Case: Industrial Chemical Corporation Vs. Excise Commissioner, U.P., Allahabad

1. Messrs Industrial Chemicaln set upa business at Ghaziabad of manufacturing Nitrocellulose Thinners. On December 2, 1959, the petitioners obtained from the Assistant Collector, Central Excise, Meerut, a licence in Formunder Rules 174 and 192 of the Central Excise Rules, 1944, for the period ending December 31, 1959, authorising them to obtain without payment of excise duty, power alcohol and toluene to be used by them in the manufacture of Thinners. This licence has been extended in favour of the petitioners by the Assistant Collector year after year. In reply to an order for the supply of 100 gallons of power alcohol, placed by the petitioners with the Central Distillery and Chemical Company Ltd., Meerut Cantt., a private distillery engaged in the production of power alcohol, theof the distillery informed the petitioners that without a permit from the Excise Commissioner, U.P., Allahabad, "the quantity of power alcohol demand cannot be supplied, for power alcohol is for the purpose of the U.P. Excise Act, IV of 1910, Denatured Spirit, and under the Rules framed under the Indian Power Alcohol Act, denatured spirit may be given only under a permit or licence issued by the Excise Commissioner."2. The petitioners then applied to the Excise Commissioner, U.P. praying that instructions be issued to the Central Distillery, Meerut, to issue to the petitioners the quantity of power alcohol demanded by them. It was claimed by the petitioners that the Central Government had control over the manufacture and distribution of power alcohol, and the petitioners having obtained a licence in Formfor use of power alcohol for industrial purposes, there was nothing in the U.P. Excise Act or Rules made thereunder which authorised the Central Distillery, Meerut, or the Excise Inspector to refuse to honour the demand. The Excise Commissioner by his letter dated December 29, 1959, informed the petitioners that the licence in Fromgranted under the Central Excise Laws and Rules merely exempted the petitioners from payment of excise duty and did not authorise the petitioners to obtain power alcohol from a distillery in Uttar Pradesh without a permit under the U.P. Excise Act, IV of 1910. The petitioners application to the State of U.P. praying that the order of the Excise Commissioner be revised did not meet with success.3. The petitioners then moved this Court under Article 32 of the Constitution for a writ of certiorari quashing the order passed by the Excise Commissioner and the State of U.P. or a writ of mandamus commanding them to act according to law.

Reasoning:
This contention is, for reasons to be presently set out, wholly without substance. The relevant statutory provisions and rules framed thereunder which have a bearing on the plea raised by the petitioners may be briefly reviewed.It is clear from the provisions of the Indian Power Alcohol Act and the Rules framed under the Act that manufacture, production and disposal of power alcohol are controlled and regulated and that power alcohol may not be issued, stored, denatured or transported otherwise than as provided in Chapter IX of the Excise Manual, U.P. Vol. I, but limited quantities may be issued to consumers direct from a distillery under the general or special permission of the Central Government or the Power Alcohol Authority. Under Rule 2(q) of the Rules framed under the Indian Power Alcohol Act, the Excise Commissioner, U.P. has been appointed as the Power Alcohol Authority.9. The licence in Formunder the Central Excises and Salt Act, 1944, issued to the petitioners merely authorised them to obtain without payment of duty power alcohol for industrial purposes. But the issue of such a licence did not obviate the necessity of complying with the relevant provisions made under the Indian Power Alcohol Act, for the licence under the Central Excise Rules authorises the use of power alcohol obtained without payment of duty, but for obtaining power alcohol, the provisions of the Power Alcohol Act and the Rules have to be complied with.10. The statutory provisions and the Rules issued thereunder which we have set out in detail clearly prescribe that power alcohol may be issued to a consumer direct from a distillery as provided by the proviso to Rule 33 of the Power Alcohol Rules, and to the issue of power alcohol from a distillery in the State of U.P., Chapter IX of the Excise Manual which contains the relevant rules framed under the U.P. Excise Act applies.11. The right to obtain power alcohol directly from a distillery was therefore subject to the provisions of the Indian Power Alcohol Act, 1948, the Rules framed under that Act which incorporated therein the U.P. Excise Manual Chapter IX. The contention of the petitioners that since they obtained a licence in Formunder the Central Excises Act they were entitled to obtain the quantity of power alcohol required for the purpose of their business without any restriction as to the quantity or the conditions as to obtaining permits is therefore wholly without substance. The Excise authorities required the petitioners to obtain permit after "satisfying all other necessary procedural details prescribed." In so directing, the Excise authorities were acting according to law. The contention raised by the petitioners that the provisions of Chapter IX of the U.P. Excise Manual, Vol. I, apply to power alcohol which is intended to be used as fuel and not otherwise, has, in our judgment, no substance. Rules 10 and 33 proviso of the Power Alcohol Rules apply to power alcohol used for all purposes and are not restricted to its use as fuel.12. The validity of Chapter IX of the U.P. Excise Manual which has been incorporated by Rule 10 in the Rules framed under the Indian Power Alcohol Act, has not been challenged before us. It is true that the petitioners had, under Article 19(1)(g) of the Constitution a fundamental right to carry on business of manufacture of Thinners. But that fundamental right is subject to restrictions prescribed under the Indian Power Alcohol Act and the Rules framed thereunder. The reasonableness of those restrictions has not been challenged before us. The only argument advanced by the petitioners in support of the petition is that the Central Government having granted a licence in Formno further conditions could be imposed restricting the right of the petitioners to obtain power alcohol required by them for the purpose of their business. That contention on the Rules framed under the Power Alcohol Act is wholly unwarranted, and must be rejected.