STATE OF KERALA Vs. JOSEPH

JUDGEMENT

(1.) The short question that arises for consideration in this appeal is whether the State is entitled to levy excise duty on liquor unfit for human consumption.

(2.) The State is in appeal against the judgment of the learned single Judge dated 31.8.2015 allowing WP(C) No.6781 of 2010 filed by the first respondent. During the pendency of the writ appeal, the first respondent died and the present Managing Director of the company has been impleaded as the second respondent. The respondent is the Managing Director of M/s.Indo Scottish Brand (P) Ltd Distillery, Karuvelipadi, Kochi-682 005. The respondent has been issued with Exts.P1 to P3 licences under the Kerala Distillery and Warehouse Rules, 1968 to manufacture alcoholic liquor for human consumption. He is engaged in the process of manufacturing, compounding and blending of liquor. The liquor so manufactured is thereafter bottled, for which a separate licence has been issued. The respondent is permitted to compound and blend Indian made foreign liquor (IMFL) as well as imported foreign liquor for the purpose of bottling or sale. The case of the respondent was that the liquor manufactured by the company is kept in a bonded warehouse under the joint control of the respondent and the Distillery Officer. The excise duty is payable only on the removal of the liquor from the bonded warehouse. The respondent contended that he was not bound to pay excise duty as long as the liquor remained in the bonded warehouse. Such liquor kept in the bonded warehouse, became chargeable to the duty only on the same being released for consumption in the State. The dispute in the present case related to the quantity of liquor that was found unfit for human consumption on being subjected to chemical analysis. Such liquor, according to the respondent, was liable to be destroyed and was not capable of being put to any use whatsoever. However by Ext.P5 proceedings, the respondent was directed to pay excise duty on the quantity of liqour that was admittedly found unfit for human consumption. He had filed the writ petition challenging Ext.P5 proceedings contending that he was not liable to pay the duty that was claimed by the appellants herein.

(3.) A counter affidavit was filed on behalf of the appellants, disputing the contentions of the respondent. The contention put forward by the State was that since the liquor had already been manufactured it had become chargeable to excise duty. Therefore, duty was payable irrespective of the question as to whether the liquor that was manufactured was actually sold or was destroyed for some reason. In view of the above, it was contended that, Ext.P5 proceedings were perfectly justified and therefore, not liable to be interfered with.