JUDGMENT Gopalan Nambiyar, C.J. 1. The appeal is against the judgment of a learned Judge, who dismissed the appellant's writ petition to quash Ext. P-1 demand notice under the provisions of the Kerala Abkari Act 1 of 1077 and other consequential reliefs. 2. The appellant, M/s Mcdowell and Co. is a public limited company which has its' registered office in Madras and branches all over the country. It owns several distilleries one of which is situated in Sherthallay. It is engaged in manufacturing foreign liquor. Ext. P-1 notice, dated 18th June 1975 stated that as a result of local audit of the appellant company, it was informed by the Accountant General that a huge amount by way of abkari dues was due from the appellant company. Attention was drawn to R.34 of the Kerala Distillery and Warehouse Rules, 1968 (Part I), under which, an account is to be taken of the distillers in each quarter, and the distiller has to pay to Government the duty at the rate prescribed for rectified spirit, on all spirit which are not forthcoming in excess of 1 per cent allowed for wastage. It was stated that during the local audit made in July 1973 it was found that excess storage wastage of Rs. 15,412.77 proof litre (P.L.) of spirit had occurred between April 1970 and March 1973, and that this quantity had been allowed duty free. The non collection of duty on this account was worked out at Rs. 2,38,398 at the rate applicable to rectified spirit. The petitioner was called upon to make good the above loss to which attention was drawn by the Accountant General. 3. The substance of the argument of the petitioner is that the duty payable under the provisions of the Excise Act had to be levied either at the stage of production of the liquor or at the stage when the quantities of liquor were passed out of the distillery, and not, at any point of time beyond and outside these stages. It was pointed out that the facts disclosed would show and that Ext. P-1 itself had proceeded on the basis that there was an omission to levy and collect the duty at the appropriate stage, and till the company drew attention to this, the requisite authorities themselves had not been alerted about it. It was pointed out that the facts disclosed would show and that Ext. P-1 itself had proceeded on the basis that there was an omission to levy and collect the duty at the appropriate stage, and till the company drew attention to this, the requisite authorities themselves had not been alerted about it. They have, it was said, proceeded to make good the remissness on their part by issuing a notice of the type of Ext. P-1, to realise the duty, payable by the distiller. It was argued that for failure or omission to levy the duty at the appropriate stage, or for short levy of the same, as the case may be, there was no provision at all either for the Accountant General to alert the Government, or the appropriate authorities, or for the Government and the authorities to rectify their omission to act in time to realise the appropriate duty. This, in brief, was the argument of Counsel for the appellant. 4. On the side of the Government, it was pointed out with respect to the provisions of the Statute and the Rules that there can be no question of any levy or assessment of duty under the provisions of the Abkari Act in the same way in which an assessment of tax is provided for and made under the provisions of the Income Tax Act, or the Sales Tax Act; and that under the scheme of the provisions of the Act and the Rules, the duty attaches statutorily to the production of liquor or to the quantity of liquor "that is not forthcoming" out of the distillery; and that, on the facts and the circumstances shown and disclosed in this case, it was perfectly open to the authorities and competent on their part to take action on the basis of the Accountant General's report, and to demand collection of duty that was due from the petitioner. 5. To appreciate the contentions raised by either side, it is necessary to examine the scheme and the provisions of the Statute, -- The Kerala Abkari Act 1 of 1077 and the Rules. S.17 of the Act, in so far as it is material, provides: "17. 5. To appreciate the contentions raised by either side, it is necessary to examine the scheme and the provisions of the Statute, -- The Kerala Abkari Act 1 of 1077 and the Rules. S.17 of the Act, in so far as it is material, provides: "17. Duty on liquor or intoxicating drugs, -- A duty of excise or luxury tax or both shall, if the Government so direct, he levied on all liquor and intoxicating drugs: (a) to (d): * * * * * (e) manufactured at any distillery, brewery, winery or other manufactory established under S.14; or (f) issued from a distillery, brewery winery or other rnanufactory or warehouse licensed or established under S.12 or S.14." S.18 provides for the manner of levy of the duty, as follows: "18. How duty may be imposed.--(1) Such duty of excise may be levied. (a) in the case of spirits of beer, either on the quantity produced in or passed out of a distillery, brewery or warehouse licensed or established under S.12 or S.14 as the case may be, or in accordance with such scale of equivalents, calculated on the quantity of materials used or by the degree of attenuation of the wash or wort, as the case may be, as the Government may prescribe; * * * * * * (3) The duty of excise under sub-s.(1) and the luxury tax under sub-s.