Orissa High Court
Ms. Sabmiller India Ltd vs State Of Odisha And Others on 29 March, 2017
Author: Indrajit Mahanty
Bench: Indrajit Mahanty
THE HIGH COURT OF ORISSA : CUTTACK
W.P.(C) No.21170 of 2013
In the matter of an application under Articles 226 and 227 of the
Constitution of India.
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M/s. SABMiller India Ltd. ... Petitioner
-Versus-
State of Odisha & others ... Opposite Parties
For Petitioner : M/s. M.K. Mishra, T. Mishra &
M.K. Rajguru
For Opposite Parties: Mr. S.P. Mishra,
Advocate General
PRESENT:
THE HON'BLE MR. JUSTICE INDRAJIT MAHANTY
&
THE HON'BLE DR. JUSTICE D.P. CHOUDHURY
___________________________________________________
Date of Judgment: 29.03.2017
___________________________________________________
Dr. D.P. Choudhury, J. Challenge has been made to the illegal demand
made by the opposite parties with a request to refund the
amount recovered towards differential of bottling and on other
counts by adjustment of excise account.
FACTS
2. The facts of the case after being filtered are as
follows:-
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Petitioner Company formerly was known as SKOL
Breweries Ltd. East Coast Breweries & Distilleries Ltd.
(hereinafter called 'ECBDL') was owned by Industrial
Development Corporation Ltd. (IDCOL). But Shaw Wallace and
Company Ltd. (hereinafter called 'SWCL') took over ECBDL in
May 1994 from IDCOL. On 21.2.2002 by the order of this Court,
application for amalgamation of ECBDL with the SKOL Breweries
Ltd. was allowed. So, SKOL Breweries Ltd. became the sole
owner of the unit of ECBDL at Paradeep. After merger of ECBDL
with SKOL Breweries Ltd., the later changed from its Company's
name to SABMiller India Limited with issue of fresh certificate of
incorporation under Section 23 (1) of the Companies Act, 1956
with effect from 22.6.2012. Now petitioner is the SABMiller India
Ltd.
3. Be it stated, during 2008-2009 the Excise policy of
the State introduced a new levy of Bottling Fee for bottling @
Rs.4/- per BL of Beer manufactured on own brands and @ Rs.5/-
per BL of Beer manufactured for the brands other than the own
brands. Similarly the Excise Policy for 2008-09 and 2009-10
shows that the Excise Duty on Beer up to 5% v/v was levied @
Rs.18/- per BL and Beer mixed with any imported element was
levied @ Rs.21/- per BL. Said rate is being revised from time to
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time for the subsequent years. The petitioner is required
purportedly to register its labels each year for different brands of
Beer supplied to OSBC on payment of specified Label
Registration fee under Rule 41-A of the Board's Excise Rules,
1965. So, the petitioner is authorized to sell Beer under the
approved labels only. It is alleged, inter alia, that during audit by
Accountant General (A.G.) there was demand of
Rs.2,02,47,100/- towards differential bottling fee as per Excise
Policy for 2008-09 and 2009-10, non-payment of Label
Registration Fee of Rs.4,60,000/- for the years 2009-10 and
2010-11 and short realization of Excise Duty of Rs.76,60,000/-
on Beer for mixing imported element therein. Petitioner
submitted reply to the observation of the A.G. that it has got
own brand "Haywards 5000" and "Knock Out" at its unit at
Paradeep and hence demand of bottling fee is not correct. But
the Excise authorities forcibly recovered the differential bottling
fee on the ground that the petitioner is using the brand other
than his own brand and as such it has already recovered a sum
of around Rs.20 crores. Similarly, it is stated that the petitioner
being Licensee is using the same labels as approved for the year
2009-10 and 2010-11, i.e., "Haywards 5000 Super Strong Beer"
and the Excise Department while granting its approval have
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wrongly typed/used the words "Haywards 5000 The Original
Super Strong Beer" although the brand as "Haywards 5000
Super Strong Beer" has been used by the petitioner's Company
in both front label and back label of each Beer bottle. Be it
stated, the word "Original" appearing in the front label is a
generic word representing the authenticity and long standing
existence of such Beer for which the petitioner is not liable to
pay any additional registration fee and application fee which is
allegedly pointed out by the A.G. for recovery. Moreover, the
petitioner is using Hops while manufacturing the Beer and Hops
being one of the basic raw-materials and a standard ingredients
used during the manufacturing process to give a distinct bitter
flavor, the same cannot be a foreign element mixed with the
Beer, exigible to duty at the rate of Rs.21/- per BL meant for
Beer mixed with foreign element, thus not applicable to the
petitioner but the payment of Excise Duty at the rate of Rs.18/-
or Rs.21/- as per Beer manufactured in India by the petitioner is
quite justified.
4. On 20.1.2012 the Superintendent of Excise without
examining the details of the submissions made by the petitioner,
directed the petitioner to deposit Rs.2,83,67,100/- within one
month and issued Demand Notice vide Annexure-7. In spite of
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protest by the petitioner, the opposite party No.5 insisted for
payment of the demand amount failing which threat was given
not to renew the licence of the petitioner for the year 2012-13.
On 22.3.2012 the petitioner made an appeal before the Excise
Commissioner-opposite party No.3 inviting his attention to his
submission to the objection raised by the A.G. Auditors. He also
requested the Excise Commissioner to renew the Brewery license
for the year 2012-13 without insisting payment of demand in
question with undertaking submitted by him that in the event of
adjudication of the demand being defeated, he would deposit the
demand amount within three months from the date of
adjudication. On such undertaking, opposite party No.3 allowed
renewal of the Brewery license for the year 2012-13. On
10.5.2012 the opposite party No.5 once again made an
additional demand of Rs.3.57 crores towards differential bottling
fees and directed the petitioner to deposit Rs.5,59,28,683/- by
end of May 2012. Then the petitioner filed another appeal before
the opposite party No.3.
5. It is stated that the opposite parties as per the
Excise Policy for the years 2012-13 and 2013-14, have forcibly
recovered at the rate of Rs.6.00 per BL and at the rate of Rs.7/-
per BL of Beer manufactured towards bottling fee, treating the
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petitioner Company being not the owner of brands. On the other
hand, as per the request of the Excise authority, petitioner
Company deposited an additional amount of Rs.3 crores as a
voluntary advance before 31st March 2012 to augment the
revenue of the State with the assurance that the same would be
adjusted towards clearance of dispatches from 1st April, 2012
onwards. Amazingly a sum of Rs.1,70,00,000/- towards the
impugned demand notice under Annexure-12 has been
apportioned from the excise amount of the petitioner and
adjusted by the opposite parties. As such, the opposite party
No.3 kept the appeal pending without same being disposed of.
The opposite party No.5 continuously issuing the demand notices
showing loss of revenue due to excess wastage in production of
Beer and shortfall in yield of Beer. It is stated that the demand of
differential bottling fee is illegal because the petitioner is using
own brand and Board has no power for imposition of bottling fee
under Rule 104 (2) (b) of Board's Rule which is ultra vires to
Section 90 of the Bihar and Orissa Excise Act, 1915. Similarly,
the petitioner having used its own label but the Excise
Department have wrongly typed the word 'Original' in the said
label while approving under Rule 41-A of the Board Excise Rules,
1965 (hereinafter called "the Rules") the petitioner is not liable
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to pay any extra label registration fee. Be it stated that Beer
being original Beer of the petitioner Company, not mixed with
any foreign element is not liable to pay Excise duty at the rate of
Rs.21/- per BL. It is asserted by the petitioner that the objection
of the Auditor about shortage in yield would not be feasible as
the wort before fermentation cannot be termed as alcoholic
liquor fit for human consumption and as such the State cannot
levy any excise duty at the stage before fermentation and
filtration. Thus, the objection of the Auditor in this regard is
unlawful.
