Judgment SARWAR ALI, J. 1. These three writ applications have been heard one after the other and are being disposed of by a common judgment. Before giving the facts of the cases it may be stated that these applications were heard by a Bench of this Court. In its order dated 9-8-77 the Bench was of the view that the amendment to Rules 33 and 33 (1) (A) of the Rules framed under S.90 of the Bihar and Orissa Excise Act were ultra vires. But since a Division Bench could not declare a State law to be ultra vires, the case was directed to be placed before a Bench of five Judges to view of Article 228A of the Constitution. In view of the deletion of Article 228A the order directing the cases to be placed before a Bench of five Judges was recalled on 29-8-1978. The cases have now been placed again for hearing and we have heard learned counsel for the parties at length because, in our view, the tentative opinion formed on 9-8-1977 was not a bar to the cases being heard and decided on merit. I, therefore, proceed to state compactly the relevant facts. 2. The petitioner Company owns two distilleries. One of these is situated at Mirganj in the district of Gopalganj and the other at Lauriya in the district of West Champaran. These distilleries manufacture spirit for various purposes and a part of the spirit so manufactured is sent outside the State of Bihar. By a notification dated 30-10-1973 the State Government in exercise of powers under Sec.22 of the Bihar and Orissa Excise Act (the "Act"), invited tenders for wholesale supply of country spirit to Government Wareshouses in the State of Bihar, for the period 1-4-1974 to 31-3-1977. In the tender the petitioner offered to supply country spirit of the strength 60,68 overproof. The tender which is in form ka contains the heading "tender for contract of supply of country liquor (Desi Sharab) for 3 years from April, 1974". In the tender the petitioner offered to supply country spirit of the strength 60,68 overproof. The tender which is in form ka contains the heading "tender for contract of supply of country liquor (Desi Sharab) for 3 years from April, 1974". While forwarding the tender it was stated by the petitioner in its letter dated 1-12-1973 that it agrees "to comply with all the rules and regulations and the terms and conditions of the licence for wholesale supply of country spirit (Form No. 27) and such other directions which may be issued from time to time." The tender was accepted and exclusive privilege under Sec.22 of the Act was granted on the basis of conditions governing the supply of country spirit to Government warehouses as laid down in the relevant rules and order. 3. The case of the petitioner is that the spirit of 65.5 to 68 overproof strength containing 95 per cent alcohol is carried from the Distilleries to Government warehouses in metal vessels (drums) by lorries or motor tankers. The process of filling the drums and loading of the same on lorries or the filling of the tankers, is carried on under the direct supervision of the staff of the Excise Department. At the warehouse the staff of the Department posted there, checks the seal on the drums and the tankers and if the seals are intact the transported spirit is allowed to be unloaded. Thus according to the petitioner the filling of the drums and the tankers, sealing the same and unloading the spirit is carried on under the supervision of the staff of the Excise Department at the Distilleries and the warehouse. It may be stated here that according to the counter-affidavit that has been filed in this case, it is not only the sealed drums or tankers which are unloaded, but even where the seals are found broken or tampered the spirit is allowed to be unloaded subject to endorsement to that effect by the warehouse officers in the relevant documents and registers. Further there is no supervision of the staff of the Department during the course of transit of the consignment which is transported under the supervision of the Staff of the petitioner. 4. Further there is no supervision of the staff of the Department during the course of transit of the consignment which is transported under the supervision of the Staff of the petitioner. 4. The case of the petitioner further is that the spirit of 65.5 to 68 overproof containing 95 per cent alcohol despatched from the Distilleries to warehouses is not for human consumption. It is at the warehouses that the spirit is converted into country spirit of various strengths which then becomes fit for human consumption. The country spirit so prepared at the warehouse premises is issued by the Excise staff posted at the warehouse to retail licensees on prepayment of duty and price, the same being fixed by the State Government. In transporting the spirit from the Distilleries to the warehouses there is certain amount of wastages due to various factors including loading, unloading, seepage and evaporation. Under rule 33, framed by the Board of Revenue under S.90 of the Act, allowance at the rate mentioned therein is allowable for the loss in transit. The said rule also states that if there is loss of a quantity greater than the maximum quantity of allowance for loss in transit, the duty at the highest rate for the time being on the country spirit is to be paid by the Distilleries. The rate of allowance was first fixed by notification dated 18-1-1932. Rule 33 has been recently amended by a notification dated 21-1-1976 and Rule 31 (1) (A) has been inserted, thereby revising and reducing the allowance for loss in transit allowable under Rule 33 