(2) shall be levied at such rates as may be fixed by the Government, from time to time, by notification in the Gazette, not exceeding the rates specified below: (1) Duty of excise Maximum rates (i) Duty of excise on liquors Rs. 20 per proof litre or (Indian made) Rs. 90-92 per proof gallon (ii) Duty of excise on intoxicating drugs Re. 1 per gram or Rs. 933.10 per seer (iii) Duty of excise in the from of tax on trees tapped for toddy Rs. 50 per tree per half year or part thereof (2) luxury tax (a) When levied in the form of a fee for licence for sale of foreign liquor (i) For licence for sale of foreign liquor in whole sale Rs.15,000 for a year or part thereof (ii) For licence for sale of foreign liquor in hotels or restaurants Rs.12,000 for a year or part thereof (2) luxury tax Maximum rates (iii) For licence for the sale of medicated wines Rs. 1,000 for a year or part thereof (iv) for licence for sale of foreign liquor in non-proprietory clubs to members Rs. 1,500 for a year or part thereof (v) For sp Rs.500 for a year or part thereof (b) When levied in the form of gallonage fee Rs.10 per bulk litre or Rs. 45 46 per bulk gallons © When levied in the form of vending fee on denatured spirit including methylated spirit Rs. 1 per bulk litre or Rs. 4.54 per bulk gallons Provided that where there is a difference of duty of excise or luxury tax as between two licence periods such difference may be collected in respect of all stocks of country liquor or intoxicating drugs held by licensees at the close of the former period. S.69 provides for the publication of Rules and Notifications under the Act. That section reads: "69. Publication of rules and notifications.-- All rules made and notifications issued under this Act shall be made and issued by publication in the Gazette. All such rules and notifications shall thereupon have the force of law and read as part of this Act and may in like manner be varied, suspended or annulled." Under the provisions of S.18(3) read with S.69 of the Act, notification had been issued fixing the rate of duty payable on liquor produced by the distillers which are not forthcoming from them at Rs. 15.50 per proof litre to complete the relevant provisions we may also draw attention to R.34 of the Kerala Distillery and Warehouse Rules, 1968 (Part I). That Rule reads: "34. Distillers and warehouse keepers to account for deficiency in stocks.-- An account shall be taken of the distiller's and warehouse keeper's stocks at such intervels, not exceeding three months, and in such manner as the Commissioner may direct; and the distillers and warehouse keepers shall pay to the Government, duty at the rate prescribed for rectified spirit on all spirits which are not forthcoming and which could not be accounted for, to the satisfaction of the Commissioner, in excess of an allowance of one per cent which shall be made for wastage. Wastage for the purpose of collection of duty on the excess as aforesaid shall be calculated at the end of every quarter ending the last day of June, September, December and March of every year. Wastage for the purpose of collection of duty on the excess as aforesaid shall be calculated at the end of every quarter ending the last day of June, September, December and March of every year. I the license is to expire earlier than the last day of the quarter the wastage shall be calculated at the end of such period: Provided that if it is proved to the satisfaction of the Commissioner or of such officer as he may appoint that any deficiency in excess of one per cent could not have been prevented by the exercise of proper care and precaution, the payment of duty at the above rate on such deficiency shall not be required." It will be seen from these provisions that the impost is attracted, the moment the liquor is produced in, or passed out of, a distillery or a warehouse. No point of time is indicated for the imposition of the levy. The impost attaches to the quantity produced, or to the quantity passed out, or not forthcoming. But beyond this, there is no indication either in the provisions of the Act, or in the Rules, as to the point of time after production or passing out, at which, or within which, the impost should be levied. We shall notice the position in some detail. S.18(3) read with S.69 would indicate that the levy attaches itself to the liquor produced or passed out, automatically, by reason of the prescription of the rates of duty made by the Government, and the notification issued by it, in accordance with S.18(3) and S.69. The learned Government Pleader sought to emphasise this aspect by calling our attention to certain other rules. He referred, for instance, to R.97 of Part II which refers to the maintenance of a register of warehousing operations in Form D-8. This rules requires that the spirits stored in the store room and those issued from each vat should be separately entered in Form D-8. The mode of keeping the entries has been indicated in some detail in the rule. The rule states that any wastage which may take place in making the issues for the day will be ascertained by deducting the "quantity in hand" (column 4) on the following morning from the "total in hand received" (column 15). This less the "total issues" (column 37) should be included in (column 38). The rule states that any wastage which may take place in making the issues for the day will be ascertained by deducting the "quantity in hand" (column 4) on the following morning from the "total in hand received" (column 15). This less the "total issues" (column 37) should be included in (column 38). At the end of every account week, a total had to be struck of the entries in the proof strength columns of D-8 register relating to each vat. Our attention was called to Form D-8 and to the entries which emphasise the relevant aspects of the rights and obligations of the distilleries and warehouses. R.108 and 109 were referred to. R.108 requires that a person who wishes to remove spirit from a distillery or warehouse on payment of duty in cash may either pay himself the duty into the treasury, or to pay the duty to the distiller or warehouse keeper. The consequential provisions as to the mode of payment are also made in the rule. R.109 provides for treasury receipts and letters of advice. R.47 of Part I provides for collection of duty on liquors released; and R.82 of Part II provides that all gauges are to be conjointly by the officers and the distillers. These emphasise the mode and the manner in which the duty is attracted on production or passing out of the liquor as provided in S.18(1) and (3) of the Act. The rest of the provisions to which we have called attention regulate the modus operandi of collection and payment of duty. We are in agreement with the contention of the learned Government Pleader that on a conspectus of these relevant provisions in the Statute and the Rules, there is no warrant for the contention strongly urged by Counsel for the petitioner that the levy of the duty must take place at the stage of production or passing out of the distillery and that the duty cannot be demanded thereafter or beyond this stage whether on reminder or by report of the Accountant General or otherwise. 