M/S Indo Spirits vs. Commissioner Of Excise, Govt. Of Nct Of Delhi & Ors. & Ors.

Facts

The Petitioner, M/s Indo Spirits, held an L-1 wholesale license under the Delhi Excise Policy 2021-22 and operated from premises at E-32, Okhla Phase-II, New Delhi. Following the introduction of a new excise policy in September 2022, the Petitioner's license expired, and they are no longer licensed to sell liquor in Delhi. The E-32 premises, for which the Petitioner incurs significant rent, has been sealed by the department. The Petitioner sought permission to transfer its stock of Indian Made Foreign Liquor (IMFL) from the E-32 premises to an alternate premises at B-230, Okhla Industrial Area, New Delhi. The Petitioner also wished to destroy a substantial portion of the stock that was nearing expiry. The Commissioner of Excise dismissed the Petitioner's representations seeking this permission.

Held

The Court held that the Petitioner, no longer being a valid liquor licensee, must deal with its leftover stock. The Court referred to Rule 56 of the Delhi Excise Rules, 2010, which prescribes the procedure for dealing with leftover stock upon expiry or determination of a license. The Court noted that the Petitioner had already submitted a list of stock to the Deputy Commissioner. Considering the Petitioner's situation of no longer holding a license and the stock nearing expiry, the Court found no useful purpose in adopting a technical approach. The Court permitted the Petitioner to destroy 79,127 cases of IMFL from the E-32 premises in the presence of excise inspectors, stating no excise duty would be payable on the expired stock. Furthermore, the Court allowed the remaining 25,374 cases to be shifted to the B-230 premises under the supervision of the excise department, without payment of further duties, though excise duty would be payable at the time of sale of these products. The Court emphasized that the purpose of Rule 56 is to provide a supervised mechanism for disposal of existing stock.

Key Issues

1. Whether the Petitioner, having ceased to be a licensee under the new excise policy, can be permitted to transfer its leftover stock of IMFL from its former licensed premises (E-32) to an alternate premises (B-230) and to destroy expired stock, despite the Commissioner of Excise's order dismissing its representations. Petitioner's arguments: The Petitioner argued that they are no longer a license holder and are incurring substantial rent for the E-32 premises, which they wish to avoid. A significant portion of their stock is also nearing expiry. They sought to transfer a portion of the stock to the B-230 premises and destroy the expired stock. Respondents' arguments: The Respondents contended that such a transfer is not permissible as the stock is tied to the premises registered on the excise department's portal, and the transfer is not allowed under the Act and Rules.