Judgment :- 1. The petitioner, a holder of a distillery licence under the Kerala Abkari Act and a licenced warehouse keeper for arrack, manufactured rectified spirit from molasses by distillation in his distillery, converted a major portion of the same into arrack, a country liquor, fit for human consumption and transported it to his warehouses as authorised by the Government. It was this arrack that was supplied to the independent retail arrack shops which, in turn sold it to the general public. The petitioner's right to manufacture and transport arrack is controlled by the Abkari Act and the rules made thereunder. The petitioner was thus bound to arrange for the transport of arrack from the distillery to the warehouse at his own cost and he had to adopt all safeguards against any loss of arrack in transit or in storage. There are excise officers stationed in the distillery and in the licenced warehouse who keep a close watch of the manufacture, storage, transport, etc. of rectified spirit and arrack. The supply of arrack from the distillery to the warehouse is covered by a permit issued by the officer-in-charge of the distillery and another officer in the warehouse has to verify the consignment on arrival at the destination and report the result of his verification of the consignment to the distillery officer. Wastage noticed in each consignment is also noted in the advice copy of the permit. The petitioner had been the supply contractor of arrack under licences and permits issued by the authorities under the Act from time to time, up to the period 31st March 1978. 2. The petitioner's case is that he was liable to pay duty on arrack manufactured in his distillery at the rate of Rs.2.50 per bulk litre and that he was also entitled to deduction on account of the loss or wastage in transit. He was allowed to deduct wastage within the permissible limits and was made liable to pay on the balance quantity of arrack manufactured by him at the rate of Rs.2.50. He has paid the amount as demanded by the the excise authorities. However, the audit party of the Accountant General's. Office raised objections that wastage of arrack in transit exceeding the permitted limits of 0.5 per cent and 1 per cent attracted a higher duty of excise duty at the rate of Rs. 15.50 per proof litre. He has paid the amount as demanded by the the excise authorities. However, the audit party of the Accountant General's. Office raised objections that wastage of arrack in transit exceeding the permitted limits of 0.5 per cent and 1 per cent attracted a higher duty of excise duty at the rate of Rs. 15.50 per proof litre. The objection of the Accountant General's Office was communicated to the petitioner by the Excise Inspector who was stationed in the petitioner's distillery, who also sent the petitioner a chalan on 31st December 1974 for payment of the deficit amount. This notice, Ext. P-1, is extracted below as this forms the basis of the subsequent demands as well: "Short collection of duty on excess wastage of arrack. R.55(2) and 55(4) provide that if spirits are transported or exported in metallic receptacles the allowance made for loss in transit by leakage and evaporation or other unavoidable causes shall not exceed a maximum of 0.5 per cent and that if the wastage exceeds the prescribed limit the distillery or warehouse keeper shall be called upon to pay duty at the tariff rate on the excess wastage. Tariff rate is defined as the rate of duty applicable to Indian made Rectified spirit. It was noticed during the local Audit of Poisons Distillery, Chalakudy, that there was an excess wastage of 1,238.70 proof litres, of arrack during transit. But duty on this excess wastage was collected only at the rate of Rs.2.50 per proof litre instead of atRs.15.50 per proof litre (Re.the duty on rectified spirit). The short collection works out to Rs.16,103. The particulars of recovery of this amount from the distillery are awaited from the department (July, 1974) (Sd.) Accounts Officer. (Sd.) Assistant Excise Commissioner. P.D. No. 179/74-75. Sir, In the light of the above orders I request you to be so good enough to remit duty on tariff rate @ 15.50 per proof litre and the chalans evidencing payment may be forwarded to this office without any further delay. Copy of the letter and related chalans are also enclosed. As I have to furnish the matter to the authority concerned immediately, kindly treat this as very urgent Yours faithfully, (Sd.) Excise Inspector, Poison's Distillery, Chalakudy. 3. The petitioner objected to this levy, contending that there is no justification to levy duty on excess wastage of arrack at the rate of Rs. As I have to furnish the matter to the authority concerned immediately, kindly treat this as very urgent Yours faithfully, (Sd.) Excise Inspector, Poison's Distillery, Chalakudy. 3. The petitioner objected to this levy, contending that there is no justification to levy duty on excess wastage of arrack at the rate of Rs. 15.50 per proof litre. He did not receive any reply to these objections but demands, continued to be made on the basis that the petitioner was liable to pay excise duty at the rate of 15.50 for the excess wastage in transit. The petitioner has a complaint that the demands under Ext. P-1 and Ext.P-2 were made without giving him any prior hearing and without considering his objections. Nevertheless demands continued to be made on the same basis for the excess wastage of arrack in transit; and apart from the other representations made, he submitted a representation to the Government as per Ext.P-6 detailing his objections. The petitioner did not receive any reply to that representation also. Even thereafter demands continued to be made and the objections by the petitioner also continued. When it was noticed that coercive steps were about to be taken against the petitioner for enforcing the demand, made by the excise authorities, the petitioner filed this writ petition claiming the following reliefs: "(a) declare R.34 and 55 (2) of the Kerala Distillery and Warehouse Rules, 1968 as unconstitutional and void; (b) to call for the records of the case leading to the demands Exts. P-1, P-4, P-7, P-9, P-10, P-11, P-15 for payment of duty at the tariff rate of Rs.15.50 per proof litre of arrack on excess wastage, from the respondents and to quash the said demands made therein by the issue of a writ of certiorari or other appropriate writ or order; (c) to issue a writ of Mandamus or other appropriate writ, or order directing the respondents to refrain from collecting duty under the Abkari Act I of 1077 and the Rules framed thereunder at Rs.15.50 per proof litre of arrack treated as wastage in excess of the limits prescribed under R.34 and 55(2) of the Kerala Warehouse and Distillery R.1968". 