No 14 of 1968
Petition under article 32 of the Constitution of India for enforcement of the fundamental rights
MC Chagla SK Mehta KL Mehta and SK Khanna for the petitioners
CK Daphtary Attorney General and DP Singh for the respondents
The Judgment of the Court was delivered by BachawatJ
The petitioner company Mohan Meakin Brewenes Ltd manufactures and soils Indian made foreign liquor
Its distilleries are situated at Solan in Himachal Pradesh and at Lucknow and Mohan Nagar in Uttar Pradesh
It has depots for sale of its products at Patna and Ranchi in the State of Bihar
Before October 13 1967 it imported foreign liquor into the State of Bihar from Solan Lucknow and Mohan Nagar for purposes of sale at its Patna and Ranchi depots on payment of duty at the then current rate of Rs 1440 LP litres
Duty on the liquor from Solan was paid upon or before importation by making deposits in the State Bank of India at Patna and Ranchi
Duty on the liquor from Lucknow and Mohan Nagar was paid upon importation by making deposits with the Uttar Pradesh Government  By a notification dated October 13 1967 duty on foreign liquor was enhanced from Rs 1440 to Rs 2620 per LP litres with effect from November 1 1967
By an order dated January 3 1968 the Superintendent of Excise Patna directed the Company to pay by January 31 1968 the difference in duty on the opening balance of India made foreign liquor in its stock on November 1 1967
In this writ petition under article 32 of the Constitution the Company challenges the legality of the levy
Duty on foreign liquor imported into the State of Bihar is chargeable under section 271a of the Bihar and Orissa Excise Act 1915 Bihar and Orissa Act H of 1915
Subject to any rules made under section 90 clause 12 the duty may be levied under section 28 a in two ways
The first method as indicated in section 28 a i is by payment upon or before importation either in the State of Bihar or in the State or territory from which the article is brought
This method is followed when the liquor is not imported under bond
The second method as indicated in section 28 aii is by payment upon issue for sale from a warehouse established authorized or continued under the Act
In view of the first pro 459 viso to section 28 the payment is made at the rate of duty in force on the date of issue of the article from the warehouse
This method is followed when the liquor is imported under bond
The form the bond at page 215 of the Bihar and Orissa Excise Manual Vol
II Part I issued in 1957 shows that foreign liquor imported under bond is kept without payment of duty in a warehouse established with the approval of the Excise Commssioner under section 15
In view of section 17 no article can be removed from the warehouse unless duty has been paid or a bond has been executed for the payment thereof
In the present case the foreign liquor was imported before November 1 1967 on payment of duty at the current rate in the manner indicated ins
28ai
Duty on imported foreign liquor was enhanced with effect from November 1 1967
Sections 27 and 28 do not authorize the levy of the enhanced duty on the liquor imported before November 1 1967 but lying with the importer on that date
Section 28 however is subject to any rules that may be made by the Board of Revenue Bihar under section 90 clause 12
The State of Bihar seeks to justify the levy of the enhanced duty on the stock of imported foreign liquor lying with the petitioner on November 1 1967 under the proviso to Rule 147 framed by the Board of Revenue
That Rule is as follows  147
The duty imposed on i foreign liquor and country spirit a imported under bond or b manufactured in a distillery and stored in a distillery or excise warehouse ii Ganja and Bhang a imported under bond or b stored in an excise warehouse shall be paid before removal from the distillery or excise warehouse unless a bond has been executed for such payment
Provided that in case of any revision in the rate of duty on an excisable article the difference of duty shall be realised from or credited to the licensee to whom such article has been issued on payment of duty prior to such revision according as the revised rate of duty is higher or lower than the old rate and the calculation of the difference of duty shall be made on the quantity of such article that may remain in possession of such licensee when the revised rate of duty comes into force
 460 The main part of Rule 147 applies to foreign liquor imported under bond which as already stated is kept in an excise warehouse established under
the Act
It provides that  duty imposed on foreign liquor imported under bond shall be paid before removal from the excise warehouse unless a bond has been executed for such payment
