JUDGMENT
Rajes Kumar, J.
1. By means of the present writ petition, the petitioner seeks the following reliefs:
i) Issue a writ, order or direction in the nature of Certiorari quashing the impugned revisional order dated 12.7.2006 passed by respondent No. 1 (Annexure-11 to the writ petition), appellate order dated 24.4.2006 passed by respondent No. 2 (Annexure-7 to the writ petition) and demand order dated 9.2.1999 passed by the respondent No. 4 (Annexure 6 to the writ petition).
ii) Issue a writ, order or direction in the nature of mandamus directing the respondents to credit the entire amount Rs. 11,29,352.00 with 18% penal interest in the advanced duty account of the petitioner if it is deducted during the pendency of the writ petition.
(iii) Issue, any other suitable writ, order or direction which this Hon’ble Court may deem fit and proper in the facts and circumstances of (he case.
(iv) Award cost of the petition in favour of the petitioner.
2. Brief facts of the case are that the petitioner is a Company duly incorporated under the Indian Companies Act, 1956 having it registered office at A-270, Defence Colony, New Delhi and the distillery at Raja Ka Sahaspur, District Moradabad. The distillery is commonly known as “Ajudhia Distillery”. The petitioner is engaged in the business of manufacture and sales of Indian Made Foreign Liquor (hereinafter referred to “IMFL”) and country liquor. The petitioner has been granted a license in Form P.D 2 for the manufacture of IMFI, and country liquor under the U.P. Excise Act, 1910 (hereinafter referred to as “the Act”). The potable liquor manufactured by the petitioner is subject to excise duty in accordance to the provisions of Section 28 readwith Section 29 of the Act and the Rules framed thereunder and the notifications.
3. On 28th August, 1998, fire took place in the godown Nos. 5 and 6 of the petitioner at around 2.30 P. M. The petitioner claimed that the information of the aforesaid fire was communicated to the Fire Brigade at Moradabad and Chandausi as well as to the Police Station, Bilari at once. After best efforts the fire could be controlled at 6.00 P.M. with the help of the Fire Brigade. The information of the aforesaid fact was duly forwarded to the Assistant Excise Commissioner, Ajudhia Distillery vide letter dated 28″‘ August, 1998 and it was informed that due to the lire accident, there has been loss of IMFL/spirit stored in godown Nos. 5 and 6. Copy of the letter dated 31st August, 1998 issued by the Fire Fighting Officer, Chandauli in this regard is Annexure-2 to the writ petition and report of police station, Bilari dated 22nd September, 1998 has also been annexed. In reply to the letter No. 447 dated 19th September, 1998 of the Assistant Excise Commissioner, Ajudhia Distillery, District Excise Officer, Moradabad wrote a letter dated 9th October, 1998 in which Assistant Excise Commissioner was directed that the goods may be quantified in your presence and the same may be kept at a secured place and for the repairing of the godown, permission may be granted. This letter is Annexure 4 to the writ petition. The Excise Commissioner, U.P. also wrote a letter dated 11th November, 1998 to Joint Excise Commissioner, Meerut Zone, Meerut directing him to make a spot inspection and after verification of the balance stock, steps may be taken for the repairing of the damaged godown and necessary action may be taken for the payment of excise duty on the damage 50,663.3 AL, IMFL. Thereafter, the Assistant Excise Commissioner issued a letter/order dated 9″‘ February, 1999 to the petitioner wherein it is stated that out of total 50,663.3 AL, IMFL was filled in bottles and out of which 22,449.5 AL, IMFL remained balance after lire and balance quantity of 28,233.8 AL was found burnt on which at the rate of 40 percent per AL Rs. 11,29,352/- is payable towards excise duty. Being aggrieved by the said order, petitioner filed appeal before the Additional Excise Commissioner (Administration) U.P., which has been dismissed on the ground that 28,233.8 AL, IMFL was damaged due to the negligence of the petitioner and therefore, the petitioner is liable for excise duty on such quantity. Being aggrieved by the order of the Additional Excise Commissioner (Administration) U.P., petitioner filed revision before the State Government. State Government vide impugned order dated 12th July, 2006 dismissed the revision. Revisional authority held that the petitioner was granted license in P.D-2 on the condition that the petitioner would follow all the Rules provided in Excise Manual and the licensee is responsible for all the losses due to the negligence. It has been held that the fire was not as a result of accident, but was the result of negligence.
4. Heard Sri Neeraj Sharma, learned Counsel for the petitioner and Sri B.K. Pandey, learned Standing Counsel.
5. Learned Counsel for the petitioner submitted that the loss was caused by an accident and due to unavoidable cause and, therefore, in view of the proviso to the Paragraph 813 of Excise Manual as amended by the U.P. Excise (Amendment) Commissioner, petitioner is not liable for excise duty on the burnt IMFL.
6. Learned Standing Counsel submitted that fire was caused due to negligence of the petitioner and it was not on account of accident and, therefore, the petitioner is not entitled for the remission.