4. The State filed a counter affidavit admitting that the manufacture, storage and transport etc. 4. The State filed a counter affidavit admitting that the manufacture, storage and transport etc. of arrack from the petitioner's distillery were done under the supervision and in the presence of the excise staff though the measurement, transport and delivery of arrack were done by the workers of the petitioner's firm. They also stated that the petitioner is primarily liable for the wastage of arrack in excess of the permissible limits and the quantity of wastage was noticed in each consignment and noted in the advice copy of the firm to the officer in charge of the Distillery and the excise officer in charge of the warehouse. The counter affidavit also understood the contentions of the petitioner correctly as it stated thus: "The main contention of the petitioner is not the quantum of wastage but the rate at which the petitioner is liable to pay. As regards the rate of duty on excess wastage, the statutory provisions stipulate the duty at the rate of tariff rate has to be paid by the petitioner;" and added "As per the statutory provisions, the petitioner is liable to pay duty on all excess wastages at the tariff rate". 5. It was the stand in the counter affidavit of the State that the levy of duty on wastage of arrack is in fact, excise duty on alcohol fit for human consumption and therefore such levy was valid both under the constitution and under the Abkari Act. Asserting that the petitioner has no fundamental right t6 carry on any trade in liquor, the State supported the stand of the Accountant General that the levy has been made correctly at the rate of Rs. 15.50. This writ petition was heard and disposed of by a Division Bench consisting of Chandrasekhara Menon and Balagangadharan Nair, JJ. by judgment dated 12th December, 1983. The learned judges in Para.8 of the judgment stated: "The petitioner challenges these demands on the ground that the levy of duty by the respondent on wastage in transit or storage is not authorised by the constitution and is hence void as not being authorised by any valid law". by judgment dated 12th December, 1983. The learned judges in Para.8 of the judgment stated: "The petitioner challenges these demands on the ground that the levy of duty by the respondent on wastage in transit or storage is not authorised by the constitution and is hence void as not being authorised by any valid law". Referring to the contention that R.34 and 55 of the Abkari Rules are beyond the rule making powers of the Government under S.29 of the Abkari Act, the learned judges after referring to the relevant statutory provisions, held that R.34 and 55 of the Kerala Distillery and Warehouse Rules have to be "read as part of the Act" itself in view of S.69 of the Act and therefore the validity of those provisions is immune from judicial scrutiny. Having disposed of the question as to whether the rules are beyond the powers of the Act, the learned judges proceeded to consider whether the rules violated Art.19(1) (g) of the Constitution. It was held that Rs.34 and 55 are only regulatory in nature and do not offend Art.19(1) (g) of the Constitution. This Court also noted that the petitioner, having operated the business for the full term covered by the respective licences, cannot turn round and contend that the rates of duty specified by the Rules are not leviable from him or that the Rules concerned are invalid. The writ petition was therefore dismissed. 6. It is this judgment that is sought be reviewed by the petitioner. In this Review Petition No. 9 of 1984, it is contended that the learned judges in relying on English decisions which were not cited at the Bar committed a patent error in that the, law laid down in the English cases is not good law in India in view of the pronouncements of the Supreme Court on the same subject. It is stated by the petitioner that the Supreme Court has expressly referred to the English decisions relied on by the learned judges, refused to adopt them in Indian conditions and under our constitution. It is, therefore, the case of the petitioner that R.34 and 55 (4) are beyond the powers conferred under the Act, discriminatory and cannot be the basis for imposing an excise duty on manufacture of arrack at a rate not applicable to arrack. 7. It is, therefore, the case of the petitioner that R.34 and 55 (4) are beyond the powers conferred under the Act, discriminatory and cannot be the basis for imposing an excise duty on manufacture of arrack at a rate not applicable to arrack. 7. The learned Advocate General opposed the review application contending that there are no grounds made out to review, that the learned judges did not commit any error and even if any error was committed, it was a matter to be taken in appeal to the Supreme Court and not to be raised in review before this Court itself. He strongly relied on the decision in Northern India Caterers (India) Ltd. v. Lt. Governor of Delhi (1980 (2) SCC.167) and contended that the parameters of the review jurisdiction having been outlined, this court may not exercise its review jurisdiction in this case. 8. The Supreme Court in the decision cited in (1980) 2 S.C.C. 167 held thus: "It is well settled that a party is not entitled to seek a review of a judgment delivered by this Court merely for the purpose of a rehearing and a fresh decision of the case. The normal principle is that a judgment pronounced by the Court is final, and departure from that principle is justified only when circumstances of a substantial and compelling character