Research › Search › Judgment

Orissa High Court · body

2017 DIGILAW 335 (ORI)

SABMiller India Ltd. v. State of Odisha

2017-03-29

D.P.CHOUDHURY, I.MAHANTY

body2017
JUDGMENT : D.P. Choudhury, J. Challenge has been made to the illegal demand made by the opposite parties with a request to refund the amount recovered towards differential of bottling and on other counts by adjustment of excise account. FACTS 2. The facts of the case after being filtered are as follows:- Petitioner Company formerly was known as SKOL Breweries Ltd. East Coast Breweries & Distilleries Ltd. (hereinafter called ‘ECBDL’) was owned by Industrial Development Corporation Ltd. (IDCOL). But Shaw Wallace and Company Ltd. (hereinafter called ‘SWCL’) took over ECBDL in May 1994 from IDCOL. On 21.2.2002 by the order of this Court, application for amalgamation of ECBDL with the SKOL Breweries Ltd. was allowed. So, SKOL Breweries Ltd. became the sole owner of the unit of ECBDL at Paradeep. After merger of ECBDL with SKOL Breweries Ltd., the later changed from its Company’s name to SABMiller India Limited with issue of fresh certificate of incorporation under Section 23 (1) of the Companies Act, 1956 with effect from 22.6.2012. Now petitioner is the SABMiller India Ltd. 3. Be it stated, during 2008-2009 the Excise policy of the State introduced a new levy of Bottling Fee for bottling @ Rs.4/- per BL of Beer manufactured on own brands and @ Rs.5/- per BL of Beer manufactured for the brands other than the own brands. Similarly the Excise Policy for 2008-09 and 2009-10 shows that the Excise Duty on Beer up to 5% v/v was levied @ Rs.18/- per BL and Beer mixed with any imported element was levied @ Rs.21/- per BL. Said rate is being revised from time to time for the subsequent years. The petitioner is required purportedly to register its labels each year for different brands of Beer supplied to OSBC on payment of specified Label Registration fee under Rule 41-A of the Board’s Excise Rules, 1965. So, the petitioner is authorized to sell Beer under the approved labels only. It is alleged, inter alia, that during audit by Accountant General (A.G.) there was demand of Rs.2,02,47,100/- towards differential bottling fee as per Excise Policy for 2008-09 and 2009-10, non-payment of Label Registration Fee of Rs.4,60,000/- for the years 2009-10 and 2010-11 and short realization of Excise Duty of Rs.76,60,000/- on Beer for mixing imported element therein. It is alleged, inter alia, that during audit by Accountant General (A.G.) there was demand of Rs.2,02,47,100/- towards differential bottling fee as per Excise Policy for 2008-09 and 2009-10, non-payment of Label Registration Fee of Rs.4,60,000/- for the years 2009-10 and 2010-11 and short realization of Excise Duty of Rs.76,60,000/- on Beer for mixing imported element therein. Petitioner submitted reply to the observation of the A.G. that it has got own brand “Haywards 5000” and “Knock Out” at its unit at Paradeep and hence demand of bottling fee is not correct. But the Excise authorities forcibly recovered the differential bottling fee on the ground that the petitioner is using the brand other than his own brand and as such it has already recovered a sum of around Rs.20 crores. Similarly, it is stated that the petitioner being Licensee is using the same labels as approved for the year 2009-10 and 2010-11, i.e., “Haywards 5000 Super Strong Beer” and the Excise Department while granting its approval have wrongly typed/used the words “Haywards 5000 The Original Super Strong Beer” although the brand as “Haywards 5000 Super Strong Beer” has been used by the petitioner’s Company in both front label and back label of each Beer bottle. Be it stated, the word “Original” appearing in the front label is a generic word representing the authenticity and long standing existence of such Beer for which the petitioner is not liable to pay any additional registration fee and application fee which is allegedly pointed out by the A.G. for recovery. Moreover, the petitioner is using Hops while manufacturing the Beer and Hops being one of the basic raw-materials and a standard ingredients used during the manufacturing process to give a distinct bitter flavor, the same cannot be a foreign element mixed with the Beer, exigible to duty at the rate of Rs.21/-per BL meant for Beer mixed with foreign element, thus not applicable to the petitioner but the payment of Excise Duty at the rate of Rs.18/-or Rs.21/-as per Beer manufactured in India by the petitioner is quite justified. 4. On 20.1.2012 the Superintendent of Excise without examining the details of the submissions made by the petitioner, directed the petitioner to deposit Rs.2,83,67,100/- within one month and issued Demand Notice vide Annexure-7. 4. On 20.1.2012 the Superintendent of Excise without examining the details of the submissions made by the petitioner, directed the petitioner to deposit Rs.2,83,67,100/- within one month and issued Demand Notice vide Annexure-7. In spite of protest by the petitioner, the opposite party No.5 insisted for payment of the demand amount failing which threat was given not to renew the licence of the petitioner for the year 2012-13. On 22.3.2012 the petitioner made an appeal before the Excise Commissioner-opposite party No.3 inviting his attention to his submission to the objection raised by the A.G. Auditors. He also requested the Excise Commissioner to renew the Brewery license for the year 2012-13 without insisting payment of demand in question with undertaking submitted by him that in the event of adjudication of the demand being defeated, he would deposit the demand amount within three months from the date of adjudication. On such undertaking, opposite party No.3 allowed renewal of the Brewery license for the year 2012-13. On 10.5.2012 the opposite party No.5 once again made an additional demand of Rs.3.57 crores towards differential bottling fees and directed the petitioner to deposit Rs.5,59,28,683/- by end of May 2012. Then the petitioner filed another appeal before the opposite party No.3. 5. It is stated that the opposite parties as per the Excise Policy for the years 2012-13 and 2013-14, have forcibly recovered at the rate of Rs.6.00 per BL and at the rate of Rs.7/-per BL of Beer manufactured towards bottling fee, treating the petitioner Company being not the owner of brands. On the other hand, as per the request of the Excise authority, petitioner Company deposited an additional amount of Rs.3 crores as a voluntary advance before 31st March 2012 to augment the revenue of the State with the assurance that the same would be adjusted towards clearance of dispatches from 1st April, 2012 onwards. Amazingly a sum of Rs.1,70,00,000/- towards the impugned demand notice under Annexure-12 has been apportioned from the excise amount of the petitioner and adjusted by the opposite parties. As such, the opposite party No.3 kept the appeal pending without same being disposed of. The opposite party No.5 continuously issuing the demand notices showing loss of revenue due to excess wastage in production of Beer and shortfall in yield of Beer. As such, the opposite party No.3 kept the appeal pending without same being disposed of. The opposite party No.5 continuously issuing the demand notices showing loss of revenue due to excess wastage in production of Beer and shortfall in yield of Beer. It is stated that the demand of differential bottling fee is illegal because the petitioner is using own brand and Board has no power for imposition of bottling fee under Rule 104 (2) (b) of Board’s Rule which is ultra vires to Section 90 of the Bihar and Orissa Excise Act, 1915. Similarly, the petitioner having used its own label but the Excise Department have wrongly typed the word ‘Original’ in the said label while approving under Rule 41-A of the Board Excise Rules, 1965 (hereinafter called “the Rules”) the petitioner is not liable to pay any extra label registration fee. Be it stated that Beer being original Beer of the petitioner Company, not mixed with any foreign element is not liable to pay Excise duty at the rate of Rs.21/- per BL. It is asserted by the petitioner that the objection of the Auditor about shortage in yield would not be feasible as the wort before fermentation cannot be termed as alcoholic liquor fit for human consumption and as such the State cannot levy any excise duty at the stage before fermentation and filtration. Thus, the objection of the Auditor in this regard is unlawful. 