New Delhi: The Supreme Court has ruled that state has jurisdiction to levy excise duty on beer only after it has been brewed and become fit for human consumption and not on the raw material used while laying down guidelines for levy of such duty.

The ruling was given by a three-judge Bench comprising Justice B N Kirpal, Justice Shivaraj V Patil and Justice Bisheswar Prasad Singh while allowing an appeal of Haryana government against a ruling of Punjab and Haryana High Court given on a writ petition filed by Haryana Breweries Ltd.

The question before the apex Court was, how to determine the quantity of beer, which is manufactured on which the excise duty is to be levied.

Referring to Section 32 of the Punjab Excise Act, Justice Kirpal, writing the judgement for the Bench, said, "A reading of this Section leaves no manner of doubt that the stage at which excise duty can be levied is only after the process of manufacture has been completed and in fact it is to be levied when it is issued from the distillery, brewery or warehouse."

Making it clear that "the tax is on the end-product and not on the raw material", the Bench referred to the proviso of Section 32 which gave details of the manner in which computation of the end product could be done.

In order to determine what was the quantity of beer manufactured that is fit for human consumption, one has to compute the raw material utilised for the production of beer after giving an allowance for wastage of seven per cent, the apex court said.

"It appears to us that the proviso to Section 32 read with Rule 35 does nothing more than to give a rough and ready method of calculating the quantum of beer which should have been manufactured in the normal process which is calculated on the basis of raw material used," the Bench said.

From the records of the manufacturer, excise authorities would be able to ascertain the quantum of raw material used, Justice Kirpal said, and added, "It is open to the excise authorities to accept the figures indicated in the records of the manufacturer of the total quantity of beer manufactured."

The apex Court, however, refused to accept the plea of the manufacturer that on the figure of the manufactured beer, arrived at on the basis of the books of the producer, an allowance for seven per cent wastage has to be given.

PTI