make it necessary to do so: Sajjan Singh v. State of Rajasthan. For instance, if the attention of the Court is not drawn to a material statutory provision during the original hearing, the Court will review its judgment: G.L. Gupta v. D.N. Mehta. The Court may also reopen its judgment if a manifest wrong has been done and it is necessary to pass an order to do full and effective justice: O.N. Mohindroo v. District Judge, Delhi. Power to review its judgments has been conferred on the Supreme Court by Art.137 of the Constitution, and that power is subject to the provisions of any law made by Parliament or the rules made under Art.145. In a Civil Proceeding, an application for review is entertained only on aground mentioned in 0.47, R.1 of the Code of Civil Procedure, and in a Criminal proceeding on the ground of an error apparent on the face of the record (Order XL, R.1, Supreme Court Rules, 1966). In a Civil Proceeding, an application for review is entertained only on aground mentioned in 0.47, R.1 of the Code of Civil Procedure, and in a Criminal proceeding on the ground of an error apparent on the face of the record (Order XL, R.1, Supreme Court Rules, 1966). But whatever the nature of the proceeding, it is beyond dispute that a review proceeding cannot be equated with the original hearing of the case, and the finality of the judgment delivered by the Court will no be reconsidered except 'where a glaring omission or patent mistake or like grave error has crept in earlier by judicial fallibility': Sow Chandra Kante v. Sheikh Habib". 9. Conscious of the limited jurisdiction in a case for the review, we shall consider whether the judgment by Chandrasekhar Menon and Balagangadharan Nair, JJ. has to be reviewed. It may be noted that though both the learned judges have since retired, one of the judges who was a party to the writ petition, Justice Balagangadharan Nair, sitting with one of us (Bhaskaran Nambiar, J.) admitted the review petition and issued notice on 28th March 1984. 10. The main question that arose for decision in the writ petition was regarding the validity of R.34 and 55 of the Abkari Rules. If the rules are beyond the powers conferred under the Abkari Act, they could not be enforced against the petitioner for demand of any higher rate of excise duty. This vital question was answered against the petitioner by relying on the decision of the House of Lords in Lockwood's case (1984 AG 347) and referring to two other decisions of the English Courts R v. Minister of Health, ex p. Raffe ((1931) AC. 494) and in Baker v. William ((18981 Q.B. 23). 11. The learned judges proceeded to consider the question thus: "When S.69 of the Abkari Act says that rules and notifications properly published become part of the Act, what exactly does that mean. Some statutes provide that the orders of regulation made thereunder are to the same effect'as if enacted in this Act'. This expression was considered in some detail by Lord Herschell in Institute of Patent Agents v. Lockwood (1894) A.C 347. It was observed by His Lordship that the effect of these words was to make the subordinate legislation as completely exempt from judicial review as the statute itself. This expression was considered in some detail by Lord Herschell in Institute of Patent Agents v. Lockwood (1894) A.C 347. It was observed by His Lordship that the effect of these words was to make the subordinate legislation as completely exempt from judicial review as the statute itself. This in effect means the subordinate legislation has to be considered as part of the statute in the light of the words "as if enacted in this Act;" and held thus: "In any view we think if the rules framed under the Act are not specifically repugnant to the provisions in the Act and the Act itself enacts that the Rules properly notified would be part of the Act itself, it can be well proceeded on the basis that the rules are provisions in the statute itself. The Kerala Distillery and Warehouse Rules are framed in exercise of the powers conferred by clauses (c), (g), (h), (i), 0), (k), and (n) of S.29 of the Abkari Act. We have already noted that all such rules are to be read as part of the Act under S.69 of the Act." "The impugned demands are on the basis of R.34 and 55 of the Kerala Distillery and Warehouse Rules. One cannot say that there is any inconsistency as regards the provisions in these rules with that in the Act. Therefore they have to be taken as pan of the Act." "It is true that no tax can be levied without the authority of law. Levy of tax is essentially a legislative function. It is also true that a rule making authority has no plenary powers. But then we have to take into account the fact that R.34 and 55 of the Distillery and Warehouse Rules have become because of specific rules in S.69 of the Act part of the statute itself". "Here also from the scheme of the rules under which the levy is made it is clear that it is regulatory in character and the nature of the rules framed under S.69 could be considered to be part of the Act so far as there is no actual repugnancy with other provisions of the Act, and therefore it cannot be said here that the Legislature has not prescribed the rate of duty". 12. 12. Thus it is held that the levy of tax is essentially a legislative function, that the impugned rules are part of the Act itself, and thus the legislature itself prescribed the duty under these rules and there was no question of the rules being beyond the powers conferred under the Act. On this reasoning, the further conclusion followed that the impugned rules are not repugnant to the other provisions of the Act. It is settled law that one provision in an Act cannot be declared ultra vires the Act because it is repugnant to some other provision in the same Act. That question, however, need not detain us, for, as we see it, the aspect as to whether the rules are valid or not was tacked to the fact that the rules had to be read as part of the Act. We shall, therefore, see whether this principle stated by the house of Lords in Lockwood's case(1984 AC. 347) has been accepted in India by the decisions of the Supreme Court. If thus this court relied on decisions of the