6. Be it stated that the objection of the opposite parties as to excess wastage of Beer as pointed out by the A.G. is not correct because Rule 47 (1) of the Board’s Excise Rules permits an allowance of 10% of the monthly total of the Beer shall be made on account of wastage and no duty shall be levied on such percentage of wastage. As such, the petitioner has prayed to quash the illegal demand made under Annexures-5 and 15, Demand notices of the opposite party No.5 under Annexures-11 and 20 and to declare the Rule 104 (2) (b) of the Board’s Excise Rules ultra vires to Section 90 of the Bihar and Orissa Excise Act, 1915 (hereinafter called ‘the Act’). It is further prayed to refund the amount already recovered towards differential bottling and other counts by adjusting the same in the excise account of the petitioner. 7. It is further prayed to refund the amount already recovered towards differential bottling and other counts by adjusting the same in the excise account of the petitioner. 7. During course of argument, learned counsel for the petitioner filed a memo dated 5.4.2016 stating that he does not want to challenge Annexure-15 with liberty to approach the appropriate authorities to reconsider the demands made on the basis of the observation of Accountant General, Odisha, Bhubaneswar without prejudice to the contention of the petitioner on the subject. Also he made it clear that he does not want to press the declaration of Rule 104 (2) (b) of the Board’s Excise Rules ultra vires to Section 90 of the Act. On the other hand, learned counsel for the petitioner prays for adjudication of other issues with regard to challenge to Annexure-5 and consequential demands thereunder such as short levy of bottling fee, mixing of imported element and short levy of label registration fee. COUNTER 8. Per contra, opposite party Nos.3 to 5 filed the counter challenging the locus standi of the petitioner to file writ petition as the Company has not been represented by any member of the Board of the petitioner Company. At the same time, these opposite parties admit the amalgamation of ECBDL with M/s. SKOL Breweries Ltd. According to these opposite parties on 1.6.1993 ECBDL entered into an agreement with SWCL to brew and bottle the products of SWBL. On 11.5.1994, the State Government handed over the unit of ECBDL to SWCL who purchased the shares of ECBDL which were held by IDCOL. At the same time these opposite parties admitted that in the Company Case No.43 of 2001, the ECBDL was amalgamated with M/s. SKOL Breweries Ltd. (hereinafter called ‘SKOL’) and after amalgamation the Company with the permission of the Registrar of Companies started brewing and bottling. But SWBL is the owner of two brands namely, “Haywards 5000” and “Royal Challenge Premium” and used to pay royalty to SWCL for use of the said brand names. However, after the Court allowed amalgamation/merger of ECBDL at Paradeep with SKOL did not make SKOL to be a part and parcel of SWCL. Thus, merger of ECBDL with SKOL has got separate entity from the SWCL which has entered into an agreement with ECBDL that ECBDL would brew and bottle the product of SWBL. 9. However, after the Court allowed amalgamation/merger of ECBDL at Paradeep with SKOL did not make SKOL to be a part and parcel of SWCL. Thus, merger of ECBDL with SKOL has got separate entity from the SWCL which has entered into an agreement with ECBDL that ECBDL would brew and bottle the product of SWBL. 9. It is submitted by these opposite parties that SWCL is not a Company which manufactures Beer but it is the owner of two brands, namely, “Haywards 5000” and “Royal Challenge” whereas SWBL, a subsidiary of SWCL carried on the business of marketing of Beer and not manufacturing of Beer. SKOL was given permission by the Excise authorities to use the brand name of “Haywards 5000” and “Royal Challenge” on payment of requisite fees and on the basis of permission received from SWCL, SKOL is manufacturing products using two brand names owned by SWCL but the same are marketed by SWBL. The Trade Marks Registration Certificate certifies that SWCL continued to be the owner of Trade Mark “Haywards 5000” till 2016 and subsequently the name of SKOL Breweries Ltd., Bangalore and not the SKOL Breweries Unit at Paradeep has entered. So, SKOL’s Paradeep unit is not the exclusive owner of the brand “Haywards 5000” for which the bottling fee by the petitioner’s Company has to be paid at the scale meant for using others brands. So, the differential bottling fee as per Annual Excise Policy 2009-10 and 2010-2011 has been rightly raised in the A.G. audit as Rs.2,02,47,100/-. 10. According to these opposite parties, as per Annual Excise Policy under Annexure-5 to the writ petition rightly Rs.4,60,000/- towards Label Registration fee for the years 200910 and 2010-11 and short realization of Excise Duty on Beer amounting to Rs.76,60,000/- have been demanded. It is stated that during the years 2009-10 and 2010-11 the petitioner has not brought to the knowledge of the Excise authority with regard to any typographical error while granting approval towards registration of front label as “The Original Haywards 5000 Super Strong Beer” and back label as “Haywards 5000 Super Strong Beer” for which the petitioner Company has committed mistake under the Company law inviting penal action. So, the demand of the opposite parties for realization of fees for registration of labels is justified. 11. So, the demand of the opposite parties for realization of fees for registration of labels is justified. 11. It is further revealed from the counter of these opposite parties that as per the Annual Excise Policy for the years 2008-09 and 2009-10, excise duty on Beer manufactured but mixed with any imported element was fixed at Rs.21/- per B.L. whereas the Beer manufactured in India with alcohol @ 5% v/v was fixed @ Rs.18/-per B.L. and above 5% v/v was Rs.21/-per B.L. It is the A.G. Auditors who have observed that the petitioner company has used Hops extract and Hops Pellets imported from foreign countries for manufacture of Beer for which Petitioner Company is liable to pay the duty on the Beer mixed with imported elements. So, the A.G. audit has asked to pay the differential amount of excise duty of Rs.76,59,850/- and as such these opposite parties had asked the petitioner to pay the differential excise duty. It is asserted by these opposite parties that as per Excise Technical Manual in para-239 the petitioner could have opted for prior permission from the Excise Directorate for use of this imported element for manufacture of Beer and in absence of such permission, the observation of the Auditors and raising of the said demand @ Rs.21/- per BL under Excise Policy is justified. 12. Be it stated that the Excise Commissioner being the appellate authority by considering the submission of the petitioner has allowed the renewal of license of the petitioner Company for the year 2012-2013 pending realization of arrear demand on the basis of the undertaking furnished by the unit. The differential bottling fee for the period from 2008-09 to 201011 being calculated at Rs.5,59,28,683/- have been justifiably demanded. Similarly the bottling fee for Rs.1,70,00,000/- for the year 2011-12 as per the Excise Policy has been deducted from the P/L Account of the petitioner and the petitioner has not raised any objection for demand of such amount. 