7. Having heard the learned Counsel for the parties, 1 have perused the impugned orders and given by anxious consideration to the rival submissions.
8. The relevant amended paragraph 813 of the Excise Manual of Notification No. 1263 IX-241-A dated March, l9, 1930 reads as follows.
813. The free wastage allowance for different kinds of spirit (Excluding bottled Spirit), stored in a distillery shall be as follows:
Percent.
1. Plain and spiced spirit 0.7. 2. Rectified and sophisticated Spirit 0.4 3. Denatured spirit 0.5. If the total wastage of any kind of spirit does not exceed 1.5 % duty will be charged on the net wastage in excess of the free allowances. But if the total wastage exceeds 1.5 %, duty shall be liable to be charged on the whole wastage without allowing for the free allowances at the following rates: 1. Plain and rectified spirits- At the highest rate of duty leviable on country spirit in the case of plain spirit and at the highest rate of duty leviable on IMFL in the case of Rectified Spirit. 2. Sophisticated Spirit including Spiced Country Spirit-At the rate of duty leviable on such spirit. 3. Denatured Spirit- A penalty at the Highest rate of purchase tax leviable on such spirit.
Provided that if it is proved to the satisfaction of the Excise Commissioner that the deficiency or wastage in excess of the prescribed limit has been caused by an accident or other unavoidable cause, the payment of duty on such deficiency or wastage shall not be required. When the wastage does not exceed the prescribed limit, no action need be taken by the officer incharge but when an excess is found in any case at the time of monthly stock taking the officer Incharge must obtain a written explanation from the distiller and forward the same together with full report of the circumstances, to the Assistant Excise Commissioner/Deputy Excise Commissioner of the charge. The Assistant Excise Commissioner/Deputy Excise Commissioner shall charge the duty on excess wastage if he is satisfied that the wastage in excess of the prescribed limit is not on account of an accident or any unavoidable cause. In case the excess wastage is due to an accident or unavoidable cause, the matter will be referred to the Excise Commissioner for orders.
9. Under the proviso, if the deficiency or wastage is caused by an accident or Other unavoidable cause, the payment of duty is not required. Thus, the question for consideration is whether on the facts and circumstances of the present case, the lire was cause by an accident or as a result of unavoidable cause or not.
10. No prudence businessman will prefer harm to itself and to act in such a manner causing fire and damage of the goods resulting monetary loss. It cannot be said that the petitioner has foreseen the fire which caused the damage. Fire was caused as a result of accident inasmuch as it was unavoidable cause. When the fire took place, the petitioner took prompt steps to check the fire as a result of which substantial quantity of bottled liquor was saved, therefore, it cannot be said that the damage was avoidable and the petitioner has not taken any steps in this regard. In my Opinion, the case of the petitioner is squarely covered under the proviso of the amended paragraph 813 of the Excise Manual referred herein above.
11. This Court in Civil Misc. Writ Petition No. 113 of 1996, Rampur Distillery, Bareilly Road, Rampur v. Stale of U.P. and Ors. decided on 26th May, 1999 held as follows”
The accident and unavoidable reasons are two different things and the benefit of write off cannot be denied even if the accident is due to the fault of the transporter. The excise duty is leviable on the distillery. So far the other unavoidable causes are concerned, they are different from accidents and a distillery is not expected to show whether the accident was avoidable or not. The other unavoidable causes are like a riotous mob looting the liquor from the tanker. As is evident, the tanker by which the consignment of country liquor in question was being transported was found fallen in a canal. The transporter had reported the matter to the police, as well as to the District Excise Officer, Haridwar. The Excise Inspector visited the spot and made enquiries, did not find any evidence of the accident having been manipulated. The approach of the authorities right from the Dy. Commissioner to the State Government has been one of rejecting the petitioner’s claim and none of them has taken a judicious approach in the matter. As stated above, the excise duty is realizable when the goods are issued to the vendors from the bonded warehouse and allowance is made for loss in transit, same of which are natural. The proviso takes care of excessive loss due to accident or other unavoidable causes and when the excess loss is established to have occurred, because of an accident or other unavoidable causes, the authorities are obliged to write off the duty and that should have been done in the present case. The impugned orders are all arbitrary and the petitioner has been subjected to undeserved demand.
12. In the case of U.P. State Cement Corporation Ltd, v. Union of India reported in 1996 (186) ELT 6, this Court held that loss of cement clinker in the transport from Dala and Churk to Chunar factory was a natural loss. Loss occurring during the transit to be regarded as natural case and incident during handling of material and its transport. Court further held that the natural cause or by unavoidable incident and other losses for other reasons is not restricted to flood and earth quake, but these words take in their scope also causes which arc related to the natural and normal manner of its handling and transport etc. This view has been followed by this Court again in the case of U.P. State Cement Corporation Ltd. v. Union of India
13. In the result, writ petition is allowed. The impugned orders are quashed and the demand is set aside.