English Courts which are no longer good law in India, it is clear that an error apparent on the face of the record has been committed. We shall, therefore, advert to this aspect at the outset 13. In Chief Inspector of Mines v. K.C. Thapar (AIR 1961 SC. 838), Lockwood's case (1984 AC. 347) was referred thus: "The proper construction of a legislative provision as regards rules or regulations made under an Act having effect as if enacted in the Act fell to be considered in several English and Indian decision and from one of these the earliest case in which the question appears to have been considered Mr. Pathak sought assistance. That is the case of Institute of Patent Agents v. Lockwood (1894 A.C. 347)". "'The House of Lords held that the rules were intra vires; but dealt also with a contention raised on behalf of the appellants that in view of the provisions in the Act that the rules 'shall be of the same effect as if they were contained in this Act" the question whether the rules were intra vires or ultra vires could not at all be canvassed in the Courts. Speaking about the effect of the above provisions, Lord Herschell, L.C. said: 'I own I feel very great difficulty in giving to this provision that they 'shall have of the same effect as if they were contained in the Act' any other meaning than this that you shall for all purposes of construction, or obligation or otherwise, treat them, as if they were in the Act'. "In our opinion, Lockwood's Case 1894 A. C. 347 is no authority in favour of the construction urged by the learned counsel for acceptance". "The true position appears to be that the Rules and Regulations do not lose their character as rules and regulations, even though they are to be of the same effect as if contained in the Act. They continue to be rules subordinate to the Act, and though for certain purposes, including the purpose of construction they are to be treated as if contained in the Act, their true nature as subordinate rule is not lost'. 14. To the same effect is the ruling of the Supreme Court in State of Kerala v. K.M.G. Abdulla and Co. (AIR 1965 SC. 1585). Wherein it was stated thus: "The rules made under S.19 and published in the Government Gazette have by the express provision to have effect as if enacted in the Act; but thereby no additional sanctity attaches to the rules. Power to frame rules is conferred by the Act upon the State Government and that power may be exercised within the strict limits of the authority conferred. If in making a rule, the State transcends its authority, the rule will be invalid, for statutory rules made in exercise of delegated authority are valid and binding only if made within the limits of authority conferred. Validity of a rule whether it is declared to have effect as if enacted in the Act or otherwise is always open to challenge on the ground that it is unauthorised". 15. Lockwoods case (1984 A.C. 347) came up for consideration before the Supreme court in Kerala State Electricity Board v. Indian Aluminium Co. (AIR. 1976 SC. 1031= (1976) 1 SCC. 466) and it was held thus: "But it would appear that where the statute provides for the laying of the rules before parliament and the Parliament could have annulled them, such a provision would make the subordinate legislation beyond challenge (Institute Of Patent Agents v. Lockwood). (AIR. 1976 SC. 1031= (1976) 1 SCC. 466) and it was held thus: "But it would appear that where the statute provides for the laying of the rules before parliament and the Parliament could have annulled them, such a provision would make the subordinate legislation beyond challenge (Institute Of Patent Agents v. Lockwood). In India many statutes both of Parliament and of state legislatures provide for subordinate legislation made under the provisions of those statutes to be placed on the table of either the parliament or the state legislature and to be subject to such modification, amendment or annulment, as the case may be, as may be made by the parliament or the state legislature. Even so, we do not think that where an executive authority is given power to frame subordinate legislation within stated limits, rules made by such authority if outside the scope of the rule making power should be deemed to be valid merely because such rules have been placed before the legislature and are subject to such modification, amendment or annulment. As the case may be, as the legislature may think fit. The process of such amendment, modification or annulment is not the same as the process of legislation and in particular it lacks the assent either of the President or the Governor of the State, as the case may be. We are, therefore, of opinion that the correct view is that notwithstanding the subordinate legislation being laid on the table of the House of Parliament or the state legislature and being subject to such modification, annulment or amendment as they may make, the subordinate legislation cannot be said to be valid unless it is within the scope of the rule making power provided in the statute". 16. 16. In the light of these decisions of the Supreme Court, it is settled in India that the rules framed by a delegated authority are always subordinate to the Act, they do not loose their character as subordinate legislation and therefore if the rules exceed the scope of the rule making power provided in the statute, the rules are invalid even if there is an express provision in the statute that the rules have to be read as part of the Act This court, therefore committed a patent error, an error apparent on the face of the record when it said that the impugned rules were immune from judicial scrutiny as to whether they were beyond the powers conferred under the Act, as they have to be read as part of the Act itself. This court relied on a wrong decision not cited at the Bar and failed to note the relevant decisions of the Supreme Court on the subject. There has been'glaring omission' and a'patent mistake' and 'a grave error has crept in earlier by judicial fallibility'. The review petition has to be allowed, the judgment of this court rendered in O.P. No. 1278 of 1981-B is reviewed and the case is reheard. We have heard the counsel for the petitioner and the learned Advocate General on the merits of the case also. 17. On the facts admitted in the pleadings, it is clear that the petitioner manufactured rectified spirit, converted the same to alcohol which is fit for consumption and transported the same to licenced warehouses. There was wastage in transit. This wastage exceeded the permissible limits fixed by the relevant rules. The petitioner could have proved that the deficiency in quantity of arrack transported could not have been prevented by the exercise of proper care and precaution and that it could not have passed into consumption; but he did not prove those facts and did not have an opportunity to prove the same. The question is whether this deficiency in the quantity of arrack transported from the distillery to the licenced warehouse attracts duty at the rate of Rs.2.50 per bulk litre or Rs.15.50 per proof litre. 