Document Fragment View

Matching Fragments

3. The Government of India announced certain incentives for higher production of sugar in order to achieve production target envisaged in the 5th five year plan period. Government Orders had been issued for the establishment of the new sugar factories and for effecting substantial expansion in the existing sugar factories. It was noticed that there had been steep increase in the cost of plant and machinery required for sugar projects and it was found that the new projects were not proving economically viable units. By the aforesaid G.O. the Government gave certain incentives to new sugar factories which commenced production on or after the 1st of April, 1974. The incentive consisted of certain concessions in excise duty and additional excise duty as well as higher percentage of levy free sugar quota. It was also indicated in the above G.O. that in regard to excise duty necessary notification would be issued by the Ministry of Agriculture and Irrigation, Department of Food, Directorate of Sugar and Vanaspati, Krishi Bhavan, New Delhi separately. In pursuance of this the Government issued a Notification No. 35/76-C.E., dated 26th April, 1976, By this notification the sugar produced in excess of 35% of its production would be subjected to Excise duty and additional Excise duty at the rate of 15% and 5% respectively on the price determined by the Government from time to time in respect of sugar which was required to be sold under Section 3(2)(f) of the Essential Commodities Act, known as Levy sugar,

5. The Government of India from time to time modified the rates of Excise duty and additional Excise duty payable on sugar which was required to be sold to the Central Government (levy sugar) under Section 3(2)(f) of the Essential Commodities Act. Such Notifications were :

Notification Nos. : -
(1) 223/76 dated the 3rd August, 1976 (2) 226/76 dated the 6th August, 1976 (3) 251/76 dated the 14th September, 1976 (4) 254/76 dated the 21st September, 1976 (5) 279/76 dated the 22nd November, 1976 (6) 317/77 dated the 16th November, 1977 (7) 81/78 dated the 15 March, 1978 (8) 152/78 dated the 16th August, 1978.

16. Reference may therefore be made to the aforementioned Notification No. 210/73, issued by the Vitta Mantralaya (Rajaswa aur Bima Vibhag), New Delhi. This Notification specifies the quantum of Excise Duty and Additional Excise Duty to be paid on sugar required to be sold to the Central Government under Section 3(2)(f) of the Essential Commodities Act. The rate specified was 15 per cent and 5 per cent respectively. This duty and additional duty was to be paid on the price of sugar payable to the producer, by the Central Government from time to time, under Section 3(3c) of the said Essential Commodities Act. In other words, the Central Government determined the rates of duty to be paid on Levy sugar. This Notification was applicable to all sugar factories, then existing. But it was specifically not made applicable to the sugar factories covered by the Notification No. 35/76.

17. Reference may now be made to the above mentioned Notification No. 36/76. It will be better to reproduce the contents, as its interpretation was the subject of much arguments.

"G.S.R. 4(E).-In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944 read with Sub-section (3) of Section 3 of the Additional Duties of Excise (Goods of Special Importance) Act, 1957 (58 of 1957) the Central Government hereby exempts sugar, falling under sub-item (1) of Item No. 1 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944) and produced by a sugar factory, commences production for the first time on or after the 1st day of April, 1974, and which is in excess of thirty-five per cent of its production in a sugar year, from so much of the duty of excise leviable thereon as is in excess of duty calculated at 15 per cent and 5 per cent, respectively, on the basis of price determined by the Central Government, from time to time, under Sub-section (3c) of Section 3 of the Essential Commodities Act, 1955 (10 of 1955) for Levy sugar subject to the condition that a certificate is produced from the Chief Director, Directorate of Sugar & Vanaspati regarding the eligibility of the sugar factory to avail of the exemption under this Notification :-