Distillers have to pay excise duty on bottles broken in transit: High Court

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New Delhi, Dec 24: Distillers will be required to pay excise duty even on bottles broken during transit. The Delhi High Court has ruled that distillers are liable to pay excise duty on bottles which break after leaving their bonded warehouses, and before reaching the retailers.

While dismissing a petition filed by a group of distillers disputing their liability to pay excise revenue for broken bottles to the Delhi government, Justice Sanjay Kishan Kaul said, “In view of the controversy, the government of NCT of Delhi has considered it appropriate to specifically mention both the terms — special duty and excise revenue in the proviso to rule 38 of the Warehouse Rules. In fact, the object seems to give an extra latitude to the L-9 licensees in the sense that to the extent of 0.5% of the breakage/damage, excise revenue is not liable to be paid. The amendment supports the argument of the respondents (Delhi Tourism & Transportation Development Corporation Ltd) that this excise revenue payable and the amendment to the proviso only restricts the extent of its application by excluding damaged bottle up to 0.5% of the total consignment.”

Justice Kaul further said, “The reading of the relevant provisions, makes it clear that once the consignment comes to the bonded warehouse, the government must get its dues. The fact that the same has split into two dues — special duty and excise revenue — would not make any difference since basic principle is the same in respect of both and the principle of countervailing duty would apply in both the cases. The submission of the bond only postpones the payment of both these levies, and the bond is for a fixed amount. Excise revenue is really nothing but countervailing duty.”

The petitioners, which included Cooperative Company Ltd, Queen Distillers and Bottlers (P) Ltd, Patiala Distillers and Manufacturers Ltd, Som Distillers Ltd, Haryana Distillery, and Associated Alcohol and Breweries Ltd, were the wholesale suppliers of country liquor in the capital and were granted L-9 licence for this.

Since the manufacturing units are not located in Delhi, the stock is brought to New Delhi by licensees and is supplied at wholesale rate. The retail price which is fixed by the Delhi government, according to the Punjab Excise Act, 1914, includes wholesale price, fixed special duty, excise revenue, fixed retail margin and sales tax.