18. The question is whether this deficiency in the quantity of arrack transported from the distillery to the licenced warehouse attracts duty at the rate of Rs.2.50 per bulk litre or Rs.15.50 per proof litre. 18. The relevant notification prescribing the rate of excise duty is extracted below: "S.R.O.60/61.-In exercise of the powers conferred by S.17 of the Cochin Abkari Act 1 of 1077 and in supersession of Revenue Department Notification (2) No. G2-443-A/57/RD, dated 26th March 1957, the Government of Kerala hereby direct that the duty under the said section shall be levied on the following kinds of liquors manufactured in the area where the said Act it in force or manufactured elsewhere in India and imported into the said area by land or under bond by sea, at the rates mentioned against each kind of liquor". 2. Indian made rectified spirit Rs.15.50 (Rs. fifteen and and absolute alcohol P.fifty) per proof litre. 6. Arrack 25 degree U.P. Rs.2.50 (Rs.Two and Np. fifty) per bulk litre." 19. S.17 of the Act providing for duty on liquor or intoxicating drugs, so far as it is relevant for our purpose is extracted: "17. Duty on liquor or intoxicating drugs.-A duty of excise or luxury tax or both shall, if the Government so direct, be levied on all liquor and intoxicating drugs. 00 (d) Manufactured under any licence granted under S.12; or (e) Manufactured at any distillery, brewery, winery or other manufactory established under S.14; or" 20. S.29 provides for rules to be made under the Act. R.34 and 55(2) of the Distillery and Warehouse Rules, relied on both sides are extracted below:- "34. Distillers and Warehousekeepers to account for deficiency in stocks.-An account shall be taken of the distiller's and warehousekeeper's stocks at such intervals, not exceeding three months, and in such manner as the Commissioner may direct; and the Distillers and Warehousekeepers 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. If the licence 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." "55. Allowances for wastage: (1) …. (2) …. (3) …. (4) If the report of the officer by whom a consignment of spirit transported or exported has been gauged and proved on arrival at its destination shows that loss has occurred in transit to a greater extent than that prescribed by sub-rules 1 to 3 the distiller or warehousekeeper shall pay duty at the tariff rate, for the time being in force, on so much of the deficiency as is excess of the allowance so prescribed: Provided that if proved to the satisfaction of the Commissioner that such deficiency could not have been prevented by the exercise of proper care and precaution, and that the spirits could not have passed into consumption, the duty levied on such deficiency shall be refunded. The Commissioner's decision shall be final." 21. On the admitted fact that the wastage in the present case was caused in transit from the distillery to the warehouse, both licenced places, the "duty" depends on the applicability and construction of R.55(4). While the petitioner contends that this rule is beyond the powers conferred under the Act and discriminatory, the learned Advocate General submits that the rule is valid and well within the rule making power conferred under the Act. 22. Before we proceed to consider the scope of R.55(4), it is necessary to clear one aspect, namely, that the stand of the learned Advocate General is that what is levied or collected under R.55(4) is only excise duty and nothing else. There is no case that there is any levy of penalty under this rule. 22. Before we proceed to consider the scope of R.55(4), it is necessary to clear one aspect, namely, that the stand of the learned Advocate General is that what is levied or collected under R.55(4) is only excise duty and nothing else. There is no case that there is any levy of penalty under this rule. As an excise duty, the levy can only be on the manufacture of liquor in the distillery, or any manufactory established under S.14 of the Act, or under any licence granted under S.12 of the Act. It is again admitted that the petitioner's distillery is established under S.14 of the Act and he had a licence under S.12 also. The duty of excise that can be imposed under the Act is therefore oh the manufacture of liquor. The arrack that is manufactured in his distillery, therefore, attracts the duty leviable on arrack i.e. at the rate of Rs.2.50 per bulk litre. He is liable to pay duty for the entire quantity so manufactured. But the legislature in S.14 of the Act authorised the Government to: "(f) prescribe the allowance for wastage of alcohol that may occur in (i) the process of manufacture of alcohol; (ii) the process of manufacture of any preparation containing alcohol; and (iii) the storage, transport and use of non-duty-paid alcohol." Rule 55 of the Distillery and Warehouse Rules provides for allowances for wastage and under sub-rule (3) the allowance is determined "by deduction from the quantity of spirit despatched from the distillery or warehouse, the quantity received at the place of destination, both quantities being stated in terms of London Proof Litres and shall be calculated on the quantity contained in each consignment". If the loss occurred in transit is greater in extent than that provided by the rules, the distiller