INDUSTRIAL CHEMICAL CORPORATION Vs. EXCISE COMMISSIONER

JUDGEMENT

(1.) MESSRS Industrial Chemical Corporation-petitioners herein - set up a business at Ghaziabad of manufacturing Nitrocellulose Thinners. On December 2, 1959, the petitioners obtained from the Assistant Collector, Central Excise, Meerut, a licence in Form L-6 under 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, the officer-in-charge of 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 Form L-6 for 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 From L-6 granted 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.) TO consolidate and amend the law relating to central duties of excise on goods manufactured or produced in certain parts of India and to salt, the Central Legislature enacted the Central Excises and Salt Act I of 1944. By Section 2(d) of the Act the expression "excisable goods" means goods specified in the First Schedule as being subject to duty of excise and includes salt. Item 4 in the First Schedule is 'Motor Spirit' which includes Power alcohol, "that is to say, ethyl alcohol of any grade (including such alcohol when denatured or otherwise treated), which by itself or in admixture with any other substance, is suitable for use as fuel for internal combustion engines". By Section 3 of the Act duty is leviable in such manner as may be prescribed on all excisable goods other than salt produced or manufactured in India. Section 6 authorises the Central Government to provide that no person shall from such date as may be specified in the notification issued in that behalf, except under the authority and in accordance with the terms and conditions of a licence granted under the Act, engage, among other activities, in the production or manufacture or any process for the production or manufacture of any specified goods included in the First Schedule or of any specified component parts or ingredients of such goods. Section 37 invests the Central Government with power to make rules to carry into effect the purposes of the Act and in particular, amongst other purposes, to exempt wholly or in part the duties imposed by the Act.