S.K. PATTANAIK (DEAD) THROUGH LRS. versus STATE OF ORISSA AND ORS.

Citation: [1999] SUPP. 5 S.C.R. 463 · Decided: 14-12-1999 · Supreme Court of India · Bench: A.S. ANAND, V.N. KHARE, M. JAGANNADHA RAO · Disposal: Dismissed
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Judgment (excerpt)

~ 
S.K. PATTANAIK (DEAD) THROUGH LRS. 
A 
v. 
ST A TE OF ORISSA AND ORS. 
DECEMBER 14, 1999 
[DR. A.S ANAND, C.J., M. JAGANNADHA RAO 
B 
AND V.N. KHARE, JJ.] 
Excise Law: 
Bihar and Orissa Excise Act, 1915: 
c 
Ss.27 and 28-Excise duty and countervailing duty-Levy of Indian 
made foreign liquor-Import of into state of orissa-Stored in licensed bonded 
warehouse-Stock became sedimented and rendered unfit for human 
consumption and destroyed-Demand of countervailing duty-Held, was 
perfectly justified-Since the taxable event for attracting excise duty or D 
countervailing duty is the manufacture or import of excisable goods into the 
- State , charge of incidence of duty stands attracted as soon o,s the taxable 
event takes place and the facility or postponement of collection of duty under 
the Act or the Rules framed thereunder can in no way affect the incidence 
of duty on the imported goods-The fact that liquor was rendered unfit for E 
human consumption and desiroyed after the import which by itself attracted 
the levy of duty could not wipe of the liability of the appellant for payment 
of duty on the excisable goods after their import in the bonded Warehouse. 
CIVIL APPELLATE JURISDICTION: Civil Appeal No . .4160 of 
1995. 
F 
(From the Judgment and order dated 2.12.1994 of the High Court of 
orissa at Cuttack in Original Jurisdiction case No. 3977/91) 
Jayant Das, A.N. Das, Udai kumar, Rajiv Dutta and Raj Kumar Mehta 
for appearing parties. 
G 
The following Order of the Court was delivered : 
This appeal by special leave is directed against the judgment and order 
of the Full Bench of the High Court of Orissa dated 2nd of December, 1994. 
• 
Brief facts giving rise to the present appeal are as follows . 
H 
463 
• 
464 
SUPREME COURT REPORTS [1999] SUPP. 5 S.C.R. 
A 
The appellant imported into the State of Orissa Indian made foreign . 
liquor and stored it in a licensed bonded warehouse from where the liquor was 
to be released for sale. While liquor was so stored in the warehouse, a portion 
of the imported stock became was sedimented and was rendered unfit for 
human consumption. That stock was therefore, destroyed. A notice was 
issued to the appellant for payment of countervailing duty on the stock to 
B the tune of Rs. l 0.02.182. The validity of the demand of countervailing duty 
was challenged by the appellant in a writ petition which was heard by a 
Division of the High Court. It was asserted that since the stock of liquor had 
been "destroyed" in the warehouse, countervailing duty could not be imposed. 
Before the Division Bench, reliance was placed on the judgment in the case 
C of P.D. Jain v. State ofOrissa, O.J.C. No. 2241 of 1999. decided on 11.5.1992, 
which had been followed in the case of Mohan Meakins Ltd. v. State of 
Orissa, O.J.C. No. 1971of1991, decided on 20.9.1993. The Division Bench felt 
that the two decisions noticed above needed re-consideration. A reference 
was accordingly made to the full Bench and that is how the matter was 
decided· by the full Bench. 
D 
Heard learned counsel for the parties. 
"Excise duty" and "countervailing duty" are well known concepts .and 
are attracted in different situations. "Excise duty" is essentially a duty on 
E manufacture of goods, and the taxable event is the manufacture of the excisable 
goods. "Countervailing duty", on the other hand, is imposed when excisable 
articles are imported into the state, in order to counter balance the excise 
duty, which is leviable on similar goods if manufactured within the State. So 
far as countervailing duty is concerned, the incidence of the impost is on the 
import of the excisable article i.e., at the time of entry into the State. 
F 
Section 27 of the Bihar and Orissa Excise Act, 1915 (hereinafter called 
'the Act') deals with the powers of the State to impose duty on import, export, 
transport and manufacture. This Section is the charging Section both for 
excise duty as well as countervailing duty. Section 28 of the Act on the other 
G hand provides for the ways for levying the duty which can be imposed under 
Section 27. Section 28 deals with the manner oflevying duty imposable under 
Section 27 of the Act in different manners. Though countervailing duty or 
excise duty are required to be assessed and collected as soon as the taxable 
event arises, a facility for postponement of collection of excise duty is 
envisaged under Section 28 in case of sale of the excisable article from the 
H bonded warehous
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