SC Stayed Bombay HC Order On Ethanol Smuggling To Hold Inquiry Against State Excise Officials

New Delhi: The Supreme Court has stayed the Bombay High Court order directing Maharashtra to hold an inquiry against state excise officials for taking action against illegal sale and transport of ethanol imported by K Raj and Co mis-declared as lab chemicals.

The Free Press Journal has extensively reported the ethanol smuggling racket misdeclared as lab chemicals by importers to avoid hefty customs levies of 150% and state excise duties to divert the ethanol for commercial use in pharma and alcohol beverage industries.

The SC observed that the HC orders ordering an inquiry should not have been passed without affording opportunity of proper hearing to all the parties, including the intervening petitioner Laboratory Solutions India, duly licensed under the provisions of the Maharashtra Prohibition Act, which pays state excise duty of Rs200 per litre of ethanol while importer K Raj did not have valid licences.

“Before passing any judgment, all the parties must be given fair opportunity of being heard as it is a basic tenet of the principles of natural justice,” said Aniruddha Purushotham, advocate-on-record for the petitioner.

The petitioner argued that seizure of ethanol consignment misdeclared as lab chemicals was legitimate under criminal proceedings and K Raj and Co’s proprietor Manohar Tolani abused the process of law approaching Bombay High Court under civil jurisdiction without withdrawal of similar writ under criminal jurisdiction pending in the HC.

The Maharashtra Prohibition Act

The Maharashtra Prohibition Act stipulates mandatory licence requirement for the sale, purchase, storage and transport of un-denatured pure ethanol seized by the excise department.

Tolani filed filed a criminal writ petition in the HC challenging the FIR and seizure of ethanol consignment and an identical petition seeking the release of the goods was listed. The HC on December 19, 2023, passed judgment on the very first day of hearing without formal notice and issued notices to the state for inquiry into the state excise department actions.

The department last month had intercepted and seized consignment of 56,000 bottles of smuggled ethanol falsely declared as laboratory chemicals by importer K Raj and Co. The SC also issued notice to Tolani and state excise officials on special leave petition filed by Laboratory Solutions.

Tolani declined to comment stating it would be inappropriate to talk about the SC orders.

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