6. Be it stated that the objection of the opposite parties
as to excess wastage of Beer as pointed out by the A.G. is not
correct because Rule 47 (1) of the Board's Excise Rules permits
an allowance of 10% of the monthly total of the Beer shall be
made on account of wastage and no duty shall be levied on such
percentage of wastage. As such, the petitioner has prayed to
quash the illegal demand made under Annexures-5 and 15,
Demand notices of the opposite party No.5 under Annexures-11
and 20 and to declare the Rule 104 (2) (b) of the Board's Excise
Rules ultra vires to Section 90 of the Bihar and Orissa Excise Act,
1915 (hereinafter called 'the Act'). It is further prayed to refund
the amount already recovered towards differential bottling and
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other counts by adjusting the same in the excise account of the
petitioner.
7. During course of argument, learned counsel for the
petitioner filed a memo dated 5.4.2016 stating that he does not
want to challenge Annexure-15 with liberty to approach the
appropriate authorities to reconsider the demands made on the
basis of the observation of Accountant General, Odisha,
Bhubaneswar without prejudice to the contention of the
petitioner on the subject. Also he made it clear that he does not
want to press the declaration of Rule 104 (2) (b) of the Board's
Excise Rules ultra vires to Section 90 of the Act. On the other
hand, learned counsel for the petitioner prays for adjudication of
other issues with regard to challenge to Annexure-5 and
consequential demands thereunder such as short levy of bottling
fee, mixing of imported element and short levy of label
registration fee.
COUNTER
8. Per contra, opposite party Nos.3 to 5 filed the
counter challenging the locus standi of the petitioner to file writ
petition as the Company has not been represented by any
member of the Board of the petitioner Company. At the same
time, these opposite parties admit the amalgamation of ECBDL
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with M/s. SKOL Breweries Ltd. According to these opposite
parties on 1.6.1993 ECBDL entered into an agreement with
SWCL to brew and bottle the products of SWBL. On 11.5.1994,
the State Government handed over the unit of ECBDL to SWCL
who purchased the shares of ECBDL which were held by IDCOL.
At the same time these opposite parties admitted that in the
Company Case No.43 of 2001, the ECBDL was amalgamated
with M/s. SKOL Breweries Ltd. (hereinafter called 'SKOL') and
after amalgamation the Company with the permission of the
Registrar of Companies started brewing and bottling. But SWBL
is the owner of two brands namely, "Haywards 5000" and "Royal
Challenge Premium" and used to pay royalty to SWCL for use of
the said brand names. However, after the Court allowed
amalgamation/merger of ECBDL at Paradeep with SKOL did not
make SKOL to be a part and parcel of SWCL. Thus, merger of
ECBDL with SKOL has got separate entity from the SWCL which
has entered into an agreement with ECBDL that ECBDL would
brew and bottle the product of SWBL.
9. It is submitted by these opposite parties that SWCL
is not a Company which manufactures Beer but it is the owner of
two brands, namely, "Haywards 5000" and "Royal Challenge"
whereas SWBL, a subsidiary of SWCL carried on the business of
10
marketing of Beer and not manufacturing of Beer. SKOL was
given permission by the Excise authorities to use the brand
name of "Haywards 5000" and "Royal Challenge" on payment of
requisite fees and on the basis of permission received from
SWCL, SKOL is manufacturing products using two brand names
owned by SWCL but the same are marketed by SWBL. The Trade
Marks Registration Certificate certifies that SWCL continued to be
the owner of Trade Mark "Haywards 5000" till 2016 and
subsequently the name of SKOL Breweries Ltd., Bangalore and
not the SKOL Breweries Unit at Paradeep has entered. So,
SKOL's Paradeep unit is not the exclusive owner of the brand
"Haywards 5000" for which the bottling fee by the petitioner's
Company has to be paid at the scale meant for using others
brands. So, the differential bottling fee as per Annual Excise
Policy 2009-10 and 2010-2011 has been rightly raised in the
A.G. audit as Rs.2,02,47,100/-.
10. According to these opposite parties, as per Annual
Excise Policy under Annexure-5 to the writ petition rightly
Rs.4,60,000/- towards Label Registration fee for the years 2009-
10 and 2010-11 and short realization of Excise Duty on Beer
amounting to Rs.76,60,000/- have been demanded. It is stated
that during the years 2009-10 and 2010-11 the petitioner has
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not brought to the knowledge of the Excise authority with regard
to any typographical error while granting approval towards
registration of front label as "The Original Haywards 5000 Super
Strong Beer" and back label as "Haywards 5000 Super Strong
Beer" for which the petitioner Company has committed mistake
under the Company law inviting penal action. So, the demand of
the opposite parties for realization of fees for registration of
labels is justified.
11. It is further revealed from the counter of these
opposite parties that as per the Annual Excise Policy for the
years 2008-09 and 2009-10, excise duty on Beer manufactured
but mixed with any imported element was fixed at Rs.21/- per
B.L. whereas the Beer manufactured in India with alcohol @ 5%
v/v was fixed @ Rs.18/- per B.L. and above 5% v/v was Rs.21/-
per B.L. It is the A.G. Auditors who have observed that the
petitioner company has used Hops extract and Hops Pellets
imported from foreign countries for manufacture of Beer for
which Petitioner Company is liable to pay the duty on the Beer
mixed with imported elements. So, the A.G. audit has asked to
pay the differential amount of excise duty of Rs.76,59,850/- and
as such these opposite parties had asked the petitioner to pay
the differential excise duty. It is asserted by these opposite
12
parties that as per Excise Technical Manual in para-239 the
petitioner could have opted for prior permission from the Excise
Directorate for use of this imported element for manufacture of
Beer and in absence of such permission, the observation of the
Auditors and raising of the said demand @ Rs.21/- per BL under
Excise Policy is justified.
12. Be it stated that the Excise Commissioner being the
appellate authority by considering the submission of the
petitioner has allowed the renewal of license of the petitioner
Company for the year 2012-2013 pending realization of arrear
demand on the basis of the undertaking furnished by the unit.
The differential bottling fee for the period from 2008-09 to 2010-
11 being calculated at Rs.5,59,28,683/- have been justifiably
demanded. Similarly the bottling fee for Rs.1,70,00,000/- for the
year 2011-12 as per the Excise Policy has been deducted from
the P/L Account of the petitioner and the petitioner has not
raised any objection for demand of such amount.
13. These opposite parties further take the stand that
the A.G. Audit report is correct and proper but the petitioner is
guilty of suppression of facts and non-disclosure of the sole
authority over the three brands in question, i.e., Haywards 5000,
Royal Challenge and Knock Out. It is stated further that as per
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para-208 of the Excise Technical Manual, five percent wastage is
allowed in the process of manufacture of Beer but petitioner has
made wastage varying from 5.14% to 9.98%, thereby the A.G.
audit has rightly raised the demand of Rs.1,35,40,566/- towards
SED @ Rs.20/- per BL and bottling fee @ Rs.6/- per BL on Beer
towards excess wastage beyond five percent limit. The bottling
fee imposed is a regulatory one and imposed under Section 90 of
the Act and Rule 110 of the Rules, 1965 for which the demand of
bottling fee is strictly in accordance with law. The Head
Manufacturing/G.M. of SKOL Breweries has no authority to
represent the Board of Directors of the petitioner Company and
has misled the Court by declaring Rs.1,70,00,000/- to have been
adjusted by the Excise Authority.
