IN THE HIGH COURT OF JUDICATURE AT PATNA CIVIL WRIT JURISDICTION CASE No.1538 of 2011 ============================================== M/s Ally Food Pvt. Ltd. - Petitioner(s) Versus The State of Bihar & Ors. - Respondent(s) ============================================== Appearance: For the Petitioner : Mr. Y.V. Giri, Sr. Advocate Mr. Sanjeev Kumar Mr. Nikhil Agrawal For the Respondents: Mr. Ajit Kumar, AC to AAG-1. ============================================== CORAM: HONOURABLE THE CHIEF JUSTICE and HONOURABLE MR. JUSTICE JYOTI SARAN ORAL ORDER (Per: HONOURABLE THE CHIEF JUSTICE) 04. 07.04.2011 With the consent of the learned Advocates, the petition is heard and decided today. This petition under Article 226 of the Constitution is filed by the petitioner to challenge the order dated 26th July 2010 made by the Superintendent of Excise, Darbhanga for recovery of excise duty of Rs. 13,91,880/- for a consignment of rectified spirit carried by Tanker bearing Registration No. B.H.F.-2651 and the order dated 4th December 2010 made by the District Collector, Darbhanga directing the Superintendent of Excise to recover the aforesaid excise duty. It is the case of the petitioner that the petitioner is a distiller engaged in manufacture and wholesale supply of country Liquor. The petitioner had imported a quantity of rectified spirit to carry to its warehouse at Laheria Sarai. On the 2 way to the warehouse, on 16th July 2010 the Tanker met with an accident on Narkatiyaganj-Betiah Road near Mahna Chowk. In the said accident the entire quantity of rectified spirit was lost. The factum of the accident was recorded by the Inspector of Excise on the very day and further report was made by the Superintendent of Excise to the Joint Commissioner of Excise on the next date i.e. on 17th July 2010. Nevertheless, the Excise authorities are pressing for the recovery of excise duty which never became payable. Learned Advocate Mr. Ajit Kumar has appeared for the respondent-State. He has submitted that the aforesaid quantity of rectified spirit was imported under a bond, without payment of excise duty. Moment the rectified spirit reached its destination the Excise authorities were liable to enforce the bond and to recover the excise duty. In case of loss in transit, procedure envisaged by Rule 33 of the Rules framed under Section 90 of the Bihar Excise Act, 1915 is required to be followed. Sub-Rule (2) of the said Rule 33 envisages an application to be made to the Commissioner of Excise for remission of the duty in case of loss in transit on account of accident or other unavoidable causes. He has, therefore, submitted that it is the duty of the petitioner first to pay the duty and then to claim refund/remission by making appropriate application to the Commissioner of Excise within 30 days. Admittedly the petitioner did not make such application within 3 30 days. He, therefore, is liable to pay the Excise duty in discharge of the bond executed by him. Learned Advocate Mr. Ajit Kumar has relied upon the judgment of this Court in the matter of M/s. Pashupatinath Distributors Private Limited Vs. The State of Bihar & Ors. [C.W.J.C. No. 14498 of 2008 decided on 24th September 2008. (Coram: Hon’ble the Chief Justice Mr. R.M. Lodha, as he then was and Hon’ble Mr. Justice Kishore K. Mandal)]. In the said matter claim for remission was made on partial loss of rectified spirit in transit on account of road accident. After going through hierarchy of officers the claim was rejected. In the aforesaid order this Court observed; “…..As a matter of fact no satisfactory evidence was led in by the petitioner before the competent authority that the transit loss was due to an accident……” Besides, the Court also observed that a quantity of rectified spirit did reach the destination. It was a case where enquiry was required to be made in respect of the exact quantity of loss as envisaged by Rule 33(2) of the aforesaid Rules. In view of the said salient features of the case the judgment shall not apply to the facts of the present case. We are unable to accept the argument advanced by Mr. Ajit Kumar. The factum of accident is supported by none other than the Excise Officers i.e. by the Inspector of Excise and the Superintendent of Excise. Further in the counter 4 affidavit also the factum of accident has not been disputed. We, therefore, proceed on the premise that the accident did take place and on account of the said accident the entire consignment of the rectified spirit was lost. It is not in dispute that the rectified spirit is not exigible to excise duty. It is the Liquor manufactured from such rectified spirit which is exigible to the excise duty. We are unable to countenance that the petitioner should pay the excise duty on the liquor which it would have manufactured had the consignment reached the destination safely; though neither the consignment reached the destination safely nor was it converted into liquor exigible to excise duty. Rule 33 of the aforesaid Rules relied upon by Mr. Ajeet Kumar envisages normal loss in transit by leakage or evaporation or contraction. Sub-Rule 2 of the said Rule does provide for loss in transit on account of accident or other unavoidable causes but it also provides for recovery of excise duty on the consignment reaching to its destination. In the present case indisputably the consignment did not reach the destination. In our view, Sub-Rule 2 of Rule 33 cannot be invoked in case of total loss of rectified spirit in transit on account of accident or other unavoidable causes. In absence of any dispute to the factum of the accident and total loss of rectified spirit in transit the question of enforcing the bond or of recovery of excise duty would not arise. In the circumstances, the petition is allowed. The impugned 5 order dated 26th July 2010 (Annexure-7) and order dated 4th December 2010 (Annexure-10) are quashed and set aside. We do appreciate the anxiety expressed by Mr. Ajit Kumar. There are possibility of importer making out a fake accident and a fake report of the loss, thereby compromising the state revenue; siphoning of the spirit for illegal manufacture of liquor or manufacture of spurious liquor causing health hazards for the consumers. But, then it is the function of the State to make appropriate rules of procedure and to provide for strict compliance of such procedure. Until the State Government makes specific rules to meet such contingencies, we have to rely upon the uncontroverted reports made by the local officers. S.Sb/- (R.M. Doshit, CJ.) (Jyoti Saran, J.)