In Brief
A distillery in Uttar Pradesh lost 35,642 cases of liquor in a warehouse fire in 2003. The State demanded excise duty on the destroyed liquor, arguing the distillery was negligent. The High Court quashed the demand, holding the fire was an act of God with no proven negligence. The Supreme Court reversed this, holding the taxable event for excise duty is manufacture, not sale, so duty arose when liquor was produced. The Court found the distillery negligent for failing to maintain proper electrical installations and firefighting systems despite warnings. The distillery's failure to insure excise duty liability (while insuring liquor value) further showed negligence. The appeal was allowed, and the duty demand was upheld as authorized by law.
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