13. These opposite parties further take the stand that the A.G. Audit report is correct and proper but the petitioner is guilty of suppression of facts and non-disclosure of the sole authority over the three brands in question, i.e., Haywards 5000, Royal Challenge and Knock Out. 13. These opposite parties further take the stand that the A.G. Audit report is correct and proper but the petitioner is guilty of suppression of facts and non-disclosure of the sole authority over the three brands in question, i.e., Haywards 5000, Royal Challenge and Knock Out. It is stated further that as per para-208 of the Excise Technical Manual, five percent wastage is allowed in the process of manufacture of Beer but petitioner has made wastage varying from 5.14% to 9.98%, thereby the A.G. audit has rightly raised the demand of Rs.1,35,40,566/- towards SED @ Rs.20/- per BL and bottling fee @ Rs.6/-per BL on Beer towards excess wastage beyond five percent limit. The bottling fee imposed is a regulatory one and imposed under Section 90 of the Act and Rule 110 of the Rules, 1965 for which the demand of bottling fee is strictly in accordance with law. The Head Manufacturing/G.M. of SKOL Breweries has no authority to represent the Board of Directors of the petitioner Company and has misled the Court by declaring Rs. 1,70,00,000/- to have been adjusted by the Excise Authority. REJOINDER 14. The petitioner filed rejoinder to the counter filed by the opposite party Nos.3 to 5 stating that resolution dated 27.8.2013 was passed by the Banking and Legal Committee of the Board of Directors of the petitioner Company vide Annexure-23 delegating the General Manager (Manufacturing) being the competent person to file the writ application on behalf of the petitioner Company. It is further stated in the rejoinder that ECBDL located at Paradeep was owned by IDCOL and the State Government handed over this unit to SWCL. Thus, SWCL acquired all the shares of ECBDL which was held by IDCOL. After taking over of the unit ECBDL by SWCL, the later manufactured beer under the trade name of “Haywards 5000” and “Royal Challenge” which trade mark was originally owned by SWCL. By virtue of order dated 21.2.2002 of this Court at Annexure-1, ECBDL at Paradeep was amalgamated with SKOL Breweries Ltd. which was 100% subsidiary of SWBL which in turn is a subsidiary Company of SWCL. Thus, SKOL Breweries Ltd. used the brand names of “Haywards 5000” and “Royal Challenge” which was owned by SWCL. On the other hand, the SWBL a subsidiary of SWCL carried on the business of marketing of Beer and not a manufacturing Company. Thus, SKOL Breweries Ltd. used the brand names of “Haywards 5000” and “Royal Challenge” which was owned by SWCL. On the other hand, the SWBL a subsidiary of SWCL carried on the business of marketing of Beer and not a manufacturing Company. Since SKOL Breweries Ltd. was not having its own marketing arrangement, it was paying royalty and marketing expenses to SWBL. The agreement dated 1.6.1994 under reference clearly shows that ECBDL was not a different Company but it became one of the group of Companies of SWCL since it was purchased from IDCOL. 15. It is further maintained in the rejoinder that Section 90 (7) of the Act only empowers the Board to prescribe the scale of fees or the manner of fixing the fees payable in respect of license, permit or pass granted under this Act but it does not authorize the Board to prescribe a new form of bottling fee in respect of other brand names used. Moreover, the petitioner all along is manufacturing its own product and had no tie up arrangement with any other Company which has already been decided by this Court in W.P.(C) No.12365 of 2003 and duly confirmed by the Hon’ble Apex Court in S.L.P. No. 2359 of 2008. The claim of the opposite parties that SKOL Breweries Ltd. is manufacturing products using two brand names owned by SWCL and the products so manufactured are marketed by SWBL is incorrect and denied by the petitioner. With regard to the differential bottling fee imposed on Brands under the Trade Mark are owned by SKOL Breweries Ltd. by virtue of their acquisition of the brands through Deed of Assignments executed on 27.5.2005. After this date neither SWCL nor SWBL remained the exclusive owner of the brands and Trade Marks. After acquisition of the brands it is manufacturing its own brands and at no stretch of imagination it can be said that the Trade Mark Registration Certificate does not establish that SKOL’s Paradeep unit is the exclusive owner of the brand “Haywards 5000”. 16. It is stated that after acquisition of Trade Mark in the year 2005, the petitioner Company has appraised the Excise Authorities about this fact and for better clarity it has filed the copies of few correspondences vide Annexure-24 series. 16. It is stated that after acquisition of Trade Mark in the year 2005, the petitioner Company has appraised the Excise Authorities about this fact and for better clarity it has filed the copies of few correspondences vide Annexure-24 series. Since the petitioner Company is the exclusive owner of the brands by virtue of its acquisition of Trade Mark and having exclusive license to brew, bottle and store Beer, the petitioner Company is manufacturing Beer of its own brands being not liable to pay the differential rate @ Rs.1/- per BL during the years 2008-09 and 2009-10. As per Rule 41-A of the Board’s Excise Rules, 1965, the application for registration/renewal of labels for the year 201011 has been annexed as Annexure-25 series but the Excise Department while granting approval failed to note the contents of the label with regard to the name of the brand in question and has used the word ‘original’ in the approval letter. 17. Be it stated that hops is not abundantly available in India except in some parts of Jammu & Kashmir and all the leading manufacturers of Beer in India are using imported hops extract/pellets so as to add a distinct bitter flavor to manufacture quality Beer. On the other hand, petitioner reiterated that the hops being part of the process of manufacture of Beer cannot be said to be the foreign element added to the Beer. It is, therefore, stated that the demand raised @ Rs.21/- per BL as per the Excise Policy is quite unjustified, arbitrary and is liable to be quashed. 18. Petitioner vide letter dated 27.3.2012 was requested to deposit an advance bottling fee of Rs.2.6 crores by 29.3.2012 with the condition that the same advance would be adjusted from the month of April, 2012 and conceding such request petitioner deposited Rs.2.5 crores as advance although the statute does not provide for payment of such advance. But the opposite parties without any intimation apportioned the said amount towards the impugned demand from the excise account. Petitioner has also intimated such facts to the Excise authorities who remained silent. Be it stated that the A.G. Auditors without properly examining the provisions of Section 27 of the Act and the Rule 47 (1) of the Board’s Excise Rules made demand illegally on all counts. ADDITIONAL COUNTER 19. Petitioner has also intimated such facts to the Excise authorities who remained silent. Be it stated that the A.G. Auditors without properly examining the provisions of Section 27 of the Act and the Rule 47 (1) of the Board’s Excise Rules made demand illegally on all counts. ADDITIONAL COUNTER 19. The opposite party Nos.3 to 5 filed additional counter on 10.8.2015 precisely reiterating the counter. It is only additionally stated that the brands owned by SWCL as its exclusive property claimed to have been amalgamated with or taken over by the Petitioner Company has not been established by the petitioner in its rejoinder. SWCL nowhere said that it has sold its brand to SKOL for which SWCL is still the owner of those brands which is used by SKOL for a consideration. 20. Be it stated that when the petitioner has admitted to have imported the hops extracts/ pellets from outside, demand raised @ 21/- per BL under Excise Policy is justifiable and petitioner Company is liable to pay such rate of duty. When the petitioner has not paid the arrears he was not entitled to the renewal of his licence as per Rule 45 of the Board’s Excise Rules, 1965. But only after giving undertaking before the Collector that it would abide by the decision of the Appellate Authority or appropriate court, the bottling fee was adjusted from the P.L. Account not towards any old demand as franchise fee but on account of the arrears of preceding years towards bottling fee. It is further stated that Excise Technical Manual duly framed under Rule 15 of the Board’s Excise Rules, 1965 which is also made by virtue of the power under Section 89 of the Act, the same Technical Manual has got all statutory forces. It is stated that in the instant case, the case of the petitioner is not about destruction of spoilt Beer but it is the case of wastage of Beer during manufacturing process for which rightly the Department has claimed the demand on this score. REPLY AFFIDAVIT OF PETITIONER 21. The petitioner has filed a reply affidavit to the additional counter reiterating the averments made in the petition and rejoinder. REPLY AFFIDAVIT OF PETITIONER 21. The petitioner has filed a reply affidavit to the additional counter reiterating the averments made in the petition and rejoinder. It is stated that since hops extract/pellets is used as a raw-material to manufacture Beer, the State is not empowered to levy the Excise duty on the raw-material as it does not attract the provisions of Section 27 (1) and (2) of the Bihar and Orissa Excise Act, 1915. Be it stated that the Technical Manual as relied upon by the A.G. Auditors have no statutory force for which they landed in a wrong