or the warehousekeeper shall pay duty at the tariff rate, for the time being in force, on so much of the deficiency as is in excess of the allowance so prescribed. The rule, however gives an opportunity to the distiller or warehousekeeper to escape this liability to pay excise duty on the deficiency under the proviso to R.55. The rule, however gives an opportunity to the distiller or warehousekeeper to escape this liability to pay excise duty on the deficiency under the proviso to R.55. Under this proviso, if the distiller or warehouse-keeper proves to the satisfaction of the Commissioner (a) that such deficiency could not have been prevented by the exercise of proper care and precaution and (b) that the spirits could not have passed into consumption, the duty levied on the deficiency is refunded. This is the scheme of R.55(4). The Rule does not levy any new duty. It only directs how the quantum of duty has to be determined and fixed where there is loss in transit. The character of the levy as an excise duty and its incidence as an imposition on manufacture continue to be maintained under this rule. This rule is thus made for the purpose of carrying out the provisions of the Act, especially S.17. The liability to pay duty on liquor, manufactured, fastened under the Act does not cease to exist when the liquor manufactured is wholly lost in transit. The liability thus continues even where the loss is parotial. This is statutorily recognised in R.55. The decision of the Supreme Court in M.M.Breweries v. E. and T. Commr., Chandigardh (A.I.R. 1976 SC. 2020) supports this proposition. It is held thus: "In the present case, the liquor for which permits were obtained by the appellant was admittedly in existence and was meant for human consumption and did leave the appellants' distilleries in Uttar Pradesh for being transported to its Warehouse in Chandigarah at its own risk and responsibility. It is also not denied on behalf of the appellant that a portion of the liquor which exceeded the permissible limit of wastage did not reach the appellant's Warehouse and was not found therein and the shortage remained unaccounted for. It is also not denied on behalf of the appellant that a portion of the liquor which exceeded the permissible limit of wastage did not reach the appellant's Warehouse and was not found therein and the shortage remained unaccounted for. It is thus evident that duty is not sought to be charged on an excisable article which was not in existence, as contended on behalf of the appellant but is sought to be charged on liquor which was actually manufactured and left Uttar Pradesh but was found short beyond the permissible limit and no reasonable explanation was tendered by the appellant in respect thereof." "In the present case, however, the liquor was lifted by the appellant from its distilleries in Uttar Pradesh and a portion thereof remained unaccounted for, as already stated, on arrival of the consignments art their destination. For the foregoing reasons, the respondents were right in demanding the duty on the shortages." 23. Thus it is evident that the petitioner was liable to pay the duty at the rate of Rs.2.50 per bulk litre on the entire quantity of arrack manufactured by him deducting the quantity within the permissible limits lost in transit. There is no dispute that the petitioner has paid this amount. There can thus be no liability to pay duty for the deficiency at any enhanced rate and the demands are illegal and beyond the powers conferred under the Act and R.55(4) of the Distillery and Warehouse Rules in particular. 24. But contends the learned Advocate General that under R.55(4), when there is deficiency exceeding the permissible limits, the liability to pay duty is at the "tariff rate" and he invited our attention to the definition of 'Tariff Rate' in R.2(g): Tariff Rate" means the rate of duty on Indian made Rectified spirit in force in the State." The contention proceeds that the tariff rate for rectified spirit was Rs. 15.50 per proof litre and the petitioner was thus liable to pay duty at that rate under R.55(4) itself. It is to meet this contention that the petitioner challenges the very rule itself as ultra vires of the Act and the constitution. 15.50 per proof litre and the petitioner was thus liable to pay duty at that rate under R.55(4) itself. It is to meet this contention that the petitioner challenges the very rule itself as ultra vires of the Act and the constitution. The learned Advocate General brought to our notice several rules under which the excise authorities seek to exercise control of the different facets of the liquor business and stressed that R.55 is only a regulatory provision, necessary for the proper and effective fulfilment of the objects and purposes of the Act. 25. We are aware that there is no fundamental right to carry on trade in liquor and S.18A of the Act only states that it shall be lawful for the Government to grant to any person or persons and on such conditions and for such period as they may deem fit the exclusive privilege of manufacturing or supplying liquor by wholesale and selling by retail. We also note that under S.14 of the Act, the Commissioner, may with the previous approval of the Government prescribe the mode of supervision that may be necessary in a distillery, manufactory etc. and to ensure the proper collection of duties, taxes etc., or the proper utilisation of liquor or intoxicating drugs. The Government have thus the power to make provisions by rules to regulate the liquor industry and there can be no quarrel that R.55 was made for carrying out the provisions of both S.14 and S.17 of the Act. The fact that R.55 is a regulatory provision is no answer to the contention that duties not authorised by the Act cannot be levied under the Rules. It is, therefore, necessary to independently consider the source of power to levy duty under the rules. It should be the endeavour to sustain the rule, if possible, and to lean in favour of an interpretation which sustains its validity instead of adopting a course resulting in its invalidation. 