6. Counsel for the petitioner stressed the requirements of R.34 to take accounts at intervals not exceeding three months, and the provision for calculation of wastage for collection of duty at the end of every quarter ending 1st day of June, September, December and March of each year. 6. Counsel for the petitioner stressed the requirements of R.34 to take accounts at intervals not exceeding three months, and the provision for calculation of wastage for collection of duty at the end of every quarter ending 1st day of June, September, December and March of each year. In the light of the provisions to which the Government pleader called attention, and to which we have referred these do not impose any inelastic obligations on the authorities to impose the duty, but are merely certain machinery provisions to work out and quantify the impost. 7. The learned Government pleader emphasised his submissions by a reference to the decision in M/s Shinde Brothers etc., v. Deputy Commissioner, Raichur and others AIR 1967 SC 1512 After discussing the nature of excise duty, in the light of the previous decisions, it was observed by the Supreme Court in Para.20, as follows: "These cases establish that in order to be an excise duty (a) the levy must be upon 'goods', and (b) the taxable event must be the manufacture or production of goods. Further the levy need not be imposed at the stage of production or manufacture but may be imposed latter". That principle also runs through the decision of a Division Bench of this Court in D.C. Johar and Sons (P) Ltd. v. State of Kerala 1965 KLT 196 where with reference to certain other statutory provisions of the Act and the Rules, it was ruled by this Court that the taxing event is the import and not a grant of a permit for import. In the light of the provisions of Statute which we have examined, we do not find any force for the contention of the Counsel for the petitioner that there is no warrant in law for a demand to be raised on the report of the Accountant General, which was at a point of time later than the stage of production of the liquor or of its being passed out of the distillery. 8. On the facts, the position appears to stand stronger against the petitioner. In the Additional counter affidavit filed by the 1st Respondent, it was stated in Para.5 that the report of the Accountant General had been sent to the petitioner company and the details of how the loss was arrived at had been disclosed. 8. On the facts, the position appears to stand stronger against the petitioner. In the Additional counter affidavit filed by the 1st Respondent, it was stated in Para.5 that the report of the Accountant General had been sent to the petitioner company and the details of how the loss was arrived at had been disclosed. It is stated in the counter affidavit that the mistake in the calculation and the inadvertence by the staff were the sole reason for the loss of Revenue to the Government. In the counter affidavit dated 9th February, 1976, it was stated that the local audit receipts conducted in the petitioner's Distillery disclosed certain loss caused to the Government. The audit itself was done on the basis of the basic records, the quarterly results of stock taking made by the 2nd Respondent. The mistake committed by the Excise Department staff is referred to in the Accountant General's report and quantification of loss is also referred to and it is stated that the Government was satisfied that the loss pointed out by the Accountant General was correct. It was thereafter that the petitioner was called upon to prove to the satisfaction of the Excise Commissioner that wastage in excess of 1 per cent which had concurred was for reasons beyond their control-vide the proviso to R.34. As the petitioner failed to place any convincing explanation, Ext. P-1 notice was issued. Para.3 of the counter affidavit gives the substance of the proceedings in their proper sequence. Ext. R-2 filed with C.M.P. 10387/76 is a copy of the explanation submitted by the petitioner to the notice dated 27th July 1974 issued to it. The said explanation deals elaborately with the various aspects raised in the notice recited therein. On point No. 3 which relates to the subject matter of this writ petition, the petitioner's explanation is as follows: "3. Loss of Revenue due to grant of excess storage wastage.--The quarterly wastages is calculated on the total quantity of spirit in hand at the beginning of the quarter plus the quantity received during the quarter. On point No. 3 which relates to the subject matter of this writ petition, the petitioner's explanation is as follows: "3. Loss of Revenue due to grant of excess storage wastage.--The quarterly wastages is calculated on the total quantity of spirit in hand at the beginning of the quarter plus the quantity received during the quarter. Even though the rule stipulate that wastage should be calculated for each vat separately this is not correct as in certain months transactions are made only from a particular vat and there will not be any transaction from other vats in which case in the vat where there are more transactions wastages will be more. Therefore we request that the quarterly storage wastages should be calculated on the total quantity of spirit in hand plus the total quantity received during the quarters." In the verified petition in support of the above C.M.P. 10387 of 1976, reference has been made to the notice dated 27th July 1974 and the reply thereto viz., Ext. R-2. In the light of these facts there is no substance at all in the petitioner's contention that the assessment of duty has been made without any material or without affording the petitioner an opportunity for explanation or without advertence of the mind by the concerned authorities. We are unable to accept these submissions of Counsel for the petitioner. We see no ground to interfere. We dismiss this appeal with no order as to costs.