conclusion about excess wastage in production of Beer. Rule 47 of the Board’s Excise Rules, 1965 is applicable under which 10% of wastage is allowed. Since the petitioner has manufactured its own brands, the provisions of Rule 110 (b) (ii) of the Board’s Excise Rules, 1965 are not applicable to the petitioner Company. SUBMISSIONS 22. Mr. Manoj Mishra, learned Senior Advocate for the petitioner urged that the demands by the Department is absolutely illegal and improper. According to him, the O.Ps. have not understood the fact of the case properly and has tried to misguide the Court. He submitted that SKOL Breweries Limited is transferee Company of brand used. By virtue of the order of this Court under the Companies Act, SKOL Breweries Limited acquired all rights, properties including the Excise licence etc. from ECBDL and the Hon’ble Company Judge of this Court has duly passed order on 21.2.2002 and the same Company case record vide Company Act Case No.43 of 2001 is available with this record. He further submitted that SKOL being subsidiary company of SWBL and SWCL has got own manufacturing unit had got brand name being transferred from SWCL under Trade Mark Act. Registrar of Trade Mark has duly approved it. According to him, the SKOL Breweries Limited has applied for use of labels of bottles of Beer under Sub-Rule (3) of Rule 41-A of Board’s Excise Rules being manufacturer of “Haywards 5000” and “Knock Out” Beer and after due enquiry the opposite party No.5-the Excise Commissioner issued licence to use label by adding a word ‘Original’ under sub-Rule 6 of Rule 41-A of Board’s Excise Rules, 1965. Since SKOL Breweries Limited has merged with the petitioner Company, the petitioner Company acquired all rights and liability with permission as it had with the Company SKOL Breweries Limited, the necessary demand of differential bottling fee or wrong use of the brand of other Company has no leg to stand. 23. Mr. Mishra, learned Senior Advocate for the petitioner further submitted that the Department has illegally imposed duty @ Rs.21/- per BL alleging that the petitioner has manufactured Beer under which licence has been granted as if it is imported under Section 27 of the Act. According to him, the petitioner has added the hops extracts being imported from other countries to give flavor to the Beer as without hops there cannot be Beer and hops extracts is not available in India except to some extent it is available in Jammu & Kashmir. Since hops is one inalienable part of the Beer, it cannot be said that Beer is being imported from the foreign country. So, the demand of the Department for Rs.21/- per BL is untenable and illegal. 24. Learned Counsel for the petitioner further contended that the opposite parties have raised demand on wrong premises that the petitioner has used allowance of wastage of Beer more than the quantity approved under the Rule. According to him, Rule 47 of the Board’s Excise Rules, 1965 prescribes procedure for granting allowance but the opposite parties have only cited Rule 45 which speaks about time and manner of worts or produces. According to him, Rule 47 (1) of the Board’s Excise Rules clearly stated that allowance of 10% of the monthly total of the charge shall be made on account of wastage and no duty shall be levied on such percentage of wastage. Even if the wastage of Beer of the petitioner Company is less than 10%, the State has levied charges taking the same into consideration as if the allowance is permissible for 5% only. He submitted that the demand on this account is also illegal. A memo is also filed by the learned counsel for the petitioner by stating that they do not want to challenge Annexure-15 with liberty to approach the appropriate authorities to reconsider the demands made on the basis of observation of Accountant General, Odisha, Bhubaneswar without prejudice to the contention of the petitioner on the subject. In toto, Mr. A memo is also filed by the learned counsel for the petitioner by stating that they do not want to challenge Annexure-15 with liberty to approach the appropriate authorities to reconsider the demands made on the basis of observation of Accountant General, Odisha, Bhubaneswar without prejudice to the contention of the petitioner on the subject. In toto, Mr. Mishra submitted that the demand of the opposite parties on different counts are only motivated and to harass the opposite parties. 25. The rival submission made by Mr. S.P. Mishra, learned Advocate General for the State is that the writ petition is not maintainable as it is misconceived both in facts as well as in law. The petitioner being the Company ought to be represented by the member of the Company’s Board and there is no proper representation of the petitioner by the General Manager of manufacturing for which it is defective. It is further contended that ECBDL became sick unit of IDCOL for which the State Government floated a tender for handing over the unit of ECBDL. ECBDL entered into an agreement with SWCL to brew and bottle the products of SWBL. On 11.5.1994 the State Government handed over the unit of ECBDL to SWCL. SWBL is a subsidiary Company of SWCL. ECBDL amalgamated with SKOL Breweries Limited as per the order of this Court. After amalgamation the Company applied for incorporation of its name in an existing licence for brewing and bottling, the prayer of that unit was allowed. So, SWBL is the owner and proprietor of two brands, namely, “Haywards 5000” and “Royal Challenge Premium”. ECBDL used to manufacture the brands of Beer on the basis of amalgamation with an understanding that SWBL would use the brand names “Haywards 5000” and “Royal Challenge” by paying royalty to SWCL for use of the said brand names. Although this Court permitted amalgamation/merger of ECBDL at Paradeep with SKOL but it does not ipso facto SKOL to be a part and parcel of SWCL. According to him, ECBDL has got a tie up with SWBL to brew and bottle products carrying brand names inside the State of Orissa but the office of SKOL being situated at Mumbai and registered office of SWCL being located at Kolkota, ECBDL even if amalgamated with SKOL has totally separated entity from SWBL. According to him, ECBDL has got a tie up with SWBL to brew and bottle products carrying brand names inside the State of Orissa but the office of SKOL being situated at Mumbai and registered office of SWCL being located at Kolkota, ECBDL even if amalgamated with SKOL has totally separated entity from SWBL. Thus, he submits that the present petitioner even if got merger of ECBDL cannot use the brand of SWBL. Since the petitioner is using the brand of other Company, the Department has rightly demanded the bottling fee as per the Excise Policy 2015-16. 26. Learned Advocate General submitted that as per Section 90 (7) of the Act, Board has prescribed two scales of fees for bottling of Beer, i.e., bottling fee in respect of the brewer’s own brand and the other one is in respect of use of brand of others. Since the Petitioner Company produces the product of brands registered in the name of other Companies in its factory under tie-up arrangements, rightly the State Government has asked to pay bottling fee meant for the latter one as per the Excise Policy in force then. Since SKOL is manufacturing products using two brand names owned by SWCL, namely, “Haywards 5000” and “Royal Challenge” and the registration of “Haywards 5000” under the Trade Marks Act, 1999 shows about registration of such brand in the name of SWCL is valid for 10 years from 19th April, 2006 and the SKOL Breweries Limited, Bangalore has got Trade Mark registration Certificate being assigned by SWCL with effect from 27.5.2005, the SKOL Breweries Limited, Paradeep unit cannot use the brand “Haywards 5000” but for using same, the Auditor has raised objection rightly demanding the bottling fee using other’s brands. So, the demand raised under A.G. audit against the petitioner for realization of differential bottling fee of Rs.2,02,47,100/- as per Annual Excise Policy 2008-09 and 200910 is justified. 27. Mr. Mishra, learned Advocate General further submitted that the petitioner has used Front label of bottle as “The Original Haywards 5000 Super Strong Beer” and Back label as “Haywards 5000 Super Strong Beer” for the year 2009-10 and 2010-11 but for the same label was not applied by the petitioner Company for which the A.G. Auditors have asked for realization of fee for registration of labels being Rs.4,60,000/- towards registration fee and Rs.10,000/- towards as application fee. According to him if there is typographical mistake committed by the Department while granting approval to such label, the petitioner Company could have brought to the knowledge of the State so as to rectify the same but by using such label, the demand of such amount is otherwise correct. 