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No excise duty on movement of molasses: HC
May, 20th 2011

The state government cannot levy excise charges on the transportation of molasses, the Bombay High Court ruled earlier this month while disposing of over 50 petitions filed by various sugar co-operatives and distilleries in the state.

The petitioners are manufacturers of the molasses or industrial alcohol, which is not fit for human consumption, as opposed to alcohol which forms the base for drinks like rum, whiskey and gin. The manufacturers could be classified as captive and non-captive users of industrial alcohol. While the captive users transport the alcohol from their distillery to their manufacturing plant through sealed pipes, the non-captive users transport the same to their manufacturing plants from outside. They had both challenged the notification of the state government issued on July 12, 1999, that had deleted the clause exempting them from paying excise duty on the transportation of the industrial alcohol.

Under the Bombay Rectified Spirit (Transport in Bond) Rules, 1951, the transport fees levied by the government was Rs 3 per litre of silent spirit for manufacturing Indian made foreign liquor (IMFL), rectified spirit for IMFL was Rs 2 per bulk litre, for country liquor Rs 1.25 per bulk litre, for toilet or medicinal purpose Re 1 per bulk litre and for industrial purposes Rs 0.30 per bulk litre.

Counsels for the non-captive users D B Sawant and Ashutosh Kumbhakoni for the captive users argued that the manufacturers were already paying excise charges to the government for supervision and no additional services were being rendered by them for transportation of industrial alcohol.

The government counsel, however, submitted that they had deployed officers from the Personal Staff Department for conducting surprise checks. Even officers of the rank of the commissioner and deputy commissioner conduct surprise checks, the court was told. Since the rectified or denatured spirit is cheaper, it can be surreptitiously diverted for making potable alcohol, which can lead to unfortunate hooch tragedies that can lead to deaths or cause blindness among those consuming this liquor, the government apprehended.

However, Justice PB Majmudar and Justice AA Saiyed held that the excise duty on transportation charged by the state does not commensurate to the services rendered and the imposition of transport fee on the petitioner.

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