raw spirit that is used in the manufacture of potable liquor. But it is contended by the learned senior Government Pleader that there is no provision under the Abkari Act which prohibits levy of duty on spirit or Extra Neutral Alcohol which is used for manufacture of potable liquor. He further contends that spirit or Extra Netral Alcohol is liquor as per Sub Section (9) and (10) of Section 3 of the Act, for the import of which duty is leviable u/s 17 of the Act.

6. Rule 55 of the Kerala Distillery & Warehouse Rules 1968 reads thus:

Rule 55: Allowance for wastage:

1) An