28. Learned Advocate General further submitted that the hops available in India have not been used by the petitioner Company while preparing the Beer but petitioner Company has used the hops/pallets after the same being imported from U.S.A. for which under the Annual Excise Policy for the years 2008-09 and 2009-10 he is to pay excise duty @ Rs.21/- per B.L. He submitted that prior permission of the Excise Department has not been obtained for use of such imported element for manufacture of Beer. Had there been permission, the matter would have been dealt otherwise. So, the demand raised @ Rs.21/- per B.L. as per Excise Policy is also legal and proper. According to him, bottling fee for the years 2008-09 to 2010-11 has rightly been calculated at Rs.5,59,28,683/- and same should be paid by the petitioner. The allegation of petitioner that Rs.1,70,00,000/- has been deducted in spite of his objection is not correct. 29. Learned Advocate General also contended that as per para-208 of the Excise Technical Manual, five percent wastage is allowed in the process of manufacture of Beer but the petitioner unit has made wastage varying from 5.14% to 9.98% and accordingly A.G. auditor has raised the demand of Rs.1,35,40,566/- towards SED @ Rs.20/- per B.L. and bottling fee @ Rs.6/- per B.L. towards excess wastage beyond five percent limit. The contention of the learned counsel for the petitioner that the wastage of Beer is within the limit up to 10% is not correct and same is only available for spoilt Beer as laid down under the Board’s Excise Rules, 1965. So, the demand of the Department altogether for Rs.8,09,60,000/- for the period from 2008-09 to 2010-11 is legal, proper and justified as per the Excise Policy of concerned years read with the Act, Rules and Excise Technical Manual. 30. The main points for consideration:- (i) Whether the petitioner was manufacturing and selling the Beer of their own brand ? (ii) Whether the petitioner has not paid the bottling fee as required under the Excise Policy of 2008-09 and 2009-10 ? 30. The main points for consideration:- (i) Whether the petitioner was manufacturing and selling the Beer of their own brand ? (ii) Whether the petitioner has not paid the bottling fee as required under the Excise Policy of 2008-09 and 2009-10 ? (iii) Whether the petitioner has made short levy of the Excise duty by manufacturing Beer mixed with imported element ? (iv) Whether the petitioner has rightly used the brands of the Beer “Haywards 5000 Original Super Strong Beer” and not required to pay any extra registration fee or application fee ? (v) Whether the petitioner has availed allowance under the Act by showing the spoilt Beer in the guise of wastage of Beer ? DISCUSSIONS POINT NOs.(i) and (ii): 31. It is not in dispute that SKOL Breweries Limited, Paradeep was changed to the petitioner Company. It is not in dispute that ECBDL has been also taken over by the SKOL Breweries Limited on 1.5.2002 by virtue of the order of this Court passed in Company Act Case No. 43 of 2001. It is also admitted fact that SKOL Breweries Limited has got registered office at Mumbai. By virtue of such transfer the Orissa State Excise Licence was transferred to SKOL Breweries Limited. 32. Learned counsel for the petitioner submitted that the transferee Company SKOL Breweries Limited was the manufacturer of own brands, i.e., “Haywards 5000 Super Strong Beer” and “Knock Out”. He further submitted that he has accordingly applied for licence and the Licensing Authority has also given permission to manufacture own brand. On the other hand, learned counsel for the State submitted that the petitioner was using the brand of others for which he is entitled to pay Rs.1/- more per bottle. He also drew attention of the Court to Annexure-5 wherein the Senior Audit Officer of the Office of the Accountant General, Orissa submitted the following: “Extract of I.R.No.14/2010-11 the accounts of the Superintendent of Excise, Jagatsinghpur passed by Sr. Audit Officer office of the Accountant General Orissa, Bhubaneswar vide his letter No.153/Ex.dt.25.04.2011. Para-2, Short-levy of bottling fee-Rs.2,02,47,100/-. As per the Excise Policy for 2009-10 bottling fee is liable at the rate of Rs.4/- per B.L. on own brand of beer manufactured and Rs.5/- per B.L. of Beer other than own brand manufactured by the licensee. Audit Officer office of the Accountant General Orissa, Bhubaneswar vide his letter No.153/Ex.dt.25.04.2011. Para-2, Short-levy of bottling fee-Rs.2,02,47,100/-. As per the Excise Policy for 2009-10 bottling fee is liable at the rate of Rs.4/- per B.L. on own brand of beer manufactured and Rs.5/- per B.L. of Beer other than own brand manufactured by the licensee. The above condition implies that the licensee of brewery is required to disclose the brands of beer manufactured by him, his own brands and the brands other than his own brands. M/s. Skol Breweries Ltd. Unit East Coast Breweries, Paradeep, Orissa a licensee for manufacturing beer in Orissa produced the following brands of and supplied to OSBC during 2009-10 and paid bottling fee at the rate of Rs.4/- per B.L. as Own brands of beer. Sl.No. Brands of Beer Strength Bottling Size Production in bottles 1. Haywards 5000 the Original Super Strong Beer Above 5% v/v below 8% v/v 650 ml 2,58,84,036 2. Knockout High punch Strong Beer Above 5% v/v not exceeding 8% v/v 13,37,220 3. Royal Challenge Premier Lagar Beer Not exceeding 5% v/v 39,28,128 Total 3,11,49,384 bottles or 2,02,099.6 BL 33. The petitioner in order to meet the above query has taken the plea that he has applied for with the correct brand of the Beer whereas the Excise authorities while approving the brand has added the word ‘Original’. So, he has no fault. He also drew the attention of the Court to Annexure-18 series. On going through the same, it appears that SWCL was the original Company has got manufacturing business of “Haywards 5000 Super Strong Beer” and by virtue of Assignment Deed dated 27.5.2005 and other documents, the properties of SWCL was transferred to SKOL Breweries Limited. The Trade Mark Certificate of SKOL Breweries Limited shows that the present petitioner is the clear manufacturer of the brand “Haywards 5000”. The Trade Mark Certificate has already been signed by the Assistant Registrar of Trade Marks and the Trade Marks Certificate has been obtained by the SKOL Breweries Limited to manufacture of “Haywards 5000 label of Super Strong Beer” since 27.5.2005. It is needless to say that SKOL Breweries Limited has already taken over the ECBDL which is the subsidiary Company of SWCL. 34. It is needless to say that SKOL Breweries Limited has already taken over the ECBDL which is the subsidiary Company of SWCL. 34. Annexure-19 also shows that permission has been given by the Excise Commissioner to SKOL Breweries Limited at its ECBDL’s branch at Paradeep to sell the “Haywards 5000 The Original Super Strong Beer” and “Knock Out High Punch Strong Beer” with the limit of proof strength. So, the brand with ‘Original’ has been approved by the Excise Commissioner to use the same. When SKOL Breweries Limited at its ECBDL branch at Paradeep has got approval to use such brand and he has already obtained the said brand from the SWCL by virtue of the Assignment Deed legally assigned by the SWCL under the Trade Mark Act, the question of using the brand of SWCL by the SKOL Breweries Limited while selling the Beer does not arise. Moreover, the word ‘Original’ is understood from Annexure-19 as generic and Beer is ‘Original’ one but not otherwise. 35. During 2008-09 under Excise Policy also issued on 17.2.2009 wherein the bottling fees was prescribed as hereunder: “GOVERNMENT OF ORISSA EXCISE DEPARTMENT No. 850/I Ex-50/2008 Ex., Dated 17.2.09 From: Dr. Taradatt, Commissioner-Cum-Secretary to Govt., To The Excise Commissioner, Orissa, Cuttack. Sub: EXCISE DUTY, FEE STRUCTURE AND GUIDELINES FOR THE YEAR, 2009-2010 Sir, I am directed to invite a reference to your Letter No. 98 SC., dated 10th November, 2008 on the above subject and say that Govt. after careful consideration have been pleased to decide to adopt the Excise duty, fee structure and guidelines for settlement of excise shops and establishments for the year 2009-2010 in the following manner:- (1) LICENCE FEE FOR BREWERIES. Licence may be renewed for the year 2009-2010 on payment of licence fees as follows: Sl.No. Production capacity (In Bulk Litres) Annual Licence Fee (Rs. In Lakhs) 1. Upto 1,20,00,000 Rs.25.00 2. 