Mohan Meakin Breweries Ltd. Vs.
Commissioner of Excise, Bihar & Ors [1968] INSC 251 (17 October 1968)
17/10/1968 BACHAWAT, R.S.
BACHAWAT, R.S.
HIDAYATULLAH, M. (CJ) SIKRI, S.M.
MITTER, G.K.
HEGDE, K.S.
CITATION: 1970 AIR 1171 1969 SCR (2) 457
ACT:
Bihar & Orissa Excise Act (2 of 1915),
ss. 27, 28 and r.
147--Increase in duty on liquor--Increased
rate whether leviable on goods imported after payment of duty before date from
which increased duty payable--Rule 147, proviso whether justifies realisation
of enhanced levy in such case.
HEADNOTE:
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 Art. 32 of the Constitution. Apart from ss. 27 and 28 of the Act the
respondent State relied on the proviso to r. 147 of the Rules made under s. 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 s. 28(a)(i). 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
s. 28(a)(ii) 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 s. 28(a)(i). The petitioner's foreign liquor was not imported
under bond. The petitioner was therefore not liable to pay under the proviso 3
Sup.C.I./69--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]
ORIGINAL JURISDICTION: Writ Petition, No. 14
of 1968.
Petition under Art. 32 of the Constitution of
India for enforcement of the fundamental rights.
M.C. Chagla, S.K. Mehta, K.L. Mehta and S.K.
Khanna, for the petitioners.
C.K. Daphtary, Attorney-General and D.P.
Singh, for the respondents.
The Judgment of the Court was delivered by
Bachawat,J. 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. 14.40 L.P. 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. 14.40 to Rs. 26.20 per L.P. 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 Art. 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 s. 27(1)(a) of the Bihar and Orissa
Excise Act, 1915 (Bihar and Orissa Act H of 1915). Subject to any rules made
under s. 90 clause (12), the duty may be levied under s. 28 (a) in two ways.
The first method as indicated in s. 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 s. 28 (a)(ii) is by
payment upon issue for sale from a warehouse established, authorized or
continued under the Act. In view of the first proviso to s. 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 Commissioner
under s. 15. In view of s. 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. 28(a)(i). 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 s. 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 s. 28(a)(ii) 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 s. 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 s. 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 B, to 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.
G.C. Petition allowed.
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