NDLI: State of Up Through Secretary (excise) & Ors. Vs. M/s Mcdowell and Company Limited

Content Provider	Supreme Court of India
e-ISSN	30484839
Language	English
Access Restriction	NDLI
Subject Keyword	Uttar Pradesh Excise Act 1969 1910: Uttar Pradesh Excise Manual – Uttar Pradesh Bottling of Foreign Liquor Rules
Content Type	Text
Resource Type	Law Judgement
Jurisdiction	India
Case(s) Referred	Referred Case 0 Referred Case 1 Referred Case 2 Referred Case 3 Referred Case 4 Referred Case 5 Referred Case 6 Referred Case 7 Referred Case 8 Referred Case 9 Referred Case 10
Case Type	Appeal
Court	Supreme Court of India
Disposal Nature	Appeal Allowed
Headnote	Uttar Pradesh Excise Act, 1910: Uttar Pradesh Excise Manual – Uttar Pradesh Bottling of Foreign Liquor Rules, 1969 – In the instant case, fire incident took place in godown of distillery of the respondent company in which liquor got destroyed – Excise Department raised demand of excise duty on the liquor destroyed from the respondent company – Whether the demand in question is authorised by law – Held: s.19 of the Act 1910 states that no intoxicant can be removed from the distillery unless duty leviable thereupon has been paid – Liquor that was lying stored in the bonded warehouse had already become subject to the excise duty – Taxable event was production or manufacture and not sale – r.7(11) of the Rules of 1969 is required to be taken into account for the legal consequences that so far as the bottled spirit is concerned, the licencee remains responsible for payment of duty on any kind of wastage in excess of 1% – Rule 709 of the Excise Manual makes it clear that the distillery remains responsible for safe custody of the stock of spirit and remains liable to make good any loss of revenue caused to the Government by their negligence – Therefore demand of excise duty cannot be said to be unauthorized by law – Constitution of India – Art.265. Uttar Pradesh Excise Act, 1910: Uttar Pradesh Excise Manual – Uttar Pradesh Bottling of Foreign Liquor Rules, 1969 – Fire incident took place in godown of distillery of the respondent company in which liquor got destroyed – Whether respondent company remains liable to pay excise duty on the liquor lost in fire – Held: In the scheme of the Act of 1910, the Rules of 1969 and the Excise Manual, it is evident that the Government is not liable for destruction, loss or damage of any spirit stored in distillery by fire or theft or any other cause – Distillery is made responsible for safe custody of the stock of spirit and is also made liable to make good any loss of revenue caused to the Government by their negligence – The rules provide for strict supervision and control of the Excise Department over the working of distillery at every stage but that supervision and control does not correspondingly absolve the distillery of its duty and responsibility towards safe custody of the stock – The warehouse in question indeed got engulfed in fire and that led to destruction of the liquor stored therein – The respondent company could be held liable to pay the excise duty on the liquor destroyed in fire only if it could be held negligent in not ensuring safe custody of the stored liquor –In the present case, nothing has happened by natural forces like storm, floods, lightning or earthquake – Hence, the fire incident in question cannot be termed as an act of God – Even when the exact cause of fire could not be ascertained, the only inference by considering the reports of Assistant Excise Commissioner could be about some fault or shortcoming in electric installations which led to the abnormal flow of current and thereby, to the fire incident in question – It is difficult to accept that the fire and the resultant loss had been beyond the control of human agency so as to be termed as inevitable accident – When the respondent had not been able to protect the goods in question from fire within the warehouse and when all other factors, as noticed above, are taken into account, the negligence as contemplated in Rule 709 of the Excise Manual is directly attributable to the respondent company – Further, the fact that the respondent company had taken insurance coverage only of the value of liquor (and not that of excise duty thereupon) and then, had received the insurance claim towards the value of liquor also operates against the respondent company and fortifies the conclusion about negligence of the respondent company.
Judge	Hon'ble Mr. Justice Dinesh Maheshwari
Neutral Citation	2022 INSC 13
Petitioner	State Of Up Through Secretary (excise) & Ors.
Respondent	M/s Mcdowell And Company Limited
SCR	[2022] 3 S.C.R. 899
Judgement Date	2022-01-05
Case Number	169-170

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