IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE S.SIRI JAGAN FRIDAY, THE 8TH JULY 2011 / 17TH ASHADHA 1933 WP(C).No. 8027 of 2006(E) -------------------------------------- PETITIONER(S): ------------------------ MCDOWELL AND COMPANY LTD., VARANAD, CHERTHALA, REPRESENTED BY ITS MANAGER-ACCOUNTS, MR.ANANTHARAMAN. BY SRI.A.M.SHAFFIQUE, SENIOR ADVOCATE BY ADV. SRI.E.K.NANDAKUMAR SRI.A.K.JAYASANKAR NAMBIAR RESPONDENT(S): -------------------------- 1. THE STATE OF KERALA, REPRESENTED BY THE SECRETARY (TAXES), GOVERNMENT OF KERALA, SECRETARIAT, THIRUVANANTHAPURAM. 2. COMMISSIONER OF EXCISE, COMMISSIONERATE OF EXCISE, THIRUVANANTHAPURAM. 3. CIRCLE INSPECTOR OF EXCISE, MCDOWELL DISTILLERY, CHERTHALA. R1 TO R3 BY GOVERNMENT PLEADER SRI.ANTONY MUKKATH THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 08/07/2011, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: sts WP(C)NO.8027/2006 APPENDIX PETITIONER'S EXHIBITS: P1 COPY OF THE NOTICE DATED 16/9/1991 TO THE PETITIONER BY THE 3RD RESPONDENT TO REMIT THE EXCISE DUTY ON THE WASTAGE. P2 COPY OF THE NOTICE DATED 26/9/1991 TO THE PETITIONER BY THE 3RD RESPONDENT TO REMIT THE EXCISE DUTY ON THE WASTAGE. P3 COPY OF THE APPEAL FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT DATED 10/10/1991. P4 COPY OF THE ORDER OF THE 2ND RESPONDENT DATED 11/1/2002. P5 COPY OF THE DEMAND NOTICE ISSUED BY THE 3RD RESPONDENT DATED 7/11/2002 ON THE PETITIONER. P6 COPY OF THE JUDGMENT OF THIS HONOURABLE COURT IN OP NO.33615 OF 2002 DATED 16/11/2005. P7 COPY OF THE ORDER OF THE 2ND RESPONDENT DATED 8/2/2006 TO THE PETITIONER. RESPONDENT'S EXHIBITS: NIL /TRUE COPY/ P.A.TO.JUDGE sts S. SIRI JAGAN, J. - - - - - - - - - - - - - - - - - - - - - - - W.P.(C)No.8027 of 2006 - - - - - - - - - - - - - - - - - - - - - - - Dated this the 8th day of July, 2011 J U D G M E N T The petitioner is a distillery. The petitioner distills spirit in its distillery and also imports spirit and re-distills it. Under Rule 92 (b) of the Kerala Distillery Warehousing Rules, the petitioner was exempted from paying excise duty on wastage. The petitioner was issued with a notice calling upon him to pay excise duty on wastage on redistillation of imported spirit. The petitioner filed an appeal against that notice. That appeal was disposed of after 10 years without hearing the petitioner. Pursuant to the directions from this Court, the 2nd respondent re-heard the matter. The petitioner brought to the notice of the 2nd respondent the judgment of this Court in O.P. No.17169/2003 in which a learned Single Judge of this Court has held that, the State is not empowered to levy excise duty on the raw material or input that is in the process of being made into alcoholic liquor for human consumption. The petitioner submits that W.P.(C)No.8027 of 2006 -2- the ratio of that judgment is applicable to the petitioner's case. But rejecting that claim, the 2nd respondent by Ext.P7 order dismissed the appeal. The petitioner is challenging Ext.P7 order. The petitioner now points out that the issue has been finally settled by a Division Bench of this Court in State of Kerala v. K.S. Distillery [2010 (2) KLT 663]. Therefore the petitioner has filed this writ petition seeking the following reliefs: “i) Call for the records leading to Ext.P7 order of the 2nd respondent, and quash the same by the issuance of a writ of certiorari or such other writ order or direction; ii) Grant a stay of all further proceedings pursuant to Ext.P7 order of the 2nd respondent pending disposal of the writ petition (Civil)” 2. A counter affidavit has been filed by the respondents 1 to 3 taking the contention that in respect of imported spirit, the petitioner is not entitled to the benefit of the said judgment. According to the respondents, when spirit is imported into the State the petitioner is expected to see that, that spirit is free from impurities and therefore the question of giving allowances for wastage does not arise W.P.(C)No.8027 of 2006 -3- and consequently the State is entitled to recover excise duty in respect of the same without reference to wastage under the Kerala Distillery and Warehouse Rules,1968. 3. I have considered the rival contentions in detail. 4. I am of opinion that the judgment in K.S. Distillery's case (supra) squarely covers the issue. I do not think that the State can distinguish between spirit manufactured in the State and spirit imported from outside the State in the matter of grating exemption from payment of excise duty on wastage. The rules do not contain any separate provisions for the two. The argument of the learned Government Pleader that the petitioner is expected to import spirit without any impurities does not stand to reason. The petitioner is admittedly redistilling the spirit imported from outside the State. The imported spirit need not necessarily be free from all kinds of impurities. The impurities can join the spirit during transportation as well. All kinds of wastage are entitled to exemption from excise duty as provided under the Kerala Distillery and Warehouse W.P.(C)No.8027 of 2006 -4- Rules,1968. Therefore I am unable to countenance the contention of the respondents. Therefore I hold that the petitioner is entitled to exemption from excise duty in respect of wastage during re-distillation also. Accordingly, Ext.P7 is quashed. It is declared that the petitioner is entitled to exemption from excise duty in respect of wastage arising on redistillation of imported spirit also. Orders in this regard shall be issued and refund of any excise duty paid by the petitioner, if any, on wastage shall be refunded to the petitioner as expeditiously as possible, at any rate within a period of three months from the date of receipt of a copy of this judgment. S. SIRI JAGAN JUDGE shg/