as it stood prior to the aforesaid amendments. The petitioner challenges the validity of the aforesaid amendment in Rule 33 and insertion of Rule 31 (1) (A) in C.W.J.C. 817/ 76. The petitioner also challenges the original Rule 33 in so far as it limits the wastage allowance to 1 1/2 per cent. 5. Under Rule 21 framed by the Board under Section 90 of the Act the permissible allowance for storage wastage in respect of distilleries stock of spirit was fixed at 1 1/2 per cent calculated on the number of Proof gallons passed into the store houses. By notification dated 12-2-1976 the rule as originally framed has been amended and the permissible storage wastage had been reduced from 1.5% to 0.5%. A copy of the relevant notification is Annexure-I to CWJC. 1000 of 1976. By notification dated 12-2-1976 the rule as originally framed has been amended and the permissible storage wastage had been reduced from 1.5% to 0.5%. A copy of the relevant notification is Annexure-I to CWJC. 1000 of 1976. The petitioner challenges the original Rule 21 and the aforesaid amendment. The third writ application relates to Rule 61 (3) and the amendment thereto. Under Rule 61 prior to the issue of spirit, the spirit in the Vats, casks and other receptacles has to be gauged and proved and any wastage which has occurred since they were last gauged and proved has to be entered in the prescribed register. Under Rule 61 (3) an allowance of 1 per cent calculated on the number of proof gallons of the quantity of liquor storage is allowed as wastage for storage and reduction. According to the rules as originally framed, the allowable wastage was 1 per cent. By the notification D/- 12-2-76 the allowable wastage has been reduced from 1 per cent to 0.3 per cent. A copy of the notification amending Rule 61 is Annexure-2 to C.W.J.C. 1160 of 1976. The petitioner challenges the original rule as also the amendment. 6. The main argument has been advanced in C.W.J.C. 817 of 1976, as contentions raised therein would with slight modification be applicable to the other two writ applications, I, therefore, first proceed to deal with the contention raised in C.W.J.C. 817/1976. But before doing so Rule 33 (1) and (2) so far as relevant quoted below :- "(1) An allowance at rate not exceeding in any case, the appropriate maximum specified in the following scales, shall be made for the loss in transit by leakage or evaporation of spirit which is transported or exported under bond by land :- Maximum Quantities of Allowance. 6-1 For conveyance in metal vessels only. 1 2 (a) For a journey of greater duration than five days. 0.5 per cent. (b) For a journey of duration exceeding five but not exceeding twenty days. 0.1 per cent, per day of the journey (c) For a of duration exceeding twenty days. 2.0 per cent. The duration of transit is to include the day of arrival at the receiving warehouse but not the date of despatch. If, however, the day of despatch and the day of arrival be the same, the duration shall be taken to be one day. 2.0 per cent. The duration of transit is to include the day of arrival at the receiving warehouse but not the date of despatch. If, however, the day of despatch and the day of arrival be the same, the duration shall be taken to be one day. Provided that if, in any case, the temperature of the spirit on arrival at its destination is found to be lower than that when despatched, a further allowance shall be made, it necessary, of .05 per cent for every degree Fahrenheit of difference between the two temperatures. (2) If the report of the officer by whom a consignment of spirits, transported or exported by land, under bond, or duty free, has been gauged and proved on arrival at its destination, should show that wastage to a greater extent than the appropriate allowance specified above has occurred, the distiller or the warehouse keeper shall pay duty at the highest rate for the time being in force on country spirit in any place through which the consignment passes, on so much of the deficiency as in excess of the above allowances; Provided that, if it shall be proved to the satisfaction of the Commissioner that such deficiency has been caused by accident or other unavoidable cause, and an application has been submitted within thirty days from the storage of the spirit at its destination, the duty levied on such deficiency shall be refunded. The Commissioners decision shall be final." It has already been stated that by the amendment dated 21-1-1976 to Sec.33 (1) maximum quantity allowance for a journey of duration exceeding ten days has been reduced to one per cent. A new rule being Rule 33 (1) (A) has also been introduced which is as follows :- "In case of transport or export under bond by land in a Motor tanker, the maximum limits of allowance for loss in transit by leakage, evaporation or contraction in volume shall be :- (1) For a journey of duration not exceeding 24 hours 0.25% (2) For a journey of duration exceeding one day but not exceeding 2 days 0.26% (3) For a journey of duration exceeding 2 days but not exceeding 5 days. 0.26% (4) For a journey of duration exceeding 5 days 0.3% 7. Only three contentions have been raised on behalf of the petitioner. 