REJOINDER
14. The petitioner filed rejoinder to the counter filed by
the opposite party Nos.3 to 5 stating that resolution dated
27.8.2013 was passed by the Banking and Legal Committee of
the Board of Directors of the petitioner Company vide
Annexure-23 delegating the General Manager (Manufacturing)
being the competent person to file the writ application on behalf
of the petitioner Company. It is further stated in the rejoinder
that ECBDL located at Paradeep was owned by IDCOL and the
14
State Government handed over this unit to SWCL. Thus, SWCL
acquired all the shares of ECBDL which was held by IDCOL. After
taking over of the unit ECBDL by SWCL, the later manufactured
beer under the trade name of "Haywards 5000" and "Royal
Challenge" which trade mark was originally owned by SWCL. By
virtue of order dated 21.2.2002 of this Court at Annexure-1,
ECBDL at Paradeep was amalgamated with SKOL Breweries Ltd.
which was 100% subsidiary of SWBL which in turn is a subsidiary
Company of SWCL. Thus, SKOL Breweries Ltd. used the brand
names of "Haywards 5000" and "Royal Challenge" which was
owned by SWCL. On the other hand, the SWBL a subsidiary of
SWCL carried on the business of marketing of Beer and not a
manufacturing Company. Since SKOL Breweries Ltd. was not
having its own marketing arrangement, it was paying royalty and
marketing expenses to SWBL. The agreement dated 1.6.1994
under reference clearly shows that ECBDL was not a different
Company but it became one of the group of Companies of SWCL
since it was purchased from IDCOL.
15. It is further maintained in the rejoinder that Section
90 (7) of the Act only empowers the Board to prescribe the scale
of fees or the manner of fixing the fees payable in respect of
license, permit or pass granted under this Act but it does not
15
authorize the Board to prescribe a new form of bottling fee in
respect of other brand names used. Moreover, the petitioner all
along is manufacturing its own product and had no tie up
arrangement with any other Company which has already been
decided by this Court in W.P.(C) No.12365 of 2003 and duly
confirmed by the Hon'ble Apex Court in S.L.P. No.2359 of 2008.
The claim of the opposite parties that SKOL Breweries Ltd. is
manufacturing products using two brand names owned by SWCL
and the products so manufactured are marketed by SWBL is
incorrect and denied by the petitioner. With regard to the
differential bottling fee imposed on Brands under the Trade Mark
are owned by SKOL Breweries Ltd. by virtue of their acquisition
of the brands through Deed of Assignments executed on
27.5.2005. After this date neither SWCL nor SWBL remained the
exclusive owner of the brands and Trade Marks. After acquisition
of the brands it is manufacturing its own brands and at no
stretch of imagination it can be said that the Trade Mark
Registration Certificate does not establish that SKOL's Paradeep
unit is the exclusive owner of the brand "Haywards 5000".
16. It is stated that after acquisition of Trade Mark in the
year 2005, the petitioner Company has appraised the Excise
Authorities about this fact and for better clarity it has filed the
16
copies of few correspondences vide Annexure-24 series. Since
the petitioner Company is the exclusive owner of the brands by
virtue of its acquisition of Trade Mark and having exclusive
license to brew, bottle and store Beer, the petitioner Company is
manufacturing Beer of its own brands being not liable to pay the
differential rate @ Rs.1/- per BL during the years 2008-09 and
2009-10. As per Rule 41-A of the Board's Excise Rules, 1965, the
application for registration/renewal of labels for the year 2010-
11 has been annexed as Annexure-25 series but the Excise
Department while granting approval failed to note the contents
of the label with regard to the name of the brand in question and
has used the word 'original' in the approval letter.
17. Be it stated that hops is not abundantly available in
India except in some parts of Jammu & Kashmir and all the
leading manufacturers of Beer in India are using imported hops
extract/pellets so as to add a distinct bitter flavor to manufacture
quality Beer. On the other hand, petitioner reiterated that the
hops being part of the process of manufacture of Beer cannot be
said to be the foreign element added to the Beer. It is, therefore,
stated that the demand raised @ Rs.21/- per BL as per the
Excise Policy is quite unjustified, arbitrary and is liable to be
quashed.
17
18. Petitioner vide letter dated 27.3.2012 was requested
to deposit an advance bottling fee of Rs.2.6 crores by 29.3.2012
with the condition that the same advance would be adjusted
from the month of April, 2012 and conceding such request
petitioner deposited Rs.2.5 crores as advance although the
statute does not provide for payment of such advance. But the
opposite parties without any intimation apportioned the said
amount towards the impugned demand from the excise account.
Petitioner has also intimated such facts to the Excise authorities
who remained silent. Be it stated that the A.G. Auditors without
properly examining the provisions of Section 27 of the Act and
the Rule 47 (1) of the Board's Excise Rules made demand
illegally on all counts.
ADDITIONAL COUNTER
19. The opposite party Nos.3 to 5 filed additional counter
on 10.8.2015 precisely reiterating the counter. It is only
additionally stated that the brands owned by SWCL as its
exclusive property claimed to have been amalgamated with or
taken over by the Petitioner Company has not been established
by the petitioner in its rejoinder. SWCL nowhere said that it has
sold its brand to SKOL for which SWCL is still the owner of those
brands which is used by SKOL for a consideration.
18
20. Be it stated that when the petitioner has admitted to
have imported the hops extracts/pellets from outside, demand
raised @ 21/- per BL under Excise Policy is justifiable and
petitioner Company is liable to pay such rate of duty. When the
petitioner has not paid the arrears he was not entitled to the
renewal of his licence as per Rule 45 of the Board's Excise Rules,
1965. But only after giving undertaking before the Collector that
it would abide by the decision of the Appellate Authority or
appropriate court, the bottling fee was adjusted from the P.L.
Account not towards any old demand as franchise fee but on
account of the arrears of preceding years towards bottling fee. It
is further stated that Excise Technical Manual duly framed under
Rule 15 of the Board's Excise Rules, 1965 which is also made by
virtue of the power under Section 89 of the Act, the same
Technical Manual has got all statutory forces. It is stated that in
the instant case, the case of the petitioner is not about
destruction of spoilt Beer but it is the case of wastage of Beer
during manufacturing process for which rightly the Department
has claimed the demand on this score.
REPLY AFFIDAVIT OF PETITIONER
21. The petitioner has filed a reply affidavit to the
additional counter reiterating the averments made in the petition
19
and rejoinder. It is stated that since hops extract/pellets is used
as a raw-material to manufacture Beer, the State is not
empowered to levy the Excise duty on the raw-material as it
does not attract the provisions of Section 27 (1) and (2) of the
Bihar and Orissa Excise Act, 1915. Be it stated that the Technical
Manual as relied upon by the A.G. Auditors have no statutory
force for which they landed in a wrong conclusion about excess
wastage in production of Beer. Rule 47 of the Board's Excise
Rules, 1965 is applicable under which 10% of wastage is
allowed. Since the petitioner has manufactured its own brands,
the provisions of Rule 110 (b) (ii) of the Board's Excise Rules,
1965 are not applicable to the petitioner Company.
