The petitioner in this writ petition is a company engaged in the manufacture of Indian made foreign liquor. It has licences for compounding, blending and bottling spirits. They obtained permit for importing 20000 bulk litres of Extra Neutral Alcohol (ENA) from a manufacturer in Maharashtra. While the same was being transported to their distillery in Kerala, the tanker in which, the ENA was being transported, met with an accident, as a consequence of which, 11965 bulk litres of ENA was lost. Only 8035 bulk litres could be salvaged from the accident, which reached the distillery of the petitioner. The respondents demanded excise duty on the 11965 bulk litres of ENA on the ground that the quantity of wastage is more than the permitted exemption and, therefore, the petitioner is liable to pay excise duty on the same. That is under challenge in this writ petition. According to the petitioner, excise duty is payable only on import of the ENA into Kerala. It has not been imported into Kerala State insofar as, on the way, in the accident, the ENA was lost. According to them, insofar as admittedly it was lost and the petitioner never used the alcohol clandestinely or otherwise for manufacture of liquor, no excise duty is payable on the same. The petitioner, therefore, seeks the following reliefs;

“a) declare that Exhibit P10 notification in so far as it provides for levy of duty of excise on rectified spirit or Extra Neutral Alcohol is ultravires the provisions of the Abkari Act, unconstitutional and therefore unenforceable.

b) issue a writ of certiorari or any other appropriate writ, order or direction quashing Exhibit P9;

c) declare that Rule 8 of Rectified Spirit Rules framed under the Abkari Act is also ultravires provisions of the Abkari Act and unconstitutional in so far as it provides for a levy of duty of excise on rectified spirit or Extra Neutral Alcohol as the case may be.”

2. A counter affidavit has been filed by the respondents supporting the impugned demand for excise duty on the alcohol which was lost in the accident. According to the respondents, normally, under Section 6 of the Abkari Act, no liquor can be imported to Kerala unless taxes and levies on the same are paid in advance. Under Section 17 of the Abkari Act, excise duty is leviable on liquor or intoxicating drugs permitted to be imported under Section 6. Under Rule 7 of the Kerala Foreign Liquors (Compounding, Blending and Bottling) Rules, 1975, a licensee can, under a bond, without prior payment of duty, import spirit. But under Rule 7(3), the imported spirit has to be duly accounted for and duty can be collected on the excess wastage and the licensee who has been permitted to import spirit without prior payment of duty, is liable to remit the duty on all spirits short accounted during the import. Therefore, according to the respondents, since the petitioner has short accounted 11965 bulk litres of ENA, they are bound to pay excise duty on the same.

3. I have considered the rival contentions in detail.

4. Section 6 of the Abkari Act reads thus;

“6. Import of liquor or intoxicating drug:- (1) 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 the Act, in respect of such liquor or intoxicating drug, have been paid or a bond for such payment on its importation has been executed.

(2) A permission granted by the Government or such officer under sub-section (1) shall be subject to such conditions and restrictions as may be specified by the Government by notification in the Gazette.”

Section 17 of the Abkari Act prescribes that a duty of excise or countervailing duty and/or luxury tax shall be levied, in such manner as may be prescribed, on liquors or intoxicating drugs permitted to be imported und