26. Of course, R.55(4) states that the duty for the deficiency noticed in excess of the limits prescribed by the rule is at the tariff rate. If the definition of tariff rate occurring in R.2(g) is applied, the result would be that the quantity of arrack lost in transit is liable to duty as rectified spirit. 26. Of course, R.55(4) states that the duty for the deficiency noticed in excess of the limits prescribed by the rule is at the tariff rate. If the definition of tariff rate occurring in R.2(g) is applied, the result would be that the quantity of arrack lost in transit is liable to duty as rectified spirit. We think that such an interpretation would do violence to R.55(4) and result in striking down the rule as beyond the rule making power conferred under the Act. The definition clause in R.2, begins with the familiar expression "unless there is anything repugnant in the subject or context". We have no doubt that the definition of tariff rate in R.2(g) can have no application to R.55(4) in its context and setting. R.55 itself was only a concession from payment of duty in certain cases for loss of liquor in transit. If R.55 was not in existence, the distiller and the warehousekeeper would be liable to pay duty on the quantity manufactured whether there was loss in transit or not. Having allowed some small concession regarding payment of duty where the loss did not exceed certain specified limits, R.55(4) provided that the loss in excess of these limits can have no protection from taxation. The duty has to be paid. After payment of the duty, the proviso enables refund of duty provided the conditions prescribed therein are satisfied, namely that reasonable precaution and care have been taken to avoid loss and that the deficient quantity has not been consumed. If thus the deficiency was caused because it was consumed, that deficiency attracts the normal duty, as if there was no deficiency. The stress is thus on the deficiency in the quantity of the goods manufactured, caused by non consumption and want of sufficient care. Duty of liquor on deficiency in transit being the core of R.55(4), the tariff rate mentioned in the sub-rule should be understood in its common parlance, according to the ordinary dictionary meaning as "rate of duty 6n particular class of goods", the class of goods being referable to goods manufactured and attracting duty. The context, therefore, excludes the meaning given to tariff duty in the definition clause in R.2(g). 27. The same conclusion that the definition of "tariff rate" cannot have application to R.55(4) is reached on a different reasoning as well. The context, therefore, excludes the meaning given to tariff duty in the definition clause in R.2(g). 27. The same conclusion that the definition of "tariff rate" cannot have application to R.55(4) is reached on a different reasoning as well. Under the Act, S.17 impose a duty on liquor manufactured. It is the manufacture of arrack that attracts the liability to pay excise duty. The rate of duty is fixed as per the notification issued under the Act. The quantity is ascertained when the same is manufactured under excise supervision. It is this quantity of arrack that is liable to duty. The liability continues even when the arrack is transported. But there may be loss in transit, but that loss does not affect the liability to duty. If the quantity of arrack that is lost is liable to duty under the rules as rectified spirit, for which a different and enhanced rate of duty is applicable, R.55(4) will be beyond the powers conferred under the Act under S.17 of the Act. S.17 does not authorise the levy of excise duty on arrack at the rates applicable to rectified spirit, especially when rectified spirit and arrack are two different commodities liable to excise duty at different rates and manufacture of arrack is not manufacture, of rectified spirit. We have thus to avoid a construction which renders R.55(4) ultra vires of the Act and the definition of tariff rate in the Distillery Rules can have no application to R.55(4). The result is that the demands now made on the footing that the loss in transit of arrack in excess of permissible limits has to be assessed at the rate of Rs.15.50 per proof litre as if it was rectified spirit is not supportable either under S.17 of the Act and the notifications levying excise duty or under the Distillery and Warehouse Rules. 28. There are some other minor aspects raised at the time of hearing which also we shall consider before we close. The learned Advocate General contended that as the petitioner utilised the licence granted to them and conducted trade on the terms and conditions of the licence, and the provisions of the Act and the rules, he cannot challenge the validity of the rules when a demand for excise duty is made. The learned Advocate General contended that as the petitioner utilised the licence granted to them and conducted trade on the terms and conditions of the licence, and the provisions of the Act and the rules, he cannot challenge the validity of the rules when a demand for excise duty is made. Even though the petitioner challenged the rules, we are not striking down any rule and thus this contention, on our conclusion, does not survive. 29. It was stated that the challenge by the petitioner was only to R.55(2) and not to R.55(4) and thus the petitioner's contention regarding the validity of R.55 (4) cannot be allowed to be raised. The petitioner expressly challenged the validity of R.55(2), which is not pressed now and challenged the validity of the demand notices issued. The petitioner has stated all the facts required for considering whether the demand was according to law. We are not satisfied, on a reading of the petition that the petitioner has not in effect challenged R.55(4). In fact, the learned judges who disposed of the writ petition earlier proceeded on the assumption that the challenge was to the whole of R.55. As we are not invalidating any portion of R.55, this contention also no longer stands. 