JUDGMENT S. L. Saraf, J.
1. The petitioner company manufactures premium qualities of Indian made Foreign Liquor. The distillery In the process of manufacture of Indian made Foreign Liquor transfers its liquor into wooden vats and keeps the same for considerable length of time so that the chemicals present in the wood along with their distinct flavour and characteristics are acquired by the matured liquor. Further, it is urged that during the period the liquor is kept in the wooden vats for maturation, it suffers a wastage that is normally about 2%.
2. In the present case, the Excise authorities have tried to levy duty at the time of maturation when the goods are not yet completely ready and are still in the process of manufacture. The same is objected to by the assessee on the ground that the excise duty on the goods is only leviable after completion of the entire process when it converts into a finished and final product for sale and not prior to that. The goods in the maturation process cannot be considered to be goods ready for sale, as such, no excise duty could be levied on the said goods. In my view of the matter, the aforesaid submission made by the learned counsel for the petitioner is correct, as such, no excise duty can be levied white the goods are In the process of manufacture. Understandably, the goods are suffered shortage during the period of maturation and same should be allowed by the authorities concerned. The present attempt by the Excise authorities to levy excise duty during the process of maturation Is improper and illegal. 1 direct the authorities not to levy any excise duty when the goods are under the process of manufacture.
3. Mr. K.M. Sahai, learned standing counsel for the department argued that the rules have been framed for the aforesaid purpose and the same is known as U.P. Maturation of Spirit for Manufacturing Indian Made Foreign Liquor Rules, 1994-which provides imposition of excise duty during the process of maturation. 1 am not expressing any opinion at this stage and allow the respondents to file counter-affidavit in this matter within a period of three weeks and the rejoinder-affidavit may be filed within one week thereafter. The matter be listed after expiry of the aforesaid period.
4. However, 1 direct that no excise duty be levied during the process of maturation till the pendency of this writ petition.