SUBMISSIONS
22. Mr. Manoj Mishra, learned Senior Advocate for the
petitioner urged that the demands by the Department is
absolutely illegal and improper. According to him, the O.Ps. have
not understood the fact of the case properly and has tried to
misguide the Court. He submitted that SKOL Breweries Limited is
transferee Company of brand used. By virtue of the order of this
Court under the Companies Act, SKOL Breweries Limited
acquired all rights, properties including the Excise licence etc.
from ECBDL and the Hon'ble Company Judge of this Court has
20
duly passed order on 21.2.2002 and the same Company case
record vide Company Act Case No.43 of 2001 is available with
this record. He further submitted that SKOL being subsidiary
company of SWBL and SWCL has got own manufacturing unit
had got brand name being transferred from SWCL under Trade
Mark Act. Registrar of Trade Mark has duly approved it.
According to him, the SKOL Breweries Limited has applied for
use of labels of bottles of Beer under Sub-Rule (3) of Rule 41-A
of Board's Excise Rules being manufacturer of "Haywards 5000"
and "Knock Out" Beer and after due enquiry the opposite party
No.5-the Excise Commissioner issued licence to use label by
adding a word 'Original' under sub-Rule 6 of Rule 41-A of Board's
Excise Rules, 1965. Since SKOL Breweries Limited has merged
with the petitioner Company, the petitioner Company acquired all
rights and liability with permission as it had with the Company
SKOL Breweries Limited, the necessary demand of differential
bottling fee or wrong use of the brand of other Company has no
leg to stand.
23. Mr. Mishra, learned Senior Advocate for the petitioner
further submitted that the Department has illegally imposed duty
@ Rs.21/- per BL alleging that the petitioner has manufactured
Beer under which licence has been granted as if it is imported
21
under Section 27 of the Act. According to him, the petitioner has
added the hops extracts being imported from other countries to
give flavor to the Beer as without hops there cannot be Beer and
hops extracts is not available in India except to some extent it is
available in Jammu & Kashmir. Since hops is one inalienable part
of the Beer, it cannot be said that Beer is being imported from
the foreign country. So, the demand of the Department for
Rs.21/- per BL is untenable and illegal.
24. Learned Counsel for the petitioner further contended
that the opposite parties have raised demand on wrong premises
that the petitioner has used allowance of wastage of Beer more
than the quantity approved under the Rule. According to him,
Rule 47 of the Board's Excise Rules, 1965 prescribes procedure
for granting allowance but the opposite parties have only cited
Rule 45 which speaks about time and manner of worts or
produces. According to him, Rule 47 (1) of the Board's Excise
Rules clearly stated that allowance of 10% of the monthly total
of the charge shall be made on account of wastage and no duty
shall be levied on such percentage of wastage. Even if the
wastage of Beer of the petitioner Company is less than 10%, the
State has levied charges taking the same into consideration as if
the allowance is permissible for 5% only. He submitted that the
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demand on this account is also illegal. A memo is also filed by
the learned counsel for the petitioner by stating that they do not
want to challenge Annexure-15 with liberty to approach the
appropriate authorities to reconsider the demands made on the
basis of observation of Accountant General, Odisha,
Bhubaneswar without prejudice to the contention of the
petitioner on the subject. In toto, Mr. Mishra submitted that the
demand of the opposite parties on different counts are only
motivated and to harass the opposite parties.
25. The rival submission made by Mr. S.P. Mishra,
learned Advocate General for the State is that the writ petition is
not maintainable as it is misconceived both in facts as well as in
law. The petitioner being the Company ought to be represented
by the member of the Company's Board and there is no proper
representation of the petitioner by the General Manager of
manufacturing for which it is defective. It is further contended
that ECBDL became sick unit of IDCOL for which the State
Government floated a tender for handing over the unit of ECBDL.
ECBDL entered into an agreement with SWCL to brew and bottle
the products of SWBL. On 11.5.1994 the State Government
handed over the unit of ECBDL to SWCL. SWBL is a subsidiary
Company of SWCL. ECBDL amalgamated with SKOL Breweries
23
Limited as per the order of this Court. After amalgamation the
Company applied for incorporation of its name in an existing
licence for brewing and bottling, the prayer of that unit was
allowed. So, SWBL is the owner and proprietor of two brands,
namely, "Haywards 5000" and "Royal Challenge Premium".
ECBDL used to manufacture the brands of Beer on the basis of
amalgamation with an understanding that SWBL would use the
brand names "Haywards 5000" and "Royal Challenge" by paying
royalty to SWCL for use of the said brand names. Although this
Court permitted amalgamation/merger of ECBDL at Paradeep
with SKOL but it does not ipso facto SKOL to be a part and
parcel of SWCL. According to him, ECBDL has got a tie up with
SWBL to brew and bottle products carrying brand names inside
the State of Orissa but the office of SKOL being situated at
Mumbai and registered office of SWCL being located at Kolkota,
ECBDL even if amalgamated with SKOL has totally separated
entity from SWBL. Thus, he submits that the present petitioner
even if got merger of ECBDL cannot use the brand of SWBL.
Since the petitioner is using the brand of other Company, the
Department has rightly demanded the bottling fee as per the
Excise Policy 2015-16.
24
26. Learned Advocate General submitted that as per
Section 90 (7) of the Act, Board has prescribed two scales of
fees for bottling of Beer, i.e., bottling fee in respect of the
brewer's own brand and the other one is in respect of use of
brand of others. Since the Petitioner Company produces the
product of brands registered in the name of other Companies in
its factory under tie-up arrangements, rightly the State
Government has asked to pay bottling fee meant for the latter
one as per the Excise Policy in force then. Since SKOL is
manufacturing products using two brand names owned by SWCL,
namely, "Haywards 5000" and "Royal Challenge" and the
registration of "Haywards 5000" under the Trade Marks Act,
1999 shows about registration of such brand in the name of
SWCL is valid for 10 years from 19th April, 2006 and the SKOL
Breweries Limited, Bangalore has got Trade Mark registration
Certificate being assigned by SWCL with effect from 27.5.2005,
the SKOL Breweries Limited, Paradeep unit cannot use the brand
"Haywards 5000" but for using same, the Auditor has raised
objection rightly demanding the bottling fee using other's
brands. So, the demand raised under A.G. audit against the
petitioner for realization of differential bottling fee of
25
Rs.2,02,47,100/- as per Annual Excise Policy 2008-09 and 2009-
10 is justified.
27. Mr. Mishra, learned Advocate General further
submitted that the petitioner has used Front label of bottle as
"The Original Haywards 5000 Super Strong Beer" and Back label
as "Haywards 5000 Super Strong Beer" for the year 2009-10
and 2010-11 but for the same label was not applied by the
petitioner Company for which the A.G. Auditors have asked for
realization of fee for registration of labels being Rs.4,60,000/-
towards registration fee and Rs.10,000/- towards as application
fee. According to him if there is typographical mistake committed
by the Department while granting approval to such label, the
petitioner Company could have brought to the knowledge of the
State so as to rectify the same but by using such label, the
demand of such amount is otherwise correct.
28. Learned Advocate General further submitted that the
hops available in India have not been used by the petitioner
Company while preparing the Beer but petitioner Company has
used the hops/pallets after the same being imported from U.S.A.
for which under the Annual Excise Policy for the years 2008-09
and 2009-10 he is to pay excise duty @ Rs.21/- per B.L. He
submitted that prior permission of the Excise Department has
26
not been obtained for use of such imported element for
manufacture of Beer. Had there been permission, the matter
would have been dealt otherwise. So, the demand raised @
Rs.21/- per B.L. as per Excise Policy is also legal and proper.