0.26% (4) For a journey of duration exceeding 5 days 0.3% 7. Only three contentions have been raised on behalf of the petitioner. They are : (1) Rule 33, as originally framed, purports to levy excise duty on wastage beyond the prescribed allowance irrespective of the fact whether the spirit transported is fit for human consumption. Neither the Act nor Entry 51 of List II of the 7th Schedule of the Constitution envisages levy of excise duty on alcoholic liquor which is not fit for human consumption. What the petitioner transports is alcohol of the strength of 95 per cent. Alcohol of such strength is not fit for human consumption. Consequently, rule 33 is ultra vires, and in any event, no duty is leviable on that alcohol transported by the petitioner as such alcohol is not an excise article within the meaning of law; (2) Under Rules 55 and 56 duty is payable on issue of spirit. No duty is, therefore, leviable before the stage of issue. There could not, consequently, be any levy of duty on the short-fall in the transport of alcohol by the petitioner, for such a transport was before the stage of levy of duty under Rules 55 and 56 and (3) the reduction in the percentage of loss in transit brought about by amendment in Rule 33 and insertion of Rule 33 (1) (A) is illegal. 8. Learned Government Advocate in reply raised the following contention: (a) Rule 33 as originally framed, as also the present amendment, which are under challenge, are regulatory in nature. They do not impose any excise duty. In order to ensure that no fraud is practised by the licensee nor there is loss of spirit which is transported on account of negligence of the licensee, the rules lay down that the licensee will be responsible for the loss in transit and will have to pay duty at the highest rate for the time being on the country spirit in respect of excessive loss of spirit. (b) The petitioner was licensee both for manufacture of spirit as also for the wholesale of country spirit. It was governed by the terms of the licences which are in forms 28 and 27 respectively. (b) The petitioner was licensee both for manufacture of spirit as also for the wholesale of country spirit. It was governed by the terms of the licences which are in forms 28 and 27 respectively. Under clause 19 of the Licence in Form-27 the licensee is liable to pay duty of any deficiency in excess of the limit for the time being prescribed by the Board of Revenue. If there is any change in the relevant rule the same becomes the allowable deficiency for the time prescribed. (c) The contention of the petitioner that what was manufactured by the petitioner was not for human consumption cannot be accepted as the tenders of the petitioner shows that he was filing the tender for country spirit (Deshi Sharab) which obviously is for human consumption. The mere fact that at the Government warehouses it was further diluted does not mean that the spirit manufactured by the petitioner was not for human consumption. (d) The spirit manufactured in this case and transported by the petitioner is an excisable article and it is alcoholic liquor for human consumption. The question whether the alcoholic liquor is for human consumption or not has to be answered with reference to the relevant provisions in the Act and the Rules. The scheme of the Act, clearly, states that all spirit is for human consumption and it only when it is denatured that it becomes unfit for human consumption. It cannot, therefore, be said that the alcoholic liquor transported by the petitioner in relation whereto short-fall had taken place was not for human consumption. (a) The excise duty is a duty on manufacture or production of goods. The said duty can be levied at convenient stages. Assuming, therefore, that what was levied was excise duty, the same could be levied at any convenient stages. (f) Since the rules in question were regulatory in nature, it was permissible for the State in exercise of regulatory power to reduce the allowable shortage. 9. It is to be observed that the main basis of attack on the validity of the rules is the assumption that the rules purport to levy excise duty. If that assumption is not correct, the first and second contention raised, on behalf of the petitioner are unsustainable. It is, therefore, necessary to examine the first contention raised on behalf of the State as formulated in the preceding paragraph. If that assumption is not correct, the first and second contention raised, on behalf of the petitioner are unsustainable. It is, therefore, necessary to examine the first contention raised on behalf of the State as formulated in the preceding paragraph. That contention is that the impugned rules are regulatory in nature and as such within the competence of rule making power. Section 90 of the Act empowers the Board of Revenue to make rules "for regulating the manufacture, supply or storage of any intoxicant." It cannot, therefore, be disputed that regulatory provisions can be made by the Board. Although the Bihar and Orissa Excise Act, 1915 and the rule as originally framed is a pre-constitution law, and therefore entitled to the protection available to an existing law under the Constitution, even under the Constitution Entry 8 of the List II of the 7th Schedule authorises the State Legislature to enact laws relating to intoxicating liquors. This would include the power to regulate production, manufacture, possession, transport etc. of intoxicating liquors. 