1,20,00,001 and above Rs.50.00 (2) BOTTLING FEES (FORM NO.F.L. 14) i. @ Rs.4.00 per BL of BEER manufactured. ii. @ Rs.5.00 per BL of Beer manufactured of brands other than the own brand.” 36. Similarly for 2009-10, the above bottling fees have also been adopted under the Excise Policy. 37. Sub-Rules 3, 4, 5 and 6 of Rule 41-A of the Board’s Excise Rules are prescribed below: “3. ii. @ Rs.5.00 per BL of Beer manufactured of brands other than the own brand.” 36. Similarly for 2009-10, the above bottling fees have also been adopted under the Excise Policy. 37. Sub-Rules 3, 4, 5 and 6 of Rule 41-A of the Board’s Excise Rules are prescribed below: “3. (a) The manufacturers licences to manufacture foreign liquor within the State shall apply for approval of brands and labels and for issue of permit to use such brand name and label directly to the Excise Commissioner, Orissa. The manufacturers licenced to manufacturer foreign liquor outside Orissa shall apply to Excise Commissioner, Orissa for approval of the brands and labels and for issue of permit through their respective Excise Authority of the State. (b) Applications for approval for a new brand name of foreign liquor mentioned at Sub-rule (1) and the labels corresponding to it, shall be made to the Excise Commissioner, Orissa, at least two months prior to its sale or offer for sale; but the application for renewal of approval of existing brand and label shall be made to the Excise Commissioner, Orissa, within the last working day of the months of February each year. (c) The Manufacturer licenced to manufacture Foreign Liquor within the State and outside the State of Orissa besides 750 ml., 375 ml. and 90 ml. may also manufacture I.M.F.L. and bottle in quantities of 60 ml. and 1000 ml. size for sale only in I.M.F.L. OFF shops. They shall have to apply for approval of the registration of the brands and labels for sale to trade inside the State of Orissa. 4. All applications for approval of brands and labels and renewals of such brands and labels and for issue of permit shall be accompanied by such fees as may be notified by the Board from time to time. 5.(a) The Excise Commissioner, Orissa before approval of Brands and labels and issue of permit, shall make such enquiries as deemed necessary and may also require samples of the liquor to be chemically examined before such approval to ensure that the liquor meets required standard; (b) The correct and up to date record of all Brands and labels which are approved or whose approval is renewed from time to time shall be maintained by the Excise Commissioner, Orissa. (c) The list of Brands which are approved by the Excise Commissioner, Orissa up to 28th of February every year shall be published by him within 31st March following and offered for sale at such price as may be fixed by the Excise Commissioner. 6. The Excise Commissioner, Orissa may refuse approval of brand and label if he is not satisfied. (a) in the case of foreign liquor bottled in India, that the bottler whose name is stated in the application holds a valid licence from the Government or any State or Union Territory in India to distil, compound, blend or bottle spirits or brew beer, and (b) in the case of foreign liquor brought into India from any foreign country and bottled in India, that the brand name under which or the label with which it is proposed to be sold in distinguishable from other brand names or labels which have already been approved or whose approval has already been applied for : Provided that while refusing to approve a particular or brand the Excise Commissioner, Orissa will state reasons to be recorded in writing and such refusal shall be made after giving the affected party a reasonable opportunity of being heard.” The above provisions clearly indicate that after the application by the manufacture licensee being submitted to the Excise Commissioner, the Excise Commissioner after due enquiry used to approve the brand and labels to be used by the manufacturer licensee. Learned Advocate General submitted that the permission has been given according to the application made. If there is wrong brand has been used or any other brand has been used, the approval of the Excise Commissioner under Rule 41-A cannot be said to be incorrect and the word ‘Original’ must be read as surplus word to have been used but the fact remains that SKOL Breweries Limited after being assigned with the brand has got same as own brand to sell “Haywards 5000 Super Strong Beer” and Annexure-19 also shows that under Rule 41-A after due enquiry has approved the SKOL Breweries Limited to use such brand with the word ‘Original’. When after necessary enquiry under Rule 41-A of the Board’s Excise Rules permission has been accorded by the Excise Commissioner vide Annexure19, it must be observed that SKOL Breweries Limited has manufactured Beer by using own brand. When after necessary enquiry under Rule 41-A of the Board’s Excise Rules permission has been accorded by the Excise Commissioner vide Annexure19, it must be observed that SKOL Breweries Limited has manufactured Beer by using own brand. It is needless to say that the opposite parties have not challenged sale of “Knock Out” Beer. 38. In terms of above discussion, it cannot be said that the petitioner has deposited the bottling fee @ Rs.4/- per BL wrongly and he is required to deposit further short-levy bottling fees towards the amount of Rs.2,02,47,100/- for the years 2008-09 and 2009-10. On the other hand, we are of view that the petitioner having got the due licence to sell the Beer with brand of its own has manufactured same for sale and it has not used the brand of any other Company while manufacturing the “Haywards 5000 Super Strong Beer” and “Knock Out”. Point Nos.(i) and (ii) are answered accordingly. POINT NO.(III) 39. It is the case of the petitioner that the petitioner has not imported the Beer from any other country outside India and sold the same here. But petitioner had imported hops and pellets which are necessary ingredients of Beer to bring proper flavor to the Beer and as such he has prepared the Beer made in India and accordingly the Excise duty for the year 2008-2009 and 2009-2010 has been paid. On the other hand, it is the case of the opposite parties that the petitioner has manufactured the Beer mixed with hops and pallets which are imported element and same is exigible to another scale of rate for which the audit report shows that the petitioner has sold such Beer but has paid excise duty less than the excise duty meant for manufacture of such Beer during said year of licence. 40. For better appreciation, Para-4 of Annexure-5 is quoted below:- “Para-4. Short-levy on Excise duty on beer Rs.7,60 lakh – As per the Excise Policy for 2009-10 circulated in Feb 2009, Excise duty on beer mixed with any imported element was fixed at the rate of Rs.21/- per B.L. Check of records in respect of Skol Brewery, Paradeep revealed that the licensee used some hop extract and ‘hop pellate’ (a plant extract) for production of beer. This item was obtained from a Delhi based supplier i.e. C. Cube consulting Pvt. Ltd. who imported the same from other countries. This item was obtained from a Delhi based supplier i.e. C. Cube consulting Pvt. Ltd. who imported the same from other countries. The certificate of analysis obtained by licensee from the supplier affirms that the material was obtained by the licensee from the supplier confirms that the material was obtained from Yakina chief inc.551 West South Hill Road, P.O. Box-2009, sunny side, WA98944 which is a North America based firm and duty was leviable at the rate of Rs.21/-per B.L. on the entire product. But the licensee paid excise duty on beer not exceeding 5% v/v at the rate of Rs.18/-per B.L. and that exceeding 5% v/v at the rate of Rs.21/-per B.L. But the licensee paid excise duty on beer not exceeding 5% v/v at the rate of Rs.18/-per B.L. and that exceeding 5% v/v at the rate of Rs.21/-per B.L. The Excise authorities did not try to know the sources of obtaining the hops by the supplier. Out of total production of 2,02,47,099.6 B.L. the licensee paid duty of lower rate (Rs.18/- per B.L.) on 25,53,283.30 B.L. So the differential duty of Rs.76,59,850 @ Rs.3/- per B.L. may be demanded realized and intimated to Audit.” When