STATE OF KERALA Vs. SIMILA HOMOEO LABORATORY

JUDGEMENT

(1.) The above Writ Appeal is filed by the respondents against the judgment rendered by the learned Single Judge in O.P. No. 2854 of 1991. Appellants are the Special Secretary to Government of Kerala (Taxes), the Commissioner of Excise, Board of Revenue and the State of Kerala. Respondent in the W.A. is the petitioner in the O.P. viz. M/s Similia Homeo Laboratory, represented by the partner and General Manager. Respondent petitioner is engaged in the manufacture of Homeopathic medicines. The Homeopathic preparations are made with alcohol as one of the contents. For the purpose, respondent/petitioner had taken licence under the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956, hereinafter referred to as 'the Rules'. This licence enables the respondent to make Homeopathic preparations containing alcohol out of bond.

(2.) Pursuant to the issue of the licence, a permit was issued to the respondent for lifting 1000 litres of rectified spirit from Chiceps Distillery at Menonpara. The Circle Inspector, Chiceps collected an amount of Rs. 28,230 from the respondent as excise duty and gallonage fee for 1000 litres of rectified spirit. The excise duly was collected at the rate of Rs. 15.50 per bulk litre and the gallonage fee was collected at Rs. 2.50 per litre. The respondent objected to the claim of the Circle Inspector in collecting the excise duty at Rs. 15.50 per bulk litre and also the collection of gallonage fee. According to the respondent, the excise duty leviable at the relevant time was only Rs. 13.20 per litre and the petitioner was not liable to pay gallonage fee as per the provisions of R.14 of the Rectified Spirit Rules. To the above effect, respondent filed a representation before the Commissioner of Excise, Board of Revenue. On this representation, the Commissioner of Excise passed an order on 10th August 1989, copy of which is produced and marked as Ext. P1 along with the O. P. The Commissioner accepted the respondent's case that no gallonage fee can be collected on rectified spirit issued for the use in the manufacture of medicinal preparations as per R.14(1) of the Rectified Spirit Rules Hence he ordered refund of the gallonage fee collected. With regard to the excise duty, the Commissioner; did not decide as to what was the correct rate of duty. On the other hand, he gave freedom to the respondent to apply for the rebate for any excise duty collected over and above the duty actually payable under S.4 of the Medicinal and Toilet Preparations Act, hereinafter referred to as 'the Act'.

(3.) Against the above order, respondent filed an appeal under R.127 of the rules before the Government of Kerala challenging the illegal levy of excise duty. The appeal memorandum was produced as Ext. P2 along with the O. P. The Government, by order dated 17th December 1990, which is produced as Ext. P3, dismissed the appeal. According to Ext. P3 order, duty on rectified spirit is Rs. 15.50 per proof litre as per notification published as S.R.O. No. 60/61, under S.17 of the Abkari Act, Act 10/77. The contention of the respondent that the duty was at the rate of Rs". 13.20 as per item 3 of the schedule to the Act was rejected. According to the Government, the duty stated in the schedule to the Act is for Homoeopathic preparations and not for rectified spirit meant for preparations. Hence, it refused to refund any amount which was collected as excise duty. At the same time, it held that, no gallonage fee was payable on rectified spirit issued for Homoeopathic preparations. It was. challenging Ext. P3 order that the respondent filed the O.P.