GOVERNMENT OF HARYANA versus HARYANA BREWERY LTD. AND ANR.

Citation: [2002] 1 S.C.R. 942 · Decided: 12-02-2002 · Supreme Court of India · Bench: B.N. KIRPAL, SHIVARAJ V. PATIL, B.P. SINGH · Disposal: Appeal(s) allowed

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Judgment (excerpt)

A 
B 
GOVERNMENT OF HARYANA 
v. 
HARYANA BREWERY LTD. AND ANR. 
FEBRUARY 12, 2002 
[B.N. KIRPAL, SHIVARAJ V. PATIL AND 
BISHESHWAR PRASAD SINGH, JJ.] 
Punjab Excise Act, 1914/Punjab Brewery Rules, 1956-Ss. 31 and 321 
C Rule 35-Manufacture of beer-Excise Duty-Levy of-Held, can be levied 
only after the process of manufacture was completed and has became fit for 
human consumption-Tax is on the end product and not on the raw material. 
Appellant-Excise authorities issued a show cause notice to the 
respondent imposing excise duty on the beer brewed sating that the wastage 
D referred to in Rule 35 was more than 10 percent for the period 1986-87 and 
earlier, and more than 7 percent in the later years. Respondent raised a plea 
before the excise authorities, that the percentage of wastage should have been 
more than 7 or 10 percent. The said plea was rejected. Thereafter respondent 
filed a writ petition before the High Court contending that it was not 
permissible for the excise authorities to levy excise duty at the stage before 
. E potable beer becomes fit for human consumption. High Court quashed the 
demand by holding that on the actual quantity of potable beer manufactured 
by the respondent allowance of 7 percent should be given and then duty 
determined. Hence the present appeal. 
F 
On behalf of appellant it was contended that the State is not proposing 
to levy any excise duty on beer which had not been manufactured and had 
not become fit for human consumption, and that the High Court has not 
correctly construed the different provisions of the Act and Rules. 
On behalf of respondents it was contended that excise duty was payable 
G only after all the process in the manufacture of beer have been completed 
and on the end-product an exemption of 7 percent was to be allowed. 
Allowing the appeal and setting aside the order of High Court, the Court 
HELD : 1. The state has jurisdiction to levy excise duty only on beer 
H after it has been brewed and has become fit for human consumption. Resorting 
942 
• 
GOVT. OF HARY ANA v. HARY ANA BREWERY LTD. 
943 
to Rule 35 of the Punjab Brewery Rules and calculating the quantity of beer A 
which is manufactured and is fit for human consumption cannot be said to 
be invalid or impermissible. (950-H) 
1.2. A reading of Section 32 of the Punjab Excise Act leaves no manner 
of !loubt that the stage at which excise duty can be levied is only after the 
process of manufacture has been completed and in fact, it is to be levied when B 
it is issued from the distillery, brewery or warehouse. The tax is on the end-
product and not on the raw material. The allowance of 7 percent has to be in 
arriving at the figure of the manufactured beer as loss of quantity during the 
process of manufacture. It cannot be that on the figure of manufactured beer, 
arrived at on the basis of the books of the respondent, an allowance of 7 C 
percent has to be given. If the figure taken for the purpose of calculating the 
excise duty is only of the end-product, viz., the beer produced, and not the 
quantity of raw material used in the manufacture of beer during which loss 
of some quantity as wastage would have occurred, there cannot be a deduction 
of any sum of proportion as wastage from the quantity of end-product in order 
to arrive at that quantity. The excisable produce is the quantity of beer D 
produced and not the quantity produced, and thus excisable, minus 7 percent. 
The allowance is contained in the proviso to Section 32 read with Rule 35. If 
the entries in the brewing book of the licensee or in the survey book of the 
Inspector are not to be taken into consideration, then the question of giving 
an allowance of 7 percent contemplated by Rule 35 would also not arise. 
E 
(950-E, G) 
2. However, in the instant case, before the Excise Commissioner no 
dispute has been raised with regard to the figures and the contention was that 
the percentage of wastage should have been more than 7 or IO percent. Thus 
the matter is remanded to the Financial Commissioner for a fresh decision 
in accordance with law and in the light of the observations made in this 
judgement. [951-E, GI 
CIVIL APPELLATE JURISDICTION 
Civil Appeal No. 1999 of 
1997. 
F 
From the Judgment and Order dated 22.7 .96 of the Punjab and Haryana G 
High Court in C. W.P. No. 18750 of 1995. 
Mahendra Anand, Anil B. Divan, Y.V. Giri, S. Ganesh Neeraj Kumar 
Jain, Aditya Kumar Chaudhary, J.P. Dhanda, Mahesh Agarwal, Manu 
Krishnan

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