According to him, bottling fee for the years 2008-09 to 2010-11
has rightly been calculated at Rs.5,59,28,683/- and same should
be paid by the petitioner. The allegation of petitioner that
Rs.1,70,00,000/- has been deducted in spite of his objection is
not correct.
29. Learned Advocate General also contended that as per
para-208 of the Excise Technical Manual, five percent wastage is
allowed in the process of manufacture of Beer but the petitioner
unit has made wastage varying from 5.14% to 9.98% and
accordingly A.G. auditor has raised the demand of
Rs.1,35,40,566/- towards SED @ Rs.20/- per B.L. and bottling
fee @ Rs.6/- per B.L. towards excess wastage beyond five
percent limit. The contention of the learned counsel for the
petitioner that the wastage of Beer is within the limit up to 10%
is not correct and same is only available for spoilt Beer as laid
down under the Board's Excise Rules, 1965. So, the demand of
the Department altogether for Rs.8,09,60,000/- for the period
from 2008-09 to 2010-11 is legal, proper and justified as per the
27
Excise Policy of concerned years read with the Act, Rules and
Excise Technical Manual.
30. The main points for consideration:-
(i) Whether the petitioner was manufacturing and selling the
Beer of their own brand ?
(ii) Whether the petitioner has not paid the bottling fee as
required under the Excise Policy of 2008-09 and 2009-10 ?
(iii) Whether the petitioner has made short levy of the Excise
duty by manufacturing Beer mixed with imported element ?
(iv) Whether the petitioner has rightly used the brands of the
Beer "Haywards 5000 Original Super Strong Beer" and not
required to pay any extra registration fee or application fee ?
(v) Whether the petitioner has availed allowance under the Act
by showing the spoilt Beer in the guise of wastage of Beer ?
DISCUSSIONS
POINT NOs.(i) and (ii):
31. It is not in dispute that SKOL Breweries Limited,
Paradeep was changed to the petitioner Company. It is not in
dispute that ECBDL has been also taken over by the SKOL
Breweries Limited on 1.5.2002 by virtue of the order of this Court
passed in Company Act Case No.43 of 2001. It is also admitted
fact that SKOL Breweries Limited has got registered office at
28
Mumbai. By virtue of such transfer the Orissa State Excise
Licence was transferred to SKOL Breweries Limited.
32. Learned counsel for the petitioner submitted that the
transferee Company SKOL Breweries Limited was the
manufacturer of own brands, i.e., "Haywards 5000 Super Strong
Beer" and "Knock Out". He further submitted that he has
accordingly applied for licence and the Licensing Authority has
also given permission to manufacture own brand. On the other
hand, learned counsel for the State submitted that the petitioner
was using the brand of others for which he is entitled to pay
Rs.1/- more per bottle. He also drew attention of the Court to
Annexure-5 wherein the Senior Audit Officer of the Office of the
Accountant General, Orissa submitted the following:
"Extract of I.R.No.14/2010-11 the accounts of the
Superintendent of Excise, Jagatsinghpur passed by Sr. Audit
Officer office of the Accountant General Orissa, Bhubaneswar
vide his letter No.153/Ex.dt.25.04.2011.
Para-2, Short-levy of bottling fee- Rs.2,02,47,100/-. As per
the Excise Policy for 2009-10 bottling fee is liable at the rate
of Rs.4/- per B.L. on own brand of beer manufactured and
Rs.5/- per B.L. of Beer other than own brand manufactured
by the licensee. The above condition implies that the licensee
of brewery is required to disclose the brands of beer
manufactured by him, his own brands and the brands other
than his own brands.
29
M/s. Skol Breweries Ltd. Unit East Coast Breweries,
Paradeep, Orissa a licensee for manufacturing beer in Orissa
produced the following brands of and supplied to OSBC
during 2009-10 and paid bottling fee at the rate of Rs.4/-
per B.L. as Own brands of beer.
Sl.No. Brands of Beer Strength Bottling Production in
Size bottles
1. Haywards 5000 Above 5% v/v 650 ml 2,58,84,036
the Original below 8% v/v
Super Strong
Beer
2. Knockout High Above 5% v/v 13,37,220
punch Strong not exceeding
Beer 8% v/v
3. Royal Challenge Not exceeding 39,28,128
Premier Lagar 5% v/v
Beer
Total 3,11,49,384 bottles or
2,02,099.6 BL
33. The petitioner in order to meet the above query has
taken the plea that he has applied for with the correct brand of
the Beer whereas the Excise authorities while approving the
brand has added the word 'Original'. So, he has no fault. He also
drew the attention of the Court to Annexure-18 series. On going
through the same, it appears that SWCL was the original
Company has got manufacturing business of "Haywards 5000
Super Strong Beer" and by virtue of Assignment Deed dated
27.5.2005 and other documents, the properties of SWCL was
transferred to SKOL Breweries Limited. The Trade Mark
30
Certificate of SKOL Breweries Limited shows that the present
petitioner is the clear manufacturer of the brand "Haywards
5000". The Trade Mark Certificate has already been signed by the
Assistant Registrar of Trade Marks and the Trade Marks
Certificate has been obtained by the SKOL Breweries Limited to
manufacture of "Haywards 5000 label of Super Strong Beer"
since 27.5.2005. It is needless to say that SKOL Breweries
Limited has already taken over the ECBDL which is the subsidiary
Company of SWCL.
34. Annexure-19 also shows that permission has been
given by the Excise Commissioner to SKOL Breweries Limited at
its ECBDL's branch at Paradeep to sell the "Haywards 5000 The
Original Super Strong Beer" and "Knock Out High Punch Strong
Beer" with the limit of proof strength. So, the brand with
'Original' has been approved by the Excise Commissioner to use
the same. When SKOL Breweries Limited at its ECBDL branch at
Paradeep has got approval to use such brand and he has already
obtained the said brand from the SWCL by virtue of the
Assignment Deed legally assigned by the SWCL under the Trade
Mark Act, the question of using the brand of SWCL by the SKOL
Breweries Limited while selling the Beer does not arise.
31
Moreover, the word 'Original' is understood from Annexure-19 as
generic and Beer is 'Original' one but not otherwise.
35. During 2008-09 under Excise Policy also issued
on 17.2.2009 wherein the bottling fees was prescribed as
hereunder:
"GOVERNMENT OF ORISSA
EXCISE DEPARTMENT
No. 850 / Ex., Dated 17.2.09
I Ex-50/2008
From:
Dr. Taradatt,
Commissioner-Cum-Secretary to Govt.,
To
The Excise Commissioner,
Orissa, Cuttack.
Sub: EXCISE DUTY, FEE STRUCTURE AND
GUIDELINES FOR THE YEAR, 2009-2010
Sir,
I am directed to invite a reference to your
Letter No.98 SC., dated 10th November, 2008 on the
above subject and say that Govt. after careful
consideration have been pleased to decide to adopt the
Excise duty, fee structure and guidelines for settlement
of excise shops and establishments for the year 2009-
2010 in the following manner:-
1) LICENCE FEE FOR BREWERIES.
Licence may be renewed for the year 2009-2010
on payment of licence fees as follows:
Sl. Production capacity Annual Licence Fee
No. (In Bulk Litres) (Rs. In Lakhs)
1. Upto 1,20,00,000 Rs.25.00
2. 1,20,00,001 and above Rs.50.00
2) BOTTLING FEES (FORM NO.F.L. 14)
i. @ Rs.4.00 per BL of BEER manufactured.
