UNITED SPIRITS LIMITED Vs. STATE OF ODISHA

JUDGEMENT

(1.) United Spirits Limited, a company incorporated under the Companies Act, 1956, has filed this writ petition seeking to quash the demand notice dtd. 1/9/2012 under Annexure-5, whereby it has been called upon to deposit the duty arising due to the transit wastage of ENA (Extra Neutral Alcohol) beyond the allowable limit amounting to Rs.57,85,991.00 @ Rs.220.00, as well as the office order dtd. 19/11/2015 under Annexure-11, whereby the representation, filed by the petitioner in compliance to the order dtd. 5/10/2015 passed by this Court in W.P.(C) No.2452 of 2014, has been rejected.

(2.) The factual matrix of the case, in brief, is that, one M/s. Heritage Distilleries Private Ltd. (hereinafter to be referred in short as 'M/s. HDPL') had established an industry at Ekamkana, Nimapara in the district of Puri for blending, bottling and manufacturing of IMFL. The present writ petitioner took over the factory/industry of M/s. HDPL on lease basis for a period of 5 years with effect from 1/4/2013 and accordingly obtained license from opposite party nos. 3 and 4 for compounding, blending and bottling of IMFL in the factory premises of M/s. HDPL. At the time of taking over the lease of the factory of M/s. HDPL, the petitioner through its official filed an undertaking by way of an affidavit dtd. 22/3/2013 before the Excise Authorities that it shall pay the amount claimed against M/s. HDPL, as and when the demand became payable as per law. Clauses-4 and 5 of the affidavit read as under:-

(3.) Mr. D.P. Nanda, learned Senior Advocate appearing along with Mr. P.R. Patnaik, learned counsel for the petitioner contended that excise duty cannot be imposed on non-excisable article and, as such, the loss in transit was by way of an accident, therefore, the demand for excise duty on the ENA so lost cannot be sustained. It is further contended that as the percentage of ethyl alcohol in ENA is 94.8 % and, as such, the demand of excise duty on the lost ENA cannot be imposed, as the said ENA is not fit for human consumption, being not converted to IMFL. In the instant case, the ethyl alcohol content being 94.8% in the ENA, the said ENA which was lost in the accident while in transit not being stored, received, weighed or verified in opposite party no.6 distillery or warehouse, the demand as per Annexure-5 dtd. 1/9/2012 and the office order dtd. 19/11/2015 under Annexure-11 cannot be sustained. Therefore, contended that the petitioner is not liable to pay any excise duty in view of proviso to Sub-rule (2) of Rule 32 of the Board's Excise Rules, 1965, wherein it has been specifically mentioned that if the opposite party no.2 is satisfied that the tanker carrying ENA faced an accident, the demand of excise duty on the lost ENA be waived. In view of such specific provision, the demand so raised cannot be sustained, as the loss has been admittedly caused due to accident.