Under the proviso to Rule 147 in case of any revision of the rate of duty on an excisable article the license to whom the article has been issued on payment of duty prior to such revision is liable to pay the difference of duty on the quantity of such article that may remain in his possession when the revised rate of duty comes into force
The proviso must be construed with reference to the main part of the Rule
A close scrutiny of the Rule reveals that the main part and the proviso deal with the same subject matter
The expression an excisable article in the proviso means foreign liquor imported under bond and other articles on which duty is payable before removal from the excise warehouse or distillery where they are kept
It is for this reason that under the proviso the difference of duty is realised from or credited to the licensee to whom the article has been issued from the excise warehouse or distillery on payment of duty prior to such revision
The proviso does not apply to all imported foreign liquor
It applies only to foreign liquor imported under bond that is to say foreign liquor on which duty has been levied under section 28aii by payment upon issue for sale from an excise warehouse
It does not apply w foreign liquor not imported under bond upon which duty has been levied under section 28 a i
The petitioner s foreign liquor was not imported under bond
The petitioner is not therefore liable to pay under the proviso to Rule 147 the difference of duty in respect of its stock of foreign liquor on November 1 1947
The demand for payment of the difference of duty in respect of this stock is not authorised by the Act or the proviso to Rule 147
The petitioner also challenged the constitutionality of section 27 and the rites of the proviso to Rule 147
In view of our conclusions aforesaid it is not necessary to decide these questions
In the result there will be an order in terms of a iii and b of the petition
The order of the Superintendent of Excise Bihar dated January 3 1968 copy whereof is Annexure Bto the petition is quashed and set aside and the respondents are prohibited from enforcing the aforesaid order
The respondents shall pay to the petitioner the costs of the petition
GC Petition allowed


Summary:
The petitioner was a company manufacturing Indian made foreign liquor in Himachal Pradesh and Uttar Pradesh
It had depots for sale of its products at Patna and Ranchi in the State of Bihar
Before October 13 1967 it imported foreign liquor into the State of Bihar from Himachal Pradesh and Uttar Pradesh for purposes of sale at its Patna and Ranchi depots on payment of duty at the then current rate
Duty on liquor from Himachal Pradesh was paid upon or before importation by making deposits in the State Bank of India at Patna and Ranchi
Duty on liquor from Uttar Pradesh was paid on importation by making deposits with the government of that State
By notification dated October 13 1967 duty on foreign liquor was enhanced with
effect from November 1 1967
The Superintendent of Excise Patna directed the company to pay the difference in duty on the opening balance of Indian made foreign liquor in its stock on November 1 1967
The company challenged the demand in a writ petition under article 32 of the Constitution
Apart from sections 27 and 28 of the Act the respondent State relied on the proviso to r 147 of the Rules made under section 90 of the Act
HELD i i The foreign liquor was imported before November 1 1967 on payment of duty at the current rate in the manner indicated in section 28ai
Duty on imported foreign liquor was enhanced with effect from November 1 1967
Sections 27 and 28 did not authorize the levy of the enhanced duty on the liquor imported before November 1 1967 but lying with the importer on that date
ii A close scrutiny of r 147 reveals that the main part and the proviso deal with the same subject matter
The expression an excisable article in the proviso means foreign liquor imported under bond and other articles on which duty is payable
before removal from the excise warehouse or distillery where they are kept
It is for this reason that under the proviso the difference of duty is realised from or credited to the licensee to whom the article has been issued from the excise warehouse or distillery on payment of duty prior to such revision
The proviso does not apply to all imported foreign liquor
It applies only to foreign liquor imported under bond that is to say foreign liquor on which duty has been levied under section 28aii by payment upon issue for sale from an excise warehouse
It does not apply to foreign liquor not imported under bond upon which duty has been levied under section 28ai
The petitioner s foreign liquor was not imported under bond
The petitioner was therefore not liable to pay under the proviso 3 Sup
CI69 12 458 to r 147 the difference of duty in respect of its stock of foreign liquor on November 1 1967
The demand for payment of the difference of duty in respect of this stock was not authorized by the Act or the proviso to r 147
460 C F