10. In my view, in order to resolve the controversy, sufficient and clear guidance is available in the decision of the Supreme Court in Mohan Meakin Breweries Ltd. V/s. Excise and Taxation Commr. Chandigarh, AIR 1976 SC 2020 . Rule 8 of the Punjab Bonded Warehouse Rules, 1957 permitted wastage allowance not exceeding one per cent for actual loss in transit by leakage or breakage of vessels or bottles containing liquor. Rule 9 states that where the wastage exceeds the prescribed limit the licensee shall be liable to pay duty at the prescribed rate as if the wastage in excess of the prescribed limit had actually been removed from the warehouse. The contention raised before the Supreme Court was that the rules aforesaid sought to impose duty. Duty could only be imposed by the State Government and the Financial Commissioner who had framed the rules had, thus, no power to impose the duty in question. It was in this context that the true nature of the said imposition in Rule 9 was considered. After stating that it was only the State Government which was empowered to impose excise duty or countervailing duty on any excisable article, it was held that the impugned rule did not impose a duty. It was in this context that the true nature of the said imposition in Rule 9 was considered. After stating that it was only the State Government which was empowered to impose excise duty or countervailing duty on any excisable article, it was held that the impugned rule did not impose a duty. It was held that "the impugned rules do not impose any one of the aforesaid duties or prescribe the rates thereof or create any liability in respect thereof. They are in essense and substance of a regulatory character meant to guard against perpetration of fraud or deception on the Revenue". Similar is the position in relation to Rule 33. The said rule does not attempt to impose an excise duty. The purpose of the rule is to prevent perpetration of fraud or deception on the revenue as also to prevent any negligence on the part of the licensee which may ultimately result in the loss of revenue to the State. Even if it be assumed that the spirit containing 95 per cent alcohol is not excisable article (about which I am not expressing any opinion) there is no doubt that the spirit is being transported to the Government warehouses for being converted into country spirit which according to the petitioners case is an excisable article. If there is loss and wastage in the spirit which is transported, there is bound to be lesser realisation of revenue as the quantity of the country spirit produced at the warehouses would be proportionately reduced. In my view, therefore, it is clear beyond peradventure that the rule in question is regulatory in nature and does not impose any excise duty. Such a rule being within the rule making power, it was legally permissible for the Board of Revenue in exercise of powers under Section 90 (1) of the Act to prescribe maximum wastage limit in transport of intoxicant manufactured by the licensee. In this view of the matter, the first and second contentions raised on behalf of the petitioner have to be rejected. Learned counsel for the petitioner placed reliance on a number of decisions of Allahabad High Court as also a decision of Madhya Pradesh and Madras High Court. I am not discussing them in detail as all those cases deal with the question whether excise duty is leviable on liquor which is not fit for human consumption. Learned counsel for the petitioner placed reliance on a number of decisions of Allahabad High Court as also a decision of Madhya Pradesh and Madras High Court. I am not discussing them in detail as all those cases deal with the question whether excise duty is leviable on liquor which is not fit for human consumption. In view of my finding no question of levy of excise duty arises in this case, the rule being only regulatory in nature. I would however like to mention the main Supreme Court case which was relied upon during the course of argument. This was the case of B.S. Banerjee V/s. State of Madhya Pradesh, AIR 1971 SC 517 . What was held in this case was that the liquor which the contractor failed to lift is not an excisable article. It was observed that the rule making authority has not been conferred with any power to levy duty on any article which does not fall within the scope of Sec.25 of the Act. In the circumstances, and since the State Government purported to levy duty on liquor which the contractor failed to lift, it was held that the action of the Government was illegal. This case is clearly distinguishable as the facts and the question for consideration were completely different. 11. It only now remains to consider the last contention which has been raised in this case. That relates to the contention that the amendment to rule 33 and insertion of Rule 33 (1) (A) is illegal. This aspect was fully considered in the order of this Court dated 9-8-1977, an order to which I was a party. Since the matter has been fully discussed therein, I would adopt what was stated in paragraphs 8 to 10 of the said order. What was observed there is as follows:- "We are, however, of the opinion, that where the provision is incapable of compliance, such a provision would cease to be regulatory in nature. Under the garb of exercising regulatory power the Board of Revenue cannot require a licensee to do the impossible in order to meet the contention of the State that the provisions were regulatory in nature. Learned Counsel for the petitioner contended, in the alternative, that the amended rules were such as could not be complied with in spite of reasonable care and caution on the part of the licensee petitioner. Learned Counsel for the petitioner contended, in the alternative, that the amended rules were such as could not be complied with in spite of reasonable care and caution on the part of the licensee petitioner. Learned Counsel for the petitioner placed reliance on the averment made in paragraph 20 of the writ application. It has