JUDGMENT : K.SURENDRA MOHAN, J. The short question that arises for consideration in this appeal is whether the State is entitled to levy excise duty on liquor unfit for human consumption. 2. The State is in appeal against the judgment of the learned single Judge dated 31.8.2015 allowing WP(C) No.6781 of 2010 filed by the first respondent. During the pendency of the writ appeal, the first respondent died and the present Managing Director of the company has been impleaded as the second respondent. The respondent is the Managing Director of M/s. Indo Scottish Brand (P) Ltd Distillery, Karuvelipadi, Kochi-682 005. The respondent has been issued with Exts.P1 to P3 licences under the Kerala Distillery and Warehouse Rules, 1968 to manufacture alcoholic liquor for human consumption. He is engaged in the process of manufacturing, compounding and blending of liquor. The liquor so manufactured is thereafter bottled, for which a separate licence has been issued. The respondent is permitted to compound and blend Indian made foreign liquor (IMFL) as well as imported foreign liquor for the purpose of bottling or sale. The case of the respondent was that the liquor manufactured by the company is kept in a bonded warehouse under the joint control of the respondent and the Distillery Officer. The excise duty is payable only on the removal of the liquor from the bonded warehouse. The respondent contended that he was not bound to pay excise duty as long as the liquor remained in the bonded warehouse. Such liquor kept in the bonded warehouse, became chargeable to the duty only on the same being released for consumption in the State. The dispute in the present case related to the quantity of liquor that was found unfit for human consumption on being subjected to chemical analysis. Such liquor, according to the respondent, was liable to be destroyed and was not capable of being put to any use whatsoever. However by Ext.P5 proceedings, the respondent was directed to pay excise duty on the quantity of liqour that was admittedly found unfit for human consumption. He had filed the writ petition challenging Ext.P5 proceedings contending that he was not liable to pay the duty that was claimed by the appellants herein. 3. A counter affidavit was filed on behalf of the appellants, disputing the contentions of the respondent. He had filed the writ petition challenging Ext.P5 proceedings contending that he was not liable to pay the duty that was claimed by the appellants herein. 3. A counter affidavit was filed on behalf of the appellants, disputing the contentions of the respondent. The contention put forward by the State was that since the liquor had already been manufactured it had become chargeable to excise duty. Therefore, duty was payable irrespective of the question as to whether the liquor that was manufactured was actually sold or was destroyed for some reason. In view of the above, it was contended that, Ext.P5 proceedings were perfectly justified and therefore, not liable to be interfered with. 4. The learned single Judge considered the respective contentions and came to the conclusion that duty was payable under the relevant provision only after it is made available for sale. In other words, the liquor become chargeable to the duty, only upon it being removed from the bonded warehouse. Such duty is payable only on the release of the liquor from the distillery. In the present case, since the quantity of liquor has been found unfit for human consumption, there was no question of payment of any duty on such liquor. The learned single Judge thus accepted the contentions of the respondent and allowed the writ petition, quashing Ext.P5. The State is in appeal before us aggrieved by the said judgment. 5. According to the Senior Government Pleader, who appears for the appellants, levy of duty is contemplated by Sec.17 of the Abkari Act. As per the said provision, the State has the discretion to levy a duty on liquor permitted to be imported under Sec.6 or manufactured under any licence granted under Sec.12 or manufactured at any distillery, brewery, winery or other manufactury established under Sec.14. In the present case, duty has been levied by the State exercising its discretion on the manufacture of liquor. The taxing event therefore is "manufacture". Admittedly, the respondent had manufactured the quantity of liquor that is under dispute. Upon completion of manufacture of the product, the same has become exigible to the duty that has been levied under Sec.17 of the Abkari Act. It is immaterial whether the manufactured product is ultimately destroyed or consumed by someone. The learned single Judge has proceeded on the assumption that duty is payable only upon the manufacture product being removed from the distillery. It is immaterial whether the manufactured product is ultimately destroyed or consumed by someone. The learned single Judge has proceeded on the assumption that duty is payable only upon the manufacture product being removed from the distillery. The said assumption is wrong and therefore the conclusion arrived at by the learned single Judge is unsustainable and liable to be set aside, it is contended. 6. The learned counsel for the respondent on the other hand contends that Sec.17 of the Abkari Act has to be read along with Sec.18 thereof. Sec.18 stipulates how the duty is to be imposed. According to Sec.18, the duty is to be imposed either on the quantity produced in or passed out of a distillery licenced under the Act. It is pointed out that going by the provision to the Kerala Distillery and Warehouse Rules, 1968, the entire quantity of the liquor manufactured in the distillery is to be stored in a warehouse that is set up within the distillery, in the joint control of the manufacturer as well as the distillery officer. The warehouse itself is licensed and the entire stock is retained in such warehouse. The duty is charged only upon the removal of the liquor from the distillery for sale in Kerala. According to the learned counsel, the State having exercised its discretion and decided to levy duty on the quantity of liquor that passes out of the distillery does not have any authority to claim such duty on the quantity of liquor that is admittedly unfit for human consumption. 