32
ii. @ Rs.5.00 per BL of Beer manufactured of
brands other than the own brand."
36. Similarly for 2009-10, the above bottling fees
have also been adopted under the Excise Policy.
37. Sub-Rules 3, 4, 5 and 6 of Rule 41-A of the
Board's Excise Rules are prescribed below:
"3. (a) The manufacturers licences to
manufacture foreign liquor within the State
shall apply for approval of brands and labels
and for issue of permit to use such
brandname and label directly to the Excise
Commissioner, Orissa. The manufacturers
licenced to manufacturer foreign liquor
outside Orissa shall apply to Excise
Commissioner, Orissa for approval of the
brands and labels and for issue of permit
through their respective Excise Authority of
the State.
(b) Applications for approval for a new brand
name of foreign liquor mentioned at Sub-rule
(1) and the labels corresponding to it, shall
be made to the Excise Commissioner, Orissa,
at least two months prior to its sale or offer
for sale; but the application for renewal of
approval of existing brand and label shall be
made to the Excise Commissioner, Orissa,
within the last working day of the months of
February each year.
© The Manufacturer licenced to manufacture
Foreign Liquor within the State and outside
the State of Orissa besides 750 ml., 375 ml.
and 90 ml. may also manufacture I.M.F.L.
and bottle in quantities of 60 ml. and 1000
ml. size for sale only in I.M.F.L. OFF shops.
They shall have to apply for approval of the
registration of the brands and labels for sale
to trade inside the State of Orissa.
33
4. All applications for approval of
brands and labels and renewals of such
brands and labels and for issue of permit
shall be accompanied by such fees as may be
notified by the Board from time to time.
5.(a) The Excise Commissioner, Orissa
before approval of Brands and labels and
issue of permit, shall make such enquiries as
deemed necessary and may also require
samples of the liquor to be chemically
examined before such approval to ensure
that the liquor meets required standard;
(b) The correct and up to date record
of all Brands and labels which are approved
or whose approval is renewed from time to
time shall be maintained by the Excise
Commissioner, Orissa.
© The list of Brands which are
approved by the Excise Commissioner, Orissa
up to 28th of February every year shall be
published by him within 31st March following
and offered for sale at such price as may be
fixed by the Excise Commissioner.
6. The Excise Commissioner, Orissa
may refuse approval of brand and label if he
is not satisfied.
(a) in the case of foreign liquor bottled
in India, that the bottler whose name is
stated in the application holds a valid
licence from the Government or any
State or Union Territory in India to
distil, compound, blend or bottle spirits
or brew beer, and
(b) in the case of foreign liquor brought
into India from any foreign country and
bottled in India, that the brand name
under which or the label with which it is
proposed to be sold in distinguishable
from other brand names or labels which
34
have already been approved or whose
approval has already been applied for :
Provided that while refusing to approve a
particular or brand the Excise Commissioner,
Orissa will state reasons to be recorded in
writing and such refusal shall be made after
giving the affected party a reasonable
opportunity of being heard."
The above provisions clearly indicate that after the
application by the manufacture licensee being submitted to the
Excise Commissioner, the Excise Commissioner after due enquiry
used to approve the brand and labels to be used by the
manufacturer licensee. Learned Advocate General submitted that
the permission has been given according to the application made.
If there is wrong brand has been used or any other brand has
been used, the approval of the Excise Commissioner under Rule
41-A cannot be said to be incorrect and the word 'Original' must
be read as surplus word to have been used but the fact remains
that SKOL Breweries Limited after being assigned with the brand
has got same as own brand to sell "Haywards 5000 Super Strong
Beer" and Annexure-19 also shows that under Rule 41-A after
due enquiry has approved the SKOL Breweries Limited to use
such brand with the word 'Original'. When after necessary
enquiry under Rule 41-A of the Board's Excise Rules permission
has been accorded by the Excise Commissioner vide Annexure-
19, it must be observed that SKOL Breweries Limited has
35
manufactured Beer by using own brand. It is needless to say that
the opposite parties have not challenged sale of "Knock Out"
Beer.
38. In terms of above discussion, it cannot be said
that the petitioner has deposited the bottling fee @ Rs.4/- per BL
wrongly and he is required to deposit further short-levy bottling
fees towards the amount of Rs.2,02,47,100/- for the years
2008-09 and 2009-10. On the other hand, we are of view that
the petitioner having got the due licence to sell the Beer with
brand of its own has manufactured same for sale and it has not
used the brand of any other Company while manufacturing the
"Haywards 5000 Super Strong Beer" and "Knock Out". Point
Nos.(i) and (ii) are answered accordingly.
POINT NO.(III)
39. It is the case of the petitioner that the petitioner has
not imported the Beer from any other country outside India and
sold the same here. But petitioner had imported hops and pellets
which are necessary ingredients of Beer to bring proper flavor to
the Beer and as such he has prepared the Beer made in India
and accordingly the Excise duty for the year 2008-2009 and
2009-2010 has been paid. On the other hand, it is the case of the
opposite parties that the petitioner has manufactured the Beer
36
mixed with hops and pallets which are imported element and
same is exigible to another scale of rate for which the audit
report shows that the petitioner has sold such Beer but has paid
excise duty less than the excise duty meant for manufacture of
such Beer during said year of licence.
40. For better appreciation, Para-4 of Annexure-5 is
quoted below:-
"Para-4. Short-levy on Excise duty on beer Rs.7,60
lakh - As per the Excise Policy for 2009-10
circulated in Feb 2009, Excise duty on beer mixed
with any imported element was fixed at the rate of
Rs.21/- per B.L.
Check of records in respect of Skol Brewery,
Paradeep revealed that the licensee used some hop
extract and 'hop pellate' (a plant extract) for
production of beer. This item was obtained from a
Delhi based supplier i.e. C. Cube consulting Pvt.
Ltd. who imported the same from other countries.
The certificate of analysis obtained by licensee from
the supplier affirms that the material was obtained
by the licensee from the supplier confirms that the
material was obtained from Yakina chief inc.551
West South Hill Road, P.O. Box-2009, sunny side,
WA98944 which is a North America based firm and
duty was leviable at the rate of Rs.21/- per B.L. on
the entire product. But the licensee paid excise
duty on beer not exceeding 5% v/v at the rate of
Rs.18/- per B.L. and that exceeding 5% v/v at the
rate of Rs.21/- per B.L. But the licensee paid excise
duty on beer not exceeding 5% v/v at the rate of
Rs.18/- per B.L. and that exceeding 5% v/v at the
rate of Rs.21/- per B.L. The Excise authorities did
not try to know the sources of obtaining the hops
by the supplier.
37
Out of total production of 2,02,47,099.6 B.L. the
licensee paid duty of lower rate (Rs.18/- per B.L.)
on 25,53,283.30 B.L. So the differential duty of
Rs.76,59,850 @ Rs.3/- per B.L. may be demanded
realized and intimated to Audit."
When the petitioner has claimed that hop or pellet is
one of the ingredient of Beer and same is not plentily available at
Jammu & Kashmir but it has to be imported from U.S.A., the
counter or the additional counter of the opposite parties at the
same time do not deny the same in specific manner. The
opposite parties in the counter also do not deny that the hop or
pellet is not part and parcel for preparation of Beer. It appears
from the extracts from Excise Technical Manual by Lt. Col. C.H.
