ORDER

1. The petitioners have been granted a license for the manufacturing and sale of brewed beer under the Karnataka Excise (Brewery) Rules, 1967 (hereinafter referred to as "Brewery Rules, 1967").

2. Petitioner in W.P.No.4346/2021 challenges the order dated 29.01.2021 passed by the 2nd respondent, rejecting the petitioner's explanation to the show cause notice dated 11.8.2016 for violation of Rule 3 of the Karnataka Excise (Regulation of Yield, Production, and Wastage of Spirit, Beer, Wine, or Liquors) Rules, 1998 (hereinafter referred to as "Rules, 1998"), stating that there was a shortfall in the production of beer as per Rules 3 and 7 read with Schedule-A of the Rules, 1998.

3. Petitioner in W.P.No.26796/2019 challenges the order dated 15.6.2019 passed by the 4th respondent, demanding excise duty, including additional excise duty, amounting to Rs.109,44,77,224/- for a shortfall in the production of beer as stated in Schedule-A to Rule 3 and 7 of the Rules, 1998.

4. Mr. K.G. Raghavan, learned senior counsel representing the petitioner's counsel in W.P.No.4346/2021 argues that:

a) The competent authority has considered ingredients other than malt for determining the shortfall in beer production under Rules 3 and 7 of the Brewery Rules, 1998.

b) Schedule-A to Rule 3 of the Yield Rules, 1998 mandates that for every 1000 Kgs of malt used, the petitioner should produce 6500 liters of beer, and since the petitioner has produced beer in excess of the prescribed quantity, the impugned order passed by the 2nd respondent contradicts the provisions of the Rules, 1998.

5. Mr. Ajit Anand Shetty, learned counsel for the petitioner in W.P.No.26796/2019, reiterates the submission made by the learned senior counsel in W.P.No.4346/2021. Additionally, he argues that the 4th respondent lacks the authority to pass the impugned order, as the power is vested with the Commissioner of Excise as stated under Rule 7 of the Rules, 1998.

6. Mr. Rubeen Jacob, learned Additional Advocate General for the respondents, argues that the petitioners have used a lesser quantity of malt than required. Malt, being the main ingredient for beer production, the calculation of the percentage of beer produced is based on the quantity of malt used, despite other ingredients being in excess. Therefore, the impugned order is in conformity with Schedule-A of Rules 3 & 7 of the Yield Rules, 1998. Considered the submissions made by the learned counsel for the parties.

7. In W.P.No.4346/2021, the petitioner used

23,74,681 Kgs of malt for the Excise period 2015-2016 and manufactured 3,29,80,989 liters of beer against the required quantity of 15,43,5426.50 liters. The 2nd respondent calculated the minimum beer yield with malt by adding a quantity of adjuncts, i.e., sugar and flakes, to the malt used for calculating the minimum quantity of beer. Schedule-A to Rules 3 and 7 of the Rules, 1998 states that for every 1000 kgs of malt, a minimum quantity of 6,500 liters has to be produced, and there is no rule prescribing a minimum quantity of malt for the production of every liter of beer. In the absence of any specific rule to this effect, the calculation raised by the 2nd respondent contradicts Schedule-A to Rules 3 and 7 of the Yield Rules, 1998.

8. In WP No.26796/2019, the petitioner used

64,69,951 Kgs of malt and produced 6,12,27,800 bulk liters of beer, applying a multiplier of 1000. In the impugned order, the 4th respondent determined a shortfall of 11,84,3928.23 bulk liters by applying Schedule-A to the Rules. The 4th respondent concluded that there is a shortfall in beer production to an extent of 11,84,3928.23 bulk liters, which contradicts Schedule-A to Rules 3 and 7 of the Rules, 1998.

9. To impose a penalty, there must be a clear and specific provision or rule outlining the circumstances under which the penalty can be applied. Essentially, it emphasizes the importance of having established guidelines or rules to ensure that penalties are applied consistently and fairly, rather