30. The learned Advocate General stressed that R.55 was intended to protect misuse of liquor in transit and was therefore only a regulatory provision. It may be mentioned that there is no case in the affidavit of the State that there has been any misuse of liquor in transit by the petitioner. The demand notices issued also do not show that they were issued as there was misuse of liquor in transit. The theory of a likelihood of misuse of liquor in transit is not borne out in this case either by the pleadings or by the demand notices. There can be no dispute that R.55 is a regulatory provision. But as a regulatory provision, as a subordinate legislation, it has no power to impose duty and it has in fact not imposed any excise duty. The excise duty is levied under the Act and not under the rules. The regulatory character of the rule therefore does not assist the State in supporting the impugned demands. 31. But as a regulatory provision, as a subordinate legislation, it has no power to impose duty and it has in fact not imposed any excise duty. The excise duty is levied under the Act and not under the rules. The regulatory character of the rule therefore does not assist the State in supporting the impugned demands. 31. The other contention of the State is that excise duty is levied under R.55(4) on the unaccounted quantity of arrack lost in transit and therefore there was sufficient warrant for imposing duty on that quantity at Rs. 15.50 per proof litre. It. has to be remembered that R.55(4) does not impose any levy of excise duty. The fallacy in this contention is in the assumption that this rule has levied duty. Unaccounted quantity of arrack lost in transit, can be liable to excise duty only to the extent of the accounted quantity of arrack manufactured. Merely because some quantity of arrack is unaccounted, it does not convert arrack into rectified spirit for the purposes of excise duty. If any quantity of arrack manufactured is not accounted, it is immaterial as the liability to duty fastens on the entire quantity of arrack manufactured. In the present case, the quantity of arrack manufactured is known, about which there is no dispute. There has been loss in excess of the permissible limits is admitted. If so, the loss of arrack which is unaccounted is still arrack liable to duty as such. Any doubt, in a taxing provision can only be in favour of the subject and not in favour of the revenue. In this case, there is no doubt on the question of quantum of liability to pay excise duty for the quantity of arrack lost in transit. A wrong assumption cannot give rise to any reasonable doubt. 32. Though the petitioner challenged the vires of R.55(2) and R.34 of the Distillery Rules, it is unnecessary for us to consider the vires of both these rules. The challenge to R.55(2) was withdrawn at the time of hearing and R.34 does not apply to the facts and circumstances of this case when levy is made only on the loss of arrack in transit to which R.55(4) applies. The challenge to R.55(2) was withdrawn at the time of hearing and R.34 does not apply to the facts and circumstances of this case when levy is made only on the loss of arrack in transit to which R.55(4) applies. It is also unnecessary to consider the validity of R.34 separately, as the principles to be adopted for interpreting the provisions for calculating the excise duty on the liquor lost in transit and unaccounted on that score can no longer be in dispute. 33. The petitioner has a contention that even if there was a short levy, the State cannot make any fresh levy and re-open old demands without an express provision in that behalf, as seen in several allied enactments. As the petitioner succeeds on the other points, it is unnecessary to pursue this argument. 34. Para.14 of the counter-affidavit of the State states that the petitioner "had been the supply contractors for arrack for over a decade past upto 31st March 1978. The Kerala Distillery and Warehouse Rules, 1968 came in to force with effect from 18th March, 1969. The petitioner is bound to pay duty as per the provisions of these rules from 18th March 1969 onwards. Hence the demands made in Ext.P-1 and Ext. P-4 are legal and just". Ext.P-1 is the first demand issued on 31st December 1974. Ext.R-1 produced by the State and dated 11th September, 1975 makes a consolidated demand for the period 1967 to 1974-75 at the rate of Rs.15-50 proof litre for arrack lost in transit. The counter affidavit in paragraph is also admitted that the excise duty at the rate of Rs.2-50 per bulk litre was collected by the excise authorities "due to inadvertence or misconception". We have held that the petitioner was liable to pay excise duty on arrack, including arrack lost in transit only at the rate of Rs.2-50 per bulk litre. The petitioner has admittedly paid that amount. Hence these demands are clearly without jurisdiction, not warranted by the Abkari Act and the Rules made thereunder and not in accordance with law. In the result, Exts.P-1, P-4, P-7, P-9, P-10, P-11, P-15 and Ext.R-1 are therefore quashed. 35. It is stated by the petitioner that he had furnished security and deposited earnest money as per contracts entered into by him for obtaining licences under the. Abkari Act. In the result, Exts.P-1, P-4, P-7, P-9, P-10, P-11, P-15 and Ext.R-1 are therefore quashed. 35. It is stated by the petitioner that he had furnished security and deposited earnest money as per contracts entered into by him for obtaining licences under the. Abkari Act. It is also stated that after the supply of arrack for each financial year, he is entitled to refund of these amounts but these amounts are withheld or adjusted towards the claim made under the impugned demands. While the writ petition was pending, the petitioner had obtained stay orders on furnishing further security. Now that we have quashed the impugned demand notices, it is directed (1) that the guarantee furnished pursuant to the interim orders of the court shall cease to operate and these guarantees shall be returned to the petitioner, (2) that the State shall not adjust or withhold the security or earnest money deposited by the petitioner for the financial years from 1967 to 1974-75 for the amounts claimed under the demand notices Exts.P-1, P-4, P-7, P-9, P-10, P-11, P-15 and Ext.R-1, and the same shall be refunded to the petitioner. The Review petition and the original petition are allowed and disposed of accordingly. No costs.