M/S KESAR ENTERPRISES LTD. vs STATE OF U.P. — C.A. No. 6896/2002

Case Summary: Kesar Enterprises Ltd. v. State of U.P. Court Decision: The Supreme Court allowed the appeal, set aside the Excise Commissioner's demand notice and the High Court's judgment. The Court held that principles of natural justice require a show-cause notice and hearing opportunity before imposing penalty under Rule 633(7) of the Excise Manual, and remitted the matter for fresh adjudication. Key Reasoning: While the State lacked authority to levy excise duty on high-strength rectified spirit (industrial alcohol), the Court found that any penalty recovery must follow natural justice principles. The respondents violated procedural fairness by demanding penalty without giving the appellant adequate opportunity to explain the disappearance of spirit during transit or to contest the allegation that it was diverted into potable alcohol. This case analysis is maintained by casestatus.in based on publicly available court records.