been stated in this paragraph that recently the tanker was loaded with spirit at Lauriya Distillery under the direct supervision of the Deputy Commissioner of Excise and was escorted by him from the Distillery to Ranchi Sadar Warehouse. There it was found that the spirit was short by 491.6 L.P. litre and after making allowance for permissible transit under Rule 33, there was excess transit wastage of 312.0 L.P. Litre. It was thus contended that amended rule reduces the allowable wastage to such an extent that in spite of all reasonable care it is not possible to comply with the amended rules. In order to justify the reduction of the allowable wastage by the amended rules and in reply to the averment made by the petitioner in paragraph 21 of the writ application it has been stated in the counter as follows:- "That with regard to the statements made in paras 21 to 23 of the writ petition it is stated that consequent upon the improvements and the facilities of transport under improved condition of the road since the period when Rule 33 has been framed, based on the calculation there made in respect of transit wastage and having regard to the leakage in the revenue on account of allowance for transit wastage in which appears disproportionate to the existing conditions and facilities available for the transport, the Excise Department considered it fair before reducing the quantum of concession on account of transit wastage to verify the position in the changed circumstances of the means and modes of communication. With such consideration the Excise Deputy Commissioner Distillaries and Warehousing, Bihar watched 3 lorries containing spirit at the petitioners Distillary at Lauriya Loaded in his presence which were destined for Hazaribagh, Ranchi and Kalimati (Jamshedpur Warehouse). Two Inspectors of Distillaries and Warehousing accompanied the Excise Dy. Commissioner during the transit of the spirit on the lorries tankers. The tankers destined for Hazaribagh and Kalmati Warehousing were unloaded and their contents were stored in the presence of the Deputy Commissioner of Excise. Two Inspectors of Distillaries and Warehousing accompanied the Excise Dy. Commissioner during the transit of the spirit on the lorries tankers. The tankers destined for Hazaribagh and Kalmati Warehousing were unloaded and their contents were stored in the presence of the Deputy Commissioner of Excise. The tankers destined for Ranchi Warehouse however, could not be stored in presence of the Deputy Commissioner of Excise as the weighing machine of that warehouse was found to be out of order. Even so the pragmatic test revealed that there was an appreciable scope for slashing the permissible limit of the transit wastage. The Board amended Rule 33 (1) and inserted Rule 31 (1) (A) in exercise of its rule making power and on the basis of the material warranting the change. New rule came into force from the 21st January, 1976." It would thus be seen that what has been averred is that there is appreciable scope for slashing the permissible limit of the transit wastage. It is quite understandable that on account of improved condition of roads and better condition for transport there may be scope for reducing the transit wastage as in original Rule 33 which was framed long time back. But in order to show that the amended rules were capable of compliance it was necessary for the respondents to give dates in relation to the experiment which was carried on and it referred to in the aforesaid paragraph of the counter affidavit. By merely stating that there was scope of slashing the permissible limit of the transit wastage it cannot be shown that the drastic reduction actually made by the amended rules in relation to the permissible limit is such as is capable of compliance. The State has not adduced sufficient materials to show that the reduction in the allowance for loss in transit was not excessive or capable of compliance." 12 In my opinion, therefore, the aforesaid amendment in Rule 33 and insertion of Rule 31 (1) (A) in C.W.J.C. 817/ 1976, copy of the notification, which is Annexure-2, has not been shown to be regulatory in character and is invalid. Similarly by notification dated 12-2-1976 the originally framed rule which has been amended and the permissible storage wastage which has been reduced from 1.5 per cent to 0.5 per cent, copy of which is Annexure-1 to C.W.J.C. 1000 of 1976 is invalid. Similarly by notification dated 12-2-1976 the originally framed rule which has been amended and the permissible storage wastage which has been reduced from 1.5 per cent to 0.5 per cent, copy of which is Annexure-1 to C.W.J.C. 1000 of 1976 is invalid. So also an allowance of 1 per cent calculated on number of proof gallons of the quantity of liquor storage as wastage for storage and reduction as framed under Rule 61 (3) which, by a notification dated 12-2-1976 has been reduced to 0.3 per cent, the copy of notification being Annexure-2 to C.W.J.C. 1160 of 1976 has also to be declared as invalid, in as much as it has not been shown to be regulatory in character. 13. In the view that I have taken, it is not necessary to discuss the other contentions that have been raised on behalf of the State. 14. In the result, these applications are allowed in part, Annexure-I to C.W.J.C. 1000/1976 and Annexure-2 to C.W.J.C. 817 and 1160 of 1976 are quashed and it is directed that the excess amount collected on the basis of the aforesaid Annexures should be refunded to the petitioner. There will be no order as to costs. B.S.SINHA, J. 15 I agree.