Patna High Court
Shri Krishna Gyanoday Sugar Ltd. vs Government Of India on 22 August, 1977
Equivalent citations: 1990ECR470(PATNA), 1980CENCUS26D, 1980(6)ELT183(PAT)
ORDER
1. In this Writ application the petitioner, prays for quashing of Annexures 1 to 4. By Annexure '1' the petitioner was directed to submit afresh A.R.I. 21 in relation to the Sugar produced by the petitioner-company. It may be stated that A.R.I. 21 is one of the forms which has to be submitted by a manufacturer in order to facilitate the levy of proper excise duty. In Annexure '2' it was stated that 1960 quintals of sugar relating to 1966-67 and prior periods, but reproduced during 1967-68 was leviable to excise duty at a rate prevalent in those years and not in the year 1967-68. But this Annexure, the petitioner was required to deposit the differential basic duty amounting to Rs. 16,366. It may be stated that this Annexure is a letter addressed by the Sub-Inspector of Central Excise Range, Mirganj, to the Works Manager of the petitioner-company. The petitioner filed an appeal against annexure '2' which has been disposed of under annexure '3', and it has been held by the Collector of Excise that the demand made by the Sub- Inspector of Central Excise is correct. The petitioner, thereafter, went in revision before the Central Government. A copy of the.order of the Central Government rejecting the revision application is annexure '4' to the writ application.
2. The circumstances leading to the filing of this Writ application may be briefly stated. The petitioner-company manufactures sugar. By a noti- fication dated 15th November, 1967, the Government of India exempted sugar produced on and from 1st of October, 1977 from basic excise duty to the extent of Rs. 8.35 per quintal. Another notification dated 15th Novem- ber, 1967 was issued by the Government of India in relation to allowing rebate of basic Central Excise duty @ Rs. 11.07 per quintal. In the year 1967-68 the petitioner had produced and bagged 84197 quintals of sugar, but the amount of sugar despatched from the factory of the petitioner during the season 1967-68 included 1960 quantals of sugar which had been produced in the year 1966-67 or earlier, but was reprocessed during the year 1967-68. In view of the notification dated 15th November, 1967, exempting sugar produc- ed and on from 1st October, 1967 from the basic excise duty, the petitioner had paid excise duty on this quantity of 1960 quintals treating it to be the production of the year 1967-68.
3. Under annexure '2' it was stated that the quantity aforesaid was not entitled to exemption and, therefore, an amount of Rs. 16,366 had to be paid. In appeal it was held that in view of the fact that the quantity from which the reprocessed sugar was recovered after 1st October, 1967 already formed part of the sugar produced prior 1st October, 1967 and the sucrose content thereof was more than 90% it was not open to the petitioner to claim-the exemption. The Order in revision also emphasised the same fact and it was held that the sugar which was reprocessed cannot be said to be produced in the year 1967-68.
4. Learned counsel for the petitioner contended that the authorities had not taken correct view of the law in holding that the petitioner was not entitled to claim exemption. Reliance was placed on two decisions of this Court, in Messrs Rohtas Industries Limited, Dalmianagar v. The Union of India and Ors., (C.W.J.C. Mo. 441 of 1969 disposed of on 11th February, 1972) and Shree Krishna Oyanoday Sugar Ltd. v. The Union of India and Ors., (C.W.J.C. No. 1838 of 1970 disposed of on 11th January, 1973).
The learned Senior Standing Counsel for the respondents contended that the view of the authorities was correct in law and it was not a case where the petitioner was entitled to any relief.
5. That relevant portion of the Notification may be quoted, which is as follows :
"Sugar produced on and from 1st October '67 has been exempted from basic excise duty to the extent of Rs. 8.35 per quintal. The sugar factories are required to mark each sugar bag with the season of production. Commencing from 1st October, 1967 as the benefit of exemption is con- fined to such sugar only as has been engaged and marked as relating to l967-68 season.
There will be no change in rate of Additional Excise duty."
Learned counsel pointed out that in M/s. Rohtas Industries Ltd.'s case it was held by a Bench of this Court that the processing and reprocessing which has taken place really amounted to manufacture of sugar at that point of time. Referring to C.W.J.C 1838 of 1970, learned counsel for the Petitioner pointed out that the point for consideration in that case was whether the departmental authorities were, justified in treating the quantity of sugar amounting to 1325.6.1 quintals as sugar produced during the period 1st January, 1964 to 30th June, 1964 for the purpose of calculation of the rebate. Learned counsel emphasised that the stand taken by the respondents in that case was that the production of sugar in a particular period includes production from the raw materials such as sugar cane also by reprocessing defective sugar. It thus contended that the stand of the respondents was opposite to the stand that is now taken in this case. Without expressing any opinion whether the stand taken is contrary or not, it is clear that so far as C.W.J.C. 1838/70 is con- cerned, it was held that the reprocessing of the sugar also amounted to pro- duction of sugar.
6. Learned counsel for the respondents emphasised that the relevant notification relates to exemption of sugar produced from 1st October, 1967 from basic excise duty to the extent indicated in the notification. The expres- sion 'production', according to him, meant the produce that obtaind by going through the entire processwhich resulted in the production of sugar. Consequently, if there was reprocessing of what had been produced earlier and might have become unmarketable did not amount to production of sugar. In our view the approach of the learned counsel is not correct. Apart from the fact that the decision in C.W.J.C. 1838/70 is an authority against the proposition of the respondents, we are also of the view that where sugar which is, for one reason or the other, unmarketable goes through reprocess- ing, it has to be held that the end-product is sugar produced as a result of the reprocessing.
7. In the view that we have taken, it is clear that the demand made is not justified in law. We accordingly allow this application and quash annexures 1 to 4.
8. It is stated that the amount of Rs. 16,366/-has been deposited by the petitioner. If the amount is so deposited, it is clear that the amount will either have to be refunded or readjusted towards the excise duty that may be payable for the succeeding years.