the petitioner has claimed that hop or pellet is one of the ingredient of Beer and same is not plentily available at Jammu & Kashmir but it has to be imported from U.S.A., the counter or the additional counter of the opposite parties at the same time do not deny the same in specific manner. The opposite parties in the counter also do not deny that the hop or pellet is not part and parcel for preparation of Beer. It appears from the extracts from Excise Technical Manual by Lt. Col. C.H. Bedford which is formal Guidelines for the Excise Authorities to find out the contents of different types of foreign liquors like Wines, Cider and Perry, Malt Liquors etc. It is revealed that Malt Liquors are properly known as Beer. Beer is made where malt and hops are used by steeping specially prepared or “malted” grain in water; the solid matter is then strained off; this strained liquid is boiled with hops; the hops are next strained off; and the strained liquid is fermented by adding specially prepared yeast. After fermentation is over, the liquid is allowed to settle and is then casked for use. After fermentation is over, the liquid is allowed to settle and is then casked for use. So, it is clear that hop is part and parcel of ingredient of Beer to manufacture the same. 41. It is admitted fact that in the case in hand the petitioner has claimed to have manufactured the Beer in India whereas the opposite parties claimed the same Beer mixed with imported element has been manufactured. When the Beer cannot be prepared without hops and said hops has been purchased by the SKOL Breweries Limited which is the previous name of the present petitioner’s Company from Delhi based firm which has brought the same from USA, it cannot be said that Beer is mixed with any imported element. Had there been Beer completely prepared and then mixed with any imported element, the submission of the learned counsel for the opposite parties could have been understood to have got some force. It cannot be said that the present Beer has been mixed with any imported element after being prepared. 42. For better clarity, we may refer to the necessary Excise Policy under which the short-levy duty in this regard has been demanded. Vide Annexure-4 series, at para-10 the Excise duty, fee structure and Guidelines for the year 2008-2009 is placed below:- (10) EXCISE DUTY ON IMFL AND BEER. (1) BEER STRENGTH EXCISE DUTY (a) Beer made in India Up to 5% vv Above 5% vv Rs.18/- Per BL Rs.21/- per BL (b) Beer mixed with any imported element Rs.21/- per BL (c) Draught Beer Rs.10/- per BL (d) Diet Beer Up to 3.5% v/v Rs.10/- per BL (e) Canned Beer Up to 5% v/v Above 5% v/v Rs,10/- per BL Rs.12/- per BL (f) Breezier/Low Alcoholic Beverage Up to 5% v/v Rs.18/- per BL Similarly the same Policy for the year 2009-2010 at para-10 is produced below: (10) EXCISE DUTY ON IMFL AND BEER. (1) BEER STRENGTH EXCISE DUTY (a) Beer made in India Up to 5% vv Above 5% vv Rs.18/- Per BL Rs.21/- per BL (b) Beer mixed with any imported element Rs.21/- per BL (c) Draught Beer Rs.10/- per BL (d) Diet Beer Up to 3.5% v/v Rs.10/- per BL (e) Canned Beer Up to 5% v/v Above 5% v/v Rs,10/- per BL Rs.12/- per BL (f) Breezier/Low Alcoholic Beverage Up to 5% v/v Rs.18/- per BL Similarly the same Policy for the year 2010-2011 at para-10 is also produced below: (10) EXCISE DUTY ON IMFL AND BEER. (1) BEER STRENGTH EXCISE DUTY (a) Beer made in India Up to 5% vv Above 5% vv Rs.20/- Per BL Rs.22/- per BL (b) Beer imported from Foreign Countries Rs.21/- per BL (c) Draught Beer Up to 5% v/v Above 5% v/v Rs.15/- per BL Rs.18/- per BL (d) Diet Beer Up to 5% v/v Above 5% v/v Rs.15/- per BL Rs.18/- per BL (e) Canned Beer Up to 5% v/v Above 5% v/v Rs.15/- per BL Rs.18/- per BL (f) Breezier/Low Alcoholic Beverage Up to 5% v/v Rs.20/- per BL Excise Policy for the subsequent years at para-10 has been also prescribed in the same manner as of 2011-2012. (10) EXCISE DUTY ON IMFL AND BEER. (1) BEER STRENGTH EXCISE DUTY (a) Beer made in India Up to 5% vv Above 5% vv Rs.20/- per BL Rs.22/- per BL (b) Beer imported from Foreign Countries Rs.21/- per BL (c) Draught Beer Up to 5% v/v Above 5% v/v Rs.15/- per BL Rs.18/- per BL (d) Diet Beer Up to 5% v/v Above 5% v/v Rs.15/- per BL Rs.18/- per BL (e) Canned Beer Up to 5% v/v Above 5% v/v Rs.18/- per BL Rs.18/- per BL (f) Breezier/Low Alcoholic Beverage Up to 5% v/v Rs.20/- per BL From the aforesaid analogy, it appears that for the years 2008-09 and 2009-10 Excise duty was demanded for these years separately for the Beer mixed with any imported element at sub-clause (b) of Clause 10 (1) whereas in subsequent years same excise duty has been demanded on Beer imported from foreign countries. It appears that the Excise Authorities after understanding the proper contents of the Beer has changed the modus operandi claiming Excise duty on imported Beer. It appears that the Excise Authorities after understanding the proper contents of the Beer has changed the modus operandi claiming Excise duty on imported Beer. We are, therefore, of the view that in the instant case the petitioner has manufactured the Beer having imported the hops, which is one of the element of the Beer but not mixed with any imported element after Beer is prepared for which rightly the petitioner has claimed that he is liable to pay the Excise duty on Beer made in India. 43. Moreover, under Section 27 of the Act, the Excise Authorities are empowered to impose duty on import, export, transport and manufacture of any excisable article. The provision is prescribed below for better appreciation: “27. Power to impose duty on import, export, transport and manufacture – (1) An excise duty or countervailing duty, as the case may be, at such rate or rates as the State Government may direct, may be imposed either generally or for any specified local area, on (a) any excisable article imported; or (b) any excisable article exported; or (c) any excisable article transported; or (d) any excisable article (other than tari) manufactured under any licence granted in respect of Clause (a) of Section 13; or (e) any hemp plant cultivated, or any portion of such plant collected, under any licence granted in respect of Clause (b) or Clause (c) of Section 13; or (f) any excisable article manufactured in any distillery or brewery licensed, established, authorized or continued under this Act. Explanation – Duty may be imposed on any article under this sub-section at different rates according to the places to which such article is to be removed for consumption, or according to the varying strengths and quality of such article. (2) An excise duty or countervailing duty, as the case may be, at such rate or rates as the State Government may direct, may be imposed, either generally or for any specified local area, on any tari drawn under any licence granted under Section 14, Sub-section (1). (2) An excise duty or countervailing duty, as the case may be, at such rate or rates as the State Government may direct, may be imposed, either generally or for any specified local area, on any tari drawn under any licence granted under Section 14, Sub-section (1). (3) Notwithstanding anything contained in Subsection (1) (i) duty shall not be imposed thereunder on any article which has been imported into India and was liable, on such importation, to duty under the Indian Tariff Act, VIII of 1894,or the Sea Customs Act, VIII of 1878, if (a) the duty as aforesaid has been already paid; or (b) a bond has been executed for the payment of such duty; and (ii) (***)” 44. From the aforesaid provision, it is clear that the Excise Authorities shall demand on excisable article imported or exported or the excisable article manufactured under licence granted to import the excise article and various other grounds but not definitely for manufacture of the Excise article mixed with any imported element upon which during 2008-09 and 2009-10 the Excise authorities has prescribed separate Excise duty. But on the other hand, they have rectified the said mistake and framed policy for Excise duty from 2010-11 and onwards by imposing duty on imported Beer. 45. From the foregoing discussion, we are of the view that the Excise Policy so far imposing Excise duty on Beer mixed with imported element is not in consonance with the provision of Section 27 of the Act. Moreover, the petitioner having not manufactured any excisable article imported but the manufactured Beer in India, he has right in payment of excise duty @ Rs.18/- per BL up to 5% v/v and for strength above 5% v/v @ Rs.21/-per BL. On the other hand, the petitioner is found to have paid the entire duty and the claim of the opposite parties of Rs.76,60,000/- for payment of short-levy excise duty in this regard is fully untenable. Point No.