Bedford which is formal Guidelines for the Excise Authorities to
find out the contents of different types of foreign liquors like
Wines, Cider and Perry, Malt Liquors etc. It is revealed that Malt
Liquors are properly known as Beer. Beer is made where malt
and hops are used by steeping specially prepared or "malted"
grain in water; the solid matter is then strained off; this strained
liquid is boiled with hops; the hops are next strained off; and the
strained liquid is fermented by adding specially prepared yeast.
After fermentation is over, the liquid is allowed to settle and is
then casked for use. So, it is clear that hop is part and parcel of
ingredient of Beer to manufacture the same.
38
41. It is admitted fact that in the case in hand the
petitioner has claimed to have manufactured the Beer in India
whereas the opposite parties claimed the same Beer mixed with
imported element has been manufactured. When the Beer cannot
be prepared without hops and said hops has been purchased by
the SKOL Breweries Limited which is the previous name of the
present petitioner's Company from Delhi based firm which has
brought the same from USA, it cannot be said that Beer is mixed
with any imported element. Had there been Beer completely
prepared and then mixed with any imported element, the
submission of the learned counsel for the opposite parties could
have been understood to have got some force. It cannot be said
that the present Beer has been mixed with any imported element
after being prepared.
42. For better clarity, we may refer to the necessary
Excise Policy under which the short-levy duty in this regard has
been demanded. Vide Annexure-4 series, at para-10 the Excise
duty, fee structure and Guidelines for the year 2008-2009 is
placed below:-
10) EXCISE DUTY ON IMFL AND BEER.
1) BEER STRENGTH EXCISE DUTY
a) Beer made in India Up to 5% vv Rs.18/- Per BL
39
Above 5% vv Rs.21/- per BL
b) Beer mixed with any Rs.21/- per BL
imported element
c) Draught Beer Rs.10/- per BL
d) Diet Beer Up to 3.5% v/v Rs.10/- per BL
e) Canned Beer Up to 5% v/v Rs,10/- per BL
Above 5% v/v Rs.12/- per BL
f) Breezier/Low Alcoholic Up to 5% v/v Rs.18/- per BL
Beverage
Similarly the same Policy for the year 2009-2010 at para-10 is
produced below:
10) EXCISE DUTY ON IMFL AND BEER.
1) BEER STRENGTH EXCISE DUTY
a) Beer made in India Up to 5% vv Rs.18/- Per BL
Above 5% vv Rs.21/- per BL
b) Beer mixed with any Rs.21/- per BL
imported element
c) Draught Beer Rs.10/- per BL
d) Diet Beer Up to 3.5% v/v Rs.10/- per BL
e) Canned Beer Up to 5% v/v Rs,10/- per BL
Above 5% v/v Rs.12/- per BL
f) Breezier/Low Alcoholic Up to 5% v/v Rs.18/- per BL
Beverage
Similarly the same Policy for the year 2010-2011 at para-10 is
also produced below:
10) EXCISE DUTY ON IMFL AND BEER.
1) BEER STRENGTH EXCISE DUTY
a) Beer made in India Up to 5% vv Rs.20/- Per BL
40
Above 5% vv Rs.22/- per BL
b) Beer imported from Rs.21/- per BL
Foreign Countries
c) Draught Beer Up to 5% v/v Rs.15/- per BL
Above 5% v/v Rs.18/- per BL
d) Diet Beer Up to 5% v/v Rs.15/- per BL
Above 5% v/v Rs.18/- per BL
e) Canned Beer Up to 5% v/v Rs,15/- per BL
Above 5% v/v Rs.18/- per BL
f) Breezier/Low Alcoholic Up to 5% v/v Rs.20/- per BL
Beverage
Excise Policy for the subsequent years at para-10 has been also
prescribed in the same manner as of 2011-2012.
10) EXCISE DUTY ON IMFL AND BEER.
1) BEER STRENGTH EXCISE DUTY
a) Beer made in India Up to 5% vv Rs.20/- Per BL
Above 5% vv Rs.22/- per BL
b) Beer imported from Rs.21/- per BL
Foreign Countries
c) Draught Beer Up to 5% v/v Rs.15/- per BL
Above 5% v/v Rs.18/- per BL
d) Diet Beer Up to 5% v/v Rs.15/- per BL
Above 5% v/v Rs.18/- per BL
e) Canned Beer Up to 5% v/v Rs,18/- per BL
Above 5% v/v Rs.18/- per BL
f) Breezier/Low Alcoholic Up to 5% v/v Rs.20/- per BL
Beverage
From the aforesaid analogy, it appears that for the
years 2008-09 and 2009-10 Excise duty was demanded for these
years separately for the Beer mixed with any imported element
41
at sub-clause (b) of Clause 10 (1) whereas in subsequent years
same excise duty has been demanded on Beer imported from
foreign countries. It appears that the Excise Authorities after
understanding the proper contents of the Beer has changed the
modus operandi claiming Excise duty on imported Beer. We are,
therefore, of the view that in the instant case the petitioner has
manufactured the Beer having imported the hops, which is one of
the element of the Beer but not mixed with any imported element
after Beer is prepared for which rightly the petitioner has claimed
that he is liable to pay the Excise duty on Beer made in India.
43. Moreover, under Section 27 of the Act, the Excise
Authorities are empowered to impose duty on import, export,
transport and manufacture of any excisable article. The provision
is prescribed below for better appreciation:
"27. Power to impose duty on import, export,
transport and manufacture - (1) An excise duty or
countervailing duty, as the case may be, at such rate or
rates as the State Government may direct, may be
imposed either generally or for any specified local area,
on
(a) any excisable article imported; or
(b) any excisable article exported; or
(c) any excisable article transported; or
(d) any excisable article (other than tari)
manufactured under any licence granted in
respect of Clause (a) of Section 13; or
42
(e) any hemp plant cultivated, or any portion of such
plant collected, under any licence granted in
respect of Clause (b) or Clause (c) of Section 13;
or
(f) any excisable article manufactured in any
distillery or brewery licensed, established,
authorized or continued under this Act.
Explanation - Duty may be imposed on any article
under this sub-section at different rates according to
the places to which such article is to be removed for
consumption, or according to the varying strengths and
quality of such article.
(2) An excise duty or countervailing duty, as the case
may be, at such rate or rates as the State Government
may direct, may be imposed, either generally or for any
specified local area, on any tari drawn under any licence
granted under Section 14, Sub-section (1).
(3) Notwithstanding anything contained in Sub-
section (1)
(i) duty shall not be imposed thereunder on any article
which has been imported into India and was liable, on
such importation, to duty under the Indian Tariff Act,
VIII of 1894,or the Sea Customs Act, VIII of 1878, if
(a) the duty as aforesaid has been already paid; or
(b) a bond has been executed for the payment of such
duty; and
(ii) ( *** )"
44. From the aforesaid provision, it is clear that the
Excise Authorities shall demand on excisable article imported or
exported or the excisable article manufactured under licence
granted to import the excise article and various other grounds
but not definitely for manufacture of the Excise article mixed with
43
any imported element upon which during 2008-09 and 2009-10
the Excise authorities has prescribed separate Excise duty. But
on the other hand, they have rectified the said mistake and
framed policy for Excise duty from 2010-11 and onwards by
imposing duty on imported Beer.
