( 1. ) THE petitioner firm manufactures certain drugs in the process of which rectified spirit or pure alcohol is used for purification, crystallisation etc. The end product, however, does not contain any alcohol.

( 2. ) THE petitioner was granted a licence in form L-2 under the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956, framed under the medicinal and Toilet Preparations (Excise Duties) Act, 1953. Under section 3 of the said Act read with the Schedule, medicinal preparations containing alcohol and which are capable of being consumed as ordinary alcoholic beverages are liable to duty at the rate of Rs. 3. 85 per litre, while on other preparations a duty at the rate of 1. 10 per litre is charged.

( 3. ) AS the drugs manufactured by the petitioner did not contain any alcohol nor could they be used as alcoholic beverages, the petitioner claimed that recovery of duty at Rs. 3. 85 per litre from it was not justified. The petitioner, therefore, by it? letter dated 15-2-1955, prayed for refund of duty in excess of Rs. 1. 10 per litre. Between 5 2 1966 to 25-8-1966 the petitioner had paid rs. 18,865 byway of duty on the alcohol supplied to it. Subsequently, by letter dated 26-9-1986, the petitioner claimed refund of the entire amount on the ground that the end product did not contain any alcohol and as such no duty was payable under the above said Act.

( 4. ) THE District Excise Officer rejected this demand. On appeal, the excise Commissioner accepted the contention of the petitioner that under the medicinal and Toilet Preparations (Excise Duties) Act no duty was chargeable on the drugs manufactured by the petitioner. The Commissioner also held that the licence in form L-2 was wrongly issued to the petitioner. The Commissioner, however, rejected the demand for refund on the ground that rectified spirit or pure alcohol supplied to the petitioner was chargeable to the same duty under Notification dated 16 3-1966 issued under section 25 of the Madhya pradesh Excise Act. Being aggrieved by the said order of the Excise Commissioner, the petitioner has filed this petition for quashing the Notification dated 16-3-1966 and the order of the Excise Commissioner passed on the basis of the said Notification. The petitioner has also prayed for a writ restraining the respondents from recovering any duty from the petitioner on the rectified spirit supplied to it and also for any other suitable relief.

( 5. ) THE main contention of the petitioner is that the State Legislature has no authority to impose excise duly on rectified spirit or alcohol and as such the impugned Notification is liable to be quashed.

( 6. ) ENTRY 84 of List I in 7th Schedule to the Constitution reads:

"84. Duties of excise on tobacco and other goods manufactured or produced in india except- (a) alcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotic drugs and narcotics, but including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry. "

Entry 51 of the State List is to the following effect:

"51. Duties of excise on the following goods manufactured or produced in the State and countervailing duties at the same or lower rates on similar goods manufactured or produced elsewhere in India- (a) alcoholic liquors for human consumption; (b) opium, Indian hemp and other narcotic drugs and narcotics; but not including medicinal and toilet preparations containing alcohol or any substance included in sub-paragraph (b) of this entry. "

These two Entries clearly show that the State can impose excise duty on alcoholic liquors for human consumption and that two if they are not medicinal preparations. This position is also clear from the provisions of the Madhya pradesh Excise Act itself. Section 25 of the Act under which the Notification was issued provides that excise duty can be levied on all excisable articles. Clause (6) of section 2 of the said Act defines excisable article to me