JUDGMENT - BHARUCHA S.P., J.: - This petition challenge the levy of excise duty under the Bombay Prohibition Act, 1949 upon losses or wastages of alcohol occurring during the manufacture by the petitioners of Indian-made foreign liquor and rectified spirit. 2. On 24th October, 1980 the petitioners were issued two notices of demand for excise duty in the sums of Rs. 7,54,982.20 and Rs. 1,43,050/- on alcohol losses caused during the manufacture of Indian-made foreign liquor and rectified spirit respectively. The petitioner filed appeals on 11th November, 1980. By orders dated 3rd September, 1981 the appeals were rejected. On 17th September, 1981 the petitioners filed a revision application in regard to the levy of excise duty on the losses of alcohol occurring during the manufacture of Indian-made foreign liquor. On 4th December, 1981 the revision application was rejected. On 10th February, 1982 the petitioners were served with notices of demand for Rs. 8,98,032.20 being the aggregate of the demands made earlier, for the period 1st April, 1979 to 31 January, 1980, and Rs. 6,96,351.50 for losses of alcohol sustained during the manufacture of Indian-made foreign liquor for the period 1st February, 1980 to 31st March, 1981. This petition impugns the notice of demand, the orders in appeal and revision. 3. A neat point is raised on behalf of the petitioners and it is not answered. 4. Section 105 of the Act empowers the levy of excise duty at such rate as the State Government shall direct, inter alia on any alcoholic liquor for human consumption and on any other excisable article when imported, exported, transported, possessed, manufactured or sold in or from the State as the case may be. Section 106 deals with manner of leving excise duty. It provides that the duties referred to in section 105 may be levied in the ways therein stated. Section 106 deals with manner of leving excise duty. It provides that the duties referred to in section 105 may be levied in the ways therein stated. We are here, admittedly, concerned only with Clause (d) of section 106, which reads as follows:- “(d)in the case of spirit or beer manufactured in any distillery established or any distillery or brewery licensed under this Act- (i) by a rate charged upon the quantity produced in or issued from the distillery or brewery, as the case may be, or issued from a warehouse established or licensed under this Act, or, (ii) by rate charged 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 State Government may prescribe;” 5. It is an admitted position that no scale of equivalents as required by Clause (d)(ii) has been prescribed by the State Government and that the only manner in which excision Indian-made foreign liquor and rectified spirit is that provided under Clause (d)(i). Clause (d)(i) provides that excise duty shall be levied by a rate charged upon the quantity of the liquor or spirit produced in or issued from a distillery or brewery, as the case may be, or issued from a distillery or brewery, as the case may be, or issued from a warehouse established or licensed under this Act. 6. By a notification dated 16th December, 1948 issued in exercise of powers under section 105 the rate of duty were first specified in respect of excisable articles “issued from any distillery, warehouse, manufactory or other place of storage established or licensed under the said Act.” 7. Mr. Vahanvati, learned Counsel for the petitioners, drew my attention to the judgment of the Allahabad High Court in (Mohan Meakin Breweries Ltd. v. State of U.P.)1, A.I.R. 1979 All. 198. Mr. Vahanvati, learned Counsel for the petitioners, drew my attention to the judgment of the Allahabad High Court in (Mohan Meakin Breweries Ltd. v. State of U.P.)1, A.I.R. 1979 All. 198. The bottling licence that the Allahabad High Court was concerned with provided, “The wastages of spirit in bottling and filling the bottles shall be recovered from the licensee at the full rate of duty leviable on Indian-made foreign liquor at the discretion of the Excise Commissioner.” The Court observed that although this clause imposed a liability for excise duty on wastages it had no efficacy as it was settled that a tax could be imposed only by a statute and not by a rule or regulation, unless the statute authorised this to be done. The Excise Act did not authorise the imposition of excise duty by a term contained in a bottling licence. The notification issued under the act clearly indicated that the duty was to be charged only at the point of issue. It was thus clear that the impugned levy of excise duty on wastages could not be sustained. 8. As has been pointed out, under section 106(d)(i) excise duty is levied by a rate charged upon the quantity of liquor or spirit produced in or issued from the distillery or brewery. It is the end-point of the production or the issue which has to be taken into account for the calculation of the excise duty. In so calculating, the wastages incurred prior to the end-point of the production or the issue cannot be taken into account. It was, therefore, beyond the powers of the excise authorities to demand from the petitioners excise duty on the wastages of liquor that occurred during the manufacture of Indian-made foreign liquor and rectified spirit. 9. My attention was drawn to Rule 13 of the Maharashtra Distillation of spirit and Manufacture of Potable Liquor Rules, 1966. Thereunder the procedure for maintaining an account of the stock of spirit is set out. It requires that particulars be sent by the distillery Officer to the excise authorities. Including a statement of losses and, where the losses are in excess of that which are permissible, an explanation of the reasons therefor. If the reasons are found to be satisfactory the Commissioner of Prohibition and Excise may write-off the excess losses. It requires that particulars be sent by the distillery Officer to the excise authorities. Including a statement of losses and, where the losses are in excess of that which are permissible, an explanation of the reasons therefor. If the reasons are found to be satisfactory the Commissioner of Prohibition and Excise may write-off the excess losses. While there is no similar rule in regard to Indian-made foreign liquor, a circular issued under Rule 24 of the said Rules makes similar provisions in regard to losses incurred in the process of manufacture of Indian-made foreign liquor. 10. That an explanation needs to be given for losses incurred in excess of the admissible percentage in the manufacture of Indian-made foreign liquor and of rectified spirit does not entitle the excise authorities, should they find the explanation to be unsatisfactory, to charge excise duty on the losses. They may, if the circumstances so warrant, take such other action under the Act as may be open to them. In so far as the levy of excise duty is concerned, the applicable statutory provision, Clause (d)(i) of section 106, does not authorise a levy of excise duty on wastages occurring in the manufacture of Indian-made foreign liquor and rectified spirit. 11. In the result, the petition is made absolute in terms of Prayers (a) and (b), with costs. Rule accordingly. -----