2022 Supreme(All) 820

IN THE HIGH COURT OF JUDICATURE AT ALLAHABAD
Saumitra Dayal Singh, J.
Modi Distillery - Petitioner
Versus
State Of U.P. And 3 Others – Respondent
WRIT TAX No. - 133 of 2021
Decided On : 07-05-2022

Headnote:

Whether the State of U.P. has legislative competence to levy Excise duty on HSMS imported from outside the country. Whether the State of U.P. has any competence to impose Consideration fee/'Pratiphal Shulk', that is Excise duty, in another garb. Whether HSMS were imported by the petitioner from William Grant, across the customs frontier of the country i.e. at the I.C.D., Dadri. Whether by virtue of Section 12(2) read with proviso (I) to Section 28(1) of the Act, no Excise duty or Consideration Fee/'Pratiphal Shulk' could be imposed on any quantity of HSMS lost in the course of import of those goods into the country. Whether the levy of Consideration Fee/'Pratiphal Shulk' may arise under the Act only in the event of transportation loss suffered during, and upon it exceeding, permissible limits, only when that excisable article may be in transit from a distillery. Whether conceptually and as also according to the statutory scheme itself, Consideration Fee/' Pratiphal Shulk' may be levied under the Act, only by the State of export. Whether theoretically, and in view of the earlier submissions advanced, the levy could not arise at the instance of or by the State of import namely the State of Uttar Pradesh.

Fact of the Case:

The petitioner is a duly incorporated company having its distillery at Modi Nagar, Ghaziabad. It first imported into the country, 24,400 Bulk litres of HSMS from William Grant & Sons Distillers Limited, Giravan Distillery, Grangestone Industrial Estate, Girvan, Scotland, United Kingdom (hereinafter referred to as William Grant). Those goods entered the country through a seaport, in the State of Gujarat. They were then transshipped to I.C.D., Dadri during that import. At Dadri, those goods were imported into the country and cleared for home consumption against payment of Custom Duty @ 150% of the value of goods. As per the Certificate of Analysis, Goods Note, Certificate of Origin and Age Certificate, issued by the Custom Authorities in the United Kingdom, HSMS thus imported were having alcoholic strength, 68%. Thereafter, the petitioner applied for permission to 'import'/'transport' those 24,400 Bulk litres of HSMS from I.C.D., Dadri, to its distillery at Modi Nagar, Ghaziabad. That permission was granted vide order dated 21.08.2018, under the Act and Rules framed thereunder. Perusal of that order reveals, the permission was granted on Form FL-22 [under Paras 609, 615(5) & 617(3) of the Excise Manual] against payment of Import fee @ Rs. 4/- bulk litre. No amount of Excise duty was prepaid, yet the petitioner was allowed to transport the goods, against bond [under Para 610(c) of the Excise Manual]. That consignment was dispatched from the I.C.D., Dadri, in a sealed tanker bearing registration No. HR-55-AI-2419. It reached the petitioner's distillery at Modi Nagar, Ghaziabad, on 2.9.2018. At that stage, the HSMS thus imported was measured, having alcoholic strength 66.21% v/v. Thus, against 24,400 Bulk litres of HSMS of strength 68% v/v dispatched, only 24,346 Bulk litres of HSMS, of strength 66.2% v/v, were received at the petitioner's distillery. Thus, against allowable transit loss of 82.96 Alcoholic litres, 474.9 Alcoholic litres were found short. Thus, 391.94 Alcoholic litres or 915.75 Bulk litres excess loss was found. Similarly, in the second transaction, the petitioner sought to import 24596 Bulk litres of HSMS from William Grant. Similar procedures were followed, and similar communications were issued leading to similar result. In that case, against 24596 Bulk litres of HSMS of strength 67.6% v/v, measured by the Custom Authorities of United Kingdom, upon receipt at the petitioner’s distillery, the same were found to be 24593 Bulk litres of HSMS of 66.6% strength. Against allowable transit loss 164.82 Alcoholic litres, loss suffered was found to be 248 Alcoholic litres. Thus, 164.82 Alcoholic litres or 385.10 Bulk litres excess loss was found. On 22.09.2018, a second demand notice no.484 was issued demanding Consideration Fee/excise duty/ ‘Pratiphal Shulk’ Rs.4,59,385.20. The petitioner filed its reply dated 11.10.2018, to that notice.

Finding of the Court:

The State of U.P. has legislative competence to levy Excise duty on HSMS imported from outside the country. The State of U.P. has any competence to impose Consideration fee/'Pratiphal Shulk', that is Excise duty, in another garb. HSMS were imported by the petitioner from William Grant, across the customs frontier of the country i.e. at the I.C.D., Dadri. By virtue of Section 12(2) read with proviso (I) to Section 28(1) of the Act, no Excise duty or Consideration Fee/'Pratiphal Shulk' could be imposed on any quantity of HSMS lost in the course of import of those goods into the country. The levy of Consideration Fee/'Pratiphal Shulk' may arise under the Act only in the event of transportation loss suffered during, and upon it exceeding, permissible limits, only when that excisable article may be in transit from a distillery. Conceptually and as also according to the statutory scheme itself, Consideration Fee/' Pratiphal Shulk' may be levied under the Act, only by the State of export. Theoretically, and in view of the earlier submissions advanced, the levy could not arise at the instance of or by the State of import namely the State of Uttar Pradesh.

Issues: Whether the State of U.P. has legislative competence to levy Excise duty on HSMS imported from outside the country. Whether the State of U.P. has any competence to impose Consideration fee/'Pratiphal Shulk', that is Excise duty, in another garb. Whether HSMS were imported by the petitioner from William Grant, across the customs frontier of the country i.e. at the I.C.D., Dadri. Whether by virtue of Section 12(2) read with proviso (I) to Section 28(1) of the Act, no Excise duty or Consideration Fee/'Pratiphal Shulk' could be imposed on any quantity of HSMS lost in the course of import of those goods into the country. Whether the levy of Consideration Fee/'Pratiphal Shulk' may arise under the Act only in the event of transportation loss suffered during, and upon it exceeding, permissible limits, only when that excisable article may be in transit from a distillery. Whether conceptually and as also according to the statutory scheme itself, Consideration Fee/' Pratiphal Shulk' may be levied under the Act, only by the State of export. Whether theoretically, and in view of the earlier submissions advanced, the levy could not arise at the instance of or by the State of import namely the State of Uttar Pradesh.

Ratio Decidendi: The State of U.P. has legislative competence to levy Excise duty on HSMS imported from outside the country. The State of U.P. has any competence to impose Consideration fee/'Pratiphal Shulk', that is Excise duty, in another garb. HSMS were imported by the petitioner from William Grant, across the customs frontier of the country i.e. at the I.C.D., Dadri. By virtue of Section 12(2) read with proviso (I) to Section 28(1) of the Act, no Excise duty or Consideration Fee/'Pratiphal Shulk' could be imposed on any quantity of HSMS lost in the course of import of those goods into the country. The levy of Consideration Fee/'Pratiphal Shulk' may arise under the Act only in the event of transportation loss suffered during, and upon it exceeding, permissible limits, only when that excisable article may be in transit from a distillery. Conceptually and as also according to the statutory scheme itself, Consideration Fee/' Pratiphal Shulk' may be levied under the Act, only by the State of export. Theoretically, and in view of the earlier submissions advanced, the levy could not arise at the instance of or by the State of import namely the State of Uttar Pradesh.

Final Decision: The Writ Petition fails and is dismissed. No order as to costs.