Hologram Omission On Liquor Bottles Not An Offence Under Section 39 Excise Act: Himachal Pradesh HC

Shimla: The Himachal Pradesh High Court has quashed an FIR registered against a licensee under Sections 39(1) and 39(2) of the Himachal Pradesh Excise Act, holding that mere failure to affix holograms on liquor bottles does not attract the penal provisions of Section 39 of the Act, and can, at best, invite a penalty under Section 43 of the Act, which is compoundable.

Justice Sandeep Sharma was hearing a petition filed under Section 482 of the Code of Criminal Procedure by Manik Kumar, proprietor of M/s Mars Bottlers, seeking quashing of FIR No. 5 of 2020 dated 08.06.2020, registered at Police Station SV and ACB, Una, under Sections 39(1) and 39(2) of the Act, along with consequent proceedings pending before the competent court.

The FIR had been lodged on the basis of secret information that M/s A-One Enterprises and M/s Mars Bottlers were illegally transporting country liquor bottles of the brand Himachali Santra without the requisite transport licence, and that the same permit was being used repeatedly for transportation. On search of the premises of both firms on 08.06.2020, the investigating team did not find that the accused were involved in illegal transport without a valid licence, but found that certain nips and bottles in possession of both parties were without the requisite holograms. After investigation, police presented a challan only against M/s Mars Bottlers, while M/s A-One Enterprises was not arraigned as an accused.

Senior Advocate Neeraj Sharma, appearing for the petitioner along with Advocate Hemant Thakur, argued that no case under Section 39 of the Act was made out, since the prosecution's own case was that the bottles lacked holograms and not that liquor was transported without a valid licence. It was submitted that absence of holograms, at best, constitutes an offence under Section 43 of the Act, which is compoundable, and that the Excise Department had itself repeatedly informed the Police Department that no case under Section 39 was made out. Reliance was also placed on a coordinate bench's judgment dated 24.03.2023 in Sant Ram v. State of Himachal Pradesh, whereby the FIR against co-accused Santram, the Excise and Taxation Officer posted at the factory premises, had already been quashed on identical grounds.

Additional Advocate General Rajan Kahol, appearing for the State, argued that since holograms were admittedly missing from the bottles, no illegality was committed by the investigating agency in presenting the challan under Sections 39(1) and 39(2) of the Act. He submitted that since the licence stood issued in the petitioner's name, he was solely responsible for any violation under the Act, and that the petitioner could not claim parity with Santram, whose role as an Excise and Taxation Officer was distinct.

The Court referred extensively to the settled principles governing the exercise of inherent jurisdiction under Section 482 CrPC, now Section 528 of the Bharatiya Nagarik Suraksha Sanhita, as laid down in State of Karnataka v. L. Muniswamy, State of Haryana v. Bhajan Lal, Vineet Kumar v. State of U.P., Amish Devgan v. Union of India, Kaptan Singh v. State of Uttar Pradesh, and the recent decision in Abhishek Singh v. Ajay Kumar, noting that while the power is exceptional and cannot be exercised as an appellate review of evidence, proceedings that are bound to fail even on their own averments amount to an abuse of the process of court.

Examining Section 39 of the Act, which penalises unlawful production, manufacture, possession, import, export, transport and sale of liquor, and Section 43, which penalises breach of licence conditions by a licensee, the Court held that omission to affix holograms is squarely covered by Section 43 and not by Section 39. 

“Having carefully perused the aforesaid provision of law, this court is not persuaded to agree with Shri Rajan Kahol, learned Additional Advocate General, that on account of omission, if any, on the part of the manufacturer to put holograms on the bottles of liquor, he or she can be charged under Sections 39(1) and 39(2), rather for that purpose, a penalty could have been imposed under Section 43 of the Act.”

The Court also noted that the Excise Department, soon after the FIR was lodged, had written to the police on 21.10.2021 stating that the omission to affix holograms, attributable to human error, was compoundable under Section 66 of the Act by the Collector, and had specifically asked that the case be transferred to the Department of State Taxes and Excise for compounding, a request the police did not act upon. The Court further observed that it was the duty of the Excise and Taxation Officer posted at the factory to ensure affixation of holograms on every bottle, and that co-accused Santram, who held that post, had already had the FIR quashed against him by a coordinate bench in Sant Ram v. State of Himachal Pradesh.

While accepting that the petitioner, as licensee, was under an obligation to affix holograms in terms of the notification dated 23.05.2012 issued by the Excise and Taxation Commissioner, the Court held that the consequence of such omission was punishment under Section 43, and not prosecution under Section 39. 

“As has been observed herein above, omission, if any, of licensee to put hologram, doesn't constitute an offense under Sections 39(1) and 39(2) of the Act, rather, qua aforesaid omission, licensee can be imposed penalty in terms of Section 43 of the Act.”

Accordingly, the Court held that no case under Sections 39(1) and 39(2) of the Act was made out against the petitioner, and that allowing the FIR to continue would amount to abuse of the process of law and cause prejudice to the petitioner by subjecting him to a protracted trial bound to fail. The FIR and consequent proceedings were quashed.

The Court further noted that separate proceedings under Section 43 of the Act stood initiated against the petitioner before the Collector (Excise), North Zone, pursuant to a notice dated 12.06.2020, which had not been carried to their logical end. With the consent of counsel for both sides, the Court itself proceeded to impose a penalty of Rs. 1,00,000 upon the petitioner under Section 43 of the Act, to be deposited with the Excise Department within four weeks, on deposit of which the pending Section 43 proceedings before the Collector were directed to stand concluded.

The petition was accordingly disposed of, with compliance listed for 24.08.2026.

Appearances

For the Petitioner: Mr. Neeraj Sharma, Senior Advocate, with Mr. Ankit Dhiman, Mr. Hemant Thakur, Mr. Happy Thakur and Mr. Vidush Chauhan, Advocates.

For the Respondents: Mr. Rajan Kahol and Mr. Vishal Panwar, Additional Advocates General, with Mr. Ravi Chauhan and Mr. Anish Banshtu, Deputy Advocates General.

Case Title : Manik Kumar v. State of Himachal Pradesh and Anr., CrMMO No. 1191 of 2023