45. From the foregoing discussion, we are of the view
that the Excise Policy so far imposing Excise duty on Beer mixed
with imported element is not in consonance with the provision of
Section 27 of the Act. Moreover, the petitioner having not
manufactured any excisable article imported but the
manufactured Beer in India, he has right in payment of excise
duty @ Rs.18/- per BL up to 5% v/v and for strength above 5%
v/v @ Rs.21/- per BL. On the other hand, the petitioner is found
to have paid the entire duty and the claim of the opposite parties
of Rs.76,60,000/- for payment of short-levy excise duty in this
regard is fully untenable. Point No.(iii) is answered accordingly.
POINT NO.(iv)
46. It is asserted by petitioner vide Annexure-5 about
short-levy of registration fee in the following manner:
"Non-levy of label Registration fee - Rs.4,60,000/-
. As per the Excise Policy for 2009-10 issued on 17.02.09
application at the rate of Rs.10,000/- and label
Registration fee at the rate of Rs.2,20,000/- per label per
brand was leviable on the licenses for supply of more than
one lakh cases of beer to OSBC per annum.
44
M/s. Skol Breweries Ltd. unit East Coast
Breweries, Paradeep a licensed Manufacturer of beer,
obtained approval of the following labels for 2009-10 for
sale of beer in Orissa on payment of Rs.6,90,000/-
towards application fee @ Rs.10,000/- per brand and label
registration fee @ Rs.2,20,000/- per brand as detailed
below.
Sl Brands of Beer Strength Bottling Amount Paid
Regist-
No size Application
ration
1. Haywards 5000 Above 650 ML 10,000/- 2,20,000
Original Super 5% v/v &
Strong Beer Below 8%
v/v
2. Knock-out High Above 650 ML 10,000/- 2,20,000
Punch Strong 5% v/v
Beer. not
exceeding
8% v/v
3. Royal Not 650 ML 10,000/- 2,20,000
Challenge exceeding
Premier Lagar 5% v/v
Beer
For the year 2010-11 the licensee get the above
labels approved on payment of the required fee of
Rs.6,90,000/- for three brands of beer. Scrutiny of the
labels and records revealed that the licensee supplied the
following brand of beer for the year 2009-10 and 2010-11
which was not registered with the Excise Commissioner,
Orissa for sale in Orissa.
Front Label Back Label
THE ORIGINAL HAYWARDS HAYWARDS 5000 SUPER
5000 SUPER STRONG BEER STRONG BEER.
Hence Label Registration application fee of
Rs.10,000/- and registration fee of Rs.2,20,000/- per year
totaling to Rs.4,60,000/- for the year 2009-10 and 2010-
11 leviable for the above brand of beer may be demanded
and realized under intimation to Audit."
45
47. With regard to above demand on duty as pointed out
by the A.G. Auditor being supported same by the State
Department, opposite party-Excise authorities demanded a total
amount of Rs.4,60,000/- as Registration fee for the years 2009-
10 and 2010-11 and label Registration application fee at
Rs.10,000/- per year. On the other hand, the petitioner claimed
that SKOL Breweries Limited having its East Coast Breweries unit
at Paradeep is a licensed manufacturer of Beer and obtained
approval of the Excise Authorities for using the labels "Haywards
5000 Original Super Strong Beer" and "Knock Out High Punch
Strong Beer" and accordingly he has paid the fees. It is the claim
of the petitioner that as per the approval made by the Excise
Commissioner under Rule 41-A of the Board's Excise Rules, 1965,
he has used the front label and back label.
48. In the Point Nos.(i) and (ii), it has been already held
that SKOL Breweries Limited having got assignment of "Haywards
5000 Super Strong Beer" has applied to use the same brand but
the Excise Authorities allowed to use "Haywards 5000 Original
Super Strong Beer" after due enquiry and as such he has used
such brand.
49. It has been discussed above that under Annexure-19
series the Excise Commissioner for the years 2010-11 and 2011-
46
12 have allowed the brand of liquor as "Haywards 5000 The
Original Super Strong Beer". It is also admitted fact that the
petitioner has used the "Haywards 5000 The Original Super
Strong Beer" on the front label but "Haywards 5000 Super Strong
Beer" by affixing back side label on the bottle. The opposite
parties have not denied about issue of licence as such. When
Rule 41-A of the Rules specifically prescribes that after due
enquiry the Excise Commissioner would grant use of the brand
and label, and Annexure-19 series is not denied by the opposite
parties and the only plea taken by the opposite parties that the
petitioner could have brought to the knowledge of the Excise
Commissioner about the typographical mistake of the use of the
word 'Original', it cannot be said that the petitioner has used any
label beyond the label approved by the Excise Commissioner. We
are, therefore, of the view that the demand of short-levy of
Registration fee of Rs.4,60,000/- and Label Registration fee of
Rs.10,000/- by the opposite parties upon the petitioner is not
legal and proper. Point No.(iv) is answered accordingly.
POINT NO.(V)
50. After going through the pleadings of both the parties,
it appears that the petitioner has claimed that there is illegal
demand by the opposite parties towards excess limit of wastage
47
of Beer whereas the opposite parties claim that the limit
prescribed under the statute with regard to the short-fall in the
yield of the Beer is not within the permissible limit for which
excise duty is to be charged. Neither Annexure-5 nor Annexure-
20 disclose about such fact.
51. It is admitted by the opposite parties that the
petitioner Company is manufacturing the Beer where there is
deficit of the yield of Beer between 5% to 10%. The opposite
parties claim that the permissible limit as per Rule 46 and 47 of
the Board's Excise Rules, 1965 is up to 5%.
52. Rule 47 of the Board's Excise Rules, 1965 shows that
allowance of 10% of the monthly total of the charges shall be
made on account of wastage and no duty shall be levied on such
percentage of wastage. Sub-Rule (2) of Rule 47 of the said Rules,
1965 speaks that written application shall be made by the
licensee to the Collector for any allowance for sour or spoilt beer.
So, the allowance of 10% of the monthly total of the charges can
be availed by the manufacturer and no duty shall be levied on
such 10%. In the instant case, since admittedly the petitioner
has shown wastage of Beer below 10%, the contention of the
learned counsel for the State Government have no force. Point
No.(v) is answered accordingly.
48
CONCLUSION:
53. There is prayer for quashing the illegal demand made
under Annexure-5 and demand notices by opposite party No.5
under Annexures-11 and 20. There is also prayer to declare Rule
110 of the Board's Excise Rules ultra vires to Section 90 of the
Bihar and Orissa Excise Act, 1915 which is not pressed during
course of argument but the petitioner has sought direction to
refund the amount recovered towards differential bottling fee by
adjustment of excise account.
54. It has been already observed in the aforesaid para
that Annexure-5 contain the demands for deposit of differential
bottling fee, short levy of duty due to use of the brand of others,
non-payment of the differential amount towards Registration fee
and the short-levy of duty for manufacturing Beer with imported
element. But all these points have been answered in favour of
the petitioner in the aforesaid para. Consequently, we are of the
view that demand of Excise duty in respect of these items in
Annexure-5 are illegal, improper for which same is liable to
be quashed and the Court do so. Likewise, Annexures-11 and
20 which are issued basing on Annexure-5 are also liable
to be quashed and the Court do so. Hence, it is
directed that the differential amount demanded on petitioner
49
Company to collect the same must be refunded within a period of
three months from the date of this order or same be adjusted in
subsequent years licence fee.
The writ petition is disposed of with the aforesaid
direction.
...................................
Dr. D.P. Choudhury, J.
I. Mahanty, J.I agree.
.................................. I.Mahanty, J.
ORISSA HIGH COURT: CUTTACK Dated the 29th March, 2017/Kar