(iii) is answered accordingly. POINT NO.(iv) 46. It is asserted by petitioner vide Annexure-5 about short-levy of registration fee in the following manner: “Non-levy of label Registration fee – Rs.4,60,000/-. Point No.(iii) is answered accordingly. POINT NO.(iv) 46. It is asserted by petitioner vide Annexure-5 about short-levy of registration fee in the following manner: “Non-levy of label Registration fee – Rs.4,60,000/-. As per the Excise Policy for 2009-10 issued on 17.02.09 application at the rate of Rs.10,000/- and label Registration fee at the rate of Rs.2,20,000/- per label per brand was leviable on the licenses for supply of more than one lakh cases of beer to OSBC per annum. M/s. Skol Breweries Ltd. unit East Coast Breweries, Paradeep a licensed Manufacturer of beer, obtained approval of the following labels for 2009-10 for sale of beer in Orissa on payment of Rs.6,90,000/-towards application fee @ Rs.10,000/- per brand and label registration fee @ Rs.2,20,000/-per brand as detailed below. Sl No Brands of Beer Strength Bottling size Amount Application Paid Registration 1. Haywards 5000 Original Super Strong Beer Above 5% v/v & Below 8% v/v 650 ML 10,000/- 2,20,000 2. Knock-out High Punch Strong Beer. Above 5% v/v not exceeding 8% v/v 650 ML 10,000/- 2,20,000 3. Royal Challenge Premier Lagar Beer Not exceeding 5% v/v 650 ML 10,000/- 2,20,000 For the year 2010-11 the licensee get the above labels approved on payment of the required fee of Rs.6,90,000/- for three brands of beer. Scrutiny of the labels and records revealed that the licensee supplied the following brand of beer for the year 2009-10 and 2010-11 which was not registered with the Excise Commissioner, Orissa for sale in Orissa. Front Label Back Label THE ORIGINAL HAYWARDS 5000 SUPER STRONG BEER HAYWARDS 5000 SUPER STRONG BEER Hence Label Registration application fee of Rs.10,000/- and registration fee of Rs.2,20,000/- per year totaling to Rs.4,60,000/- for the year 2009-10 and 201011 leviable for the above brand of beer may be demanded and realized under intimation to Audit.” 47. With regard to above demand on duty as pointed out by the A.G. Auditor being supported same by the State Department, opposite party-Excise authorities demanded a total amount of Rs.4,60,000/- as Registration fee for the years 200910 and 2010-11 and label Registration application fee at Rs.10,000/- per year. With regard to above demand on duty as pointed out by the A.G. Auditor being supported same by the State Department, opposite party-Excise authorities demanded a total amount of Rs.4,60,000/- as Registration fee for the years 200910 and 2010-11 and label Registration application fee at Rs.10,000/- per year. On the other hand, the petitioner claimed that SKOL Breweries Limited having its East Coast Breweries unit at Paradeep is a licensed manufacturer of Beer and obtained approval of the Excise Authorities for using the labels “Haywards 5000 Original Super Strong Beer” and “Knock Out High Punch Strong Beer” and accordingly he has paid the fees. It is the claim of the petitioner that as per the approval made by the Excise Commissioner under Rule 41-A of the Board’s Excise Rules, 1965, he has used the front label and back label. 48. In the Point Nos.(i) and (ii), it has been already held that SKOL Breweries Limited having got assignment of “Haywards 5000 Super Strong Beer” has applied to use the same brand but the Excise Authorities allowed to use “Haywards 5000 Original Super Strong Beer” after due enquiry and as such he has used such brand. 49. It has been discussed above that under Annexure-19 series the Excise Commissioner for the years 2010-11 and 2011-12 have allowed the brand of liquor as “Haywards 5000 The Original Super Strong Beer”. It is also admitted fact that the petitioner has used the “Haywards 5000 The Original Super Strong Beer” on the front label but “Haywards 5000 Super Strong Beer” by affixing back side label on the bottle. The opposite parties have not denied about issue of licence as such. When Rule 41-A of the Rules specifically prescribes that after due enquiry the Excise Commissioner would grant use of the brand and label, and Annexure-19 series is not denied by the opposite parties and the only plea taken by the opposite parties that the petitioner could have brought to the knowledge of the Excise Commissioner about the typographical mistake of the use of the word ‘Original’, it cannot be said that the petitioner has used any label beyond the label approved by the Excise Commissioner. We are, therefore, of the view that the demand of short-levy of Registration fee of Rs.4,60,000/-and Label Registration fee of Rs.10,000/- by the opposite parties upon the petitioner is not legal and proper. Point No.(iv) is answered accordingly. We are, therefore, of the view that the demand of short-levy of Registration fee of Rs.4,60,000/-and Label Registration fee of Rs.10,000/- by the opposite parties upon the petitioner is not legal and proper. Point No.(iv) is answered accordingly. POINT NO.(V) 50. After going through the pleadings of both the parties, it appears that the petitioner has claimed that there is illegal demand by the opposite parties towards excess limit of wastage of Beer whereas the opposite parties claim that the limit prescribed under the statute with regard to the short-fall in the yield of the Beer is not within the permissible limit for which excise duty is to be charged. Neither Annexure-5 nor Annexure20 disclose about such fact. 51. It is admitted by the opposite parties that the petitioner Company is manufacturing the Beer where there is deficit of the yield of Beer between 5% to 10%. The opposite parties claim that the permissible limit as per Rule 46 and 47 of the Board’s Excise Rules, 1965 is up to 5%. 52. Rule 47 of the Board’s Excise Rules, 1965 shows that allowance of 10% of the monthly total of the charges shall be made on account of wastage and no duty shall be levied on such percentage of wastage. Sub-Rule (2) of Rule 47 of the said Rules, 1965 speaks that written application shall be made by the licensee to the Collector for any allowance for sour or spoilt beer. So, the allowance of 10% of the monthly total of the charges can be availed by the manufacturer and no duty shall be levied on such 10%. In the instant case, since admittedly the petitioner has shown wastage of Beer below 10%, the contention of the learned counsel for the State Government have no force. Point No.(v) is answered accordingly. CONCLUSION: 53. There is prayer for quashing the illegal demand made under Annexure-5 and demand notices by opposite party No.5 under Annexures-11 and 20. There is also prayer to declare Rule 110 of the Board’s Excise Rules ultra vires to Section 90 of the Bihar and Orissa Excise Act, 1915 which is not pressed during course of argument but the petitioner has sought direction to refund the amount recovered towards differential bottling fee by adjustment of excise account. 54. There is also prayer to declare Rule 110 of the Board’s Excise Rules ultra vires to Section 90 of the Bihar and Orissa Excise Act, 1915 which is not pressed during course of argument but the petitioner has sought direction to refund the amount recovered towards differential bottling fee by adjustment of excise account. 54. It has been already observed in the aforesaid para that Annexure-5 contain the demands for deposit of differential bottling fee, short levy of duty due to use of the brand of others, non-payment of the differential amount towards Registration fee and the short-levy of duty for manufacturing Beer with imported element. But all these points have been answered in favour of the petitioner in the aforesaid para. Consequently, we are of the view that demand of Excise duty in respect of these items in Annexure-5 are illegal, improper for which same is liable to be quashed and the Court do so. Likewise, Annexures-11 and 20 which are issued basing on Annexure-5 are also liable to be quashed and the Court do so. Hence, it is directed that the differential amount demanded on petitioner Company to collect the same must be refunded within a period of three months from the date of this order or same be adjusted in subsequent years licence fee. The writ petition is disposed of with the aforesaid direction. I. Mahanty, J. I agree.