7. Heard. The facts of the case fall within a very narrow compass. The facts are all undisputed. It is not in dispute that, the claim for duty is made by the State on a quantity of liquor that is unfit for human consumption. The above fact is admitted in paragraph 8 of the counter affidavit filed on behalf of the appellants herein. Ext.P5 notice was issued directing payment of Rs.5,822/- on the idle stock of 1385 cases of IMFL manufactured during the period 1994-95. It is admitted that the above quantity of liquor on chemical analysis was found to be unfit for human consumption. Such liquor, according to the learned counsel for the respondent, is only to be destroyed. 8. Ext.P5 notice was issued directing payment of Rs.5,822/- on the idle stock of 1385 cases of IMFL manufactured during the period 1994-95. It is admitted that the above quantity of liquor on chemical analysis was found to be unfit for human consumption. Such liquor, according to the learned counsel for the respondent, is only to be destroyed. 8. As already noticed above, Sec.17 of the Abkari Act confers power on the State to levy a duty of excise or countervailing duty and/or luxury tax on liquors or intoxicating drugs. The provision is extracted hereunder for convenience of reference. 17. Duty on liquor or intoxicating drugs.- A duty of excise or countervailing duty and/or luxury tax shall be levied, in such manner as may be prescribed, on liquors or intoxicating drugs,- (a) permitted to be imported under section 6, or (b) manufactured under any licence granted under section 12; or (c) manufactured at any distillery, brewery, winery or other manufactury established under section 14. Provided that no duty or gallonage fee or vend fee or other taxes shall be levied under this Act on rectified spirit including absolute alcohol, which is not intended to be used for the manufacture of potable liquor meant for human consumption. Explanation,- No liquor or intoxicating drug shall be permitted to be exported unless the duties, taxes, fees and such other sums as are due to the Government under this Act in respect of such liquor or intoxicating drug have been paid or a bond for such payment on its exportation or re-exportation has been executed. 9. In the present case, the duty sought to be levied is on the manufacture at a distillery. Sec.18 of the Abkari Act to the extent it relates to levy of duty reads as under: 18. How duty or countervailing duty may be imposed - (1) Such duty of excise or countervailing duty may be levied and collected. 9. In the present case, the duty sought to be levied is on the manufacture at a distillery. Sec.18 of the Abkari Act to the extent it relates to levy of duty reads as under: 18. How duty or countervailing duty may be imposed - (1) Such duty of excise or countervailing duty may be levied and collected. (a) in the case of spirit or beer, either on the quantity produced in or passed out of a distillery, brewery, winery or other manufactury licensed or established under section 12 or section 14, as the case may be or in accordance with such scale of equivalents, calculated on the quantity of materials used or by the degree of attenuation of the wash or wort on the value of liquor, as the case may be, as the Government may prescribe; (b) in the case of intoxicating drugs, on the quantity produced or manufactured under a licence granted under section 12 or issued from a warehouse licensed or established under section 12 or section 14; (c) x x x x (d) x x x x (e) in the case of toddy, or spirits manufactured from toddy, in the form of a tax on each tree from which toddy is drawn, to be paid in such installments and for such period as the Government may direct; or (f) in the case of import of spirits, beer or intoxicating drugs, in such manner as may be prescribed; [Emphasis supplied] 10. A joint reading of Secs 17 and 18 reveals that the duty that is contemplated under Sec.17 is to be levied in accordance with the provisions of Sec.18. In the present case, as evident from the licences issued to the respondent, Exts. P1 to P3 in the writ petition, it is incumbent on the respondent to remove the entire quantity of liquor manufactured to a separate store room within the licensed premises, to be retained in the joint custody of the Excise Inspector in charge of the distillery or bonded warehouse and the respondent. It is clear from the conditions stipulated by the licence that the duty stipulated by Sec.18 is payable on the quantity that passes out of the distillery. This is for the reason that no duty is levied on the quantity of liquor that is stored or retained in the bonded warehouse or store rooms as the case may be. It is clear from the conditions stipulated by the licence that the duty stipulated by Sec.18 is payable on the quantity that passes out of the distillery. This is for the reason that no duty is levied on the quantity of liquor that is stored or retained in the bonded warehouse or store rooms as the case may be. Therefore, it is clear in the present case that the State has already decided in exercise of its discretion, to levy the duty stipulated by Sec.17 of the Abkari Act at the stage of removal of the manufactured liquor from the bonded warehouse. The above being the position, the contention that, duty is actually levied on the liquor immediately on the process of manufacture being completed, cannot be accepted. In the present case, the quantity of liquor that was manufactured had not been released from the bonded warehouse. On the contrary, the same was retained at the distillery and was later on found to be unfit for human consumption, upon chemical examination. The same cannot therefore be released out of the distillery for human consumption. Therefore, there is no justification for the demand of excise duty on said quantity of liquor, that is only to be destroyed. For the above reasons, we do not find any grounds to interfere with the judgment of the learned single Judge appealed against. The writ appeal fails. It is accordingly dismissed.