Document Fragment View

Matching Fragments

It is submitted by the Counsel for the petitioners that the State by amending the impugned Act seeks to nullify the decision of the Apex Court. Pursuant to the impugned amendment in the Act, the respondents have issued draft rules, namely, Uttar Pradesh Sheera Niyantran (Fifth Amendment) Niyamavali, 2009. Under the general presumption and understanding of law, the "captive consumption" means "self consumption". Significantly this was also the meaning of the captive consumption as per the provisions of the U. P. Sheera Niyantran Adhiniyam, 1964. The State Government cannot vary from the exact meaning of the said definition, which is beyond the scope of the U.P. Sheera Niyantran Adhiniyam, 1964. Further, the definition of "molasses for captive consumption" under the new Section 2(d)(i) is contrary to the general principle of law and understood by the Apex Court in catena of judgments.

The definition "molasses for captive consumption" is also clearly discriminatory and violative of Articles 14, 19 (1) (g), and 300-A of the Constitution of India, inasmuch as there is no rational basis for differentiating between (i) a distillery which may be situated in the same premises as the sugar factory and a distillery which may be situated in different premises as the sugar factory and a distillery outside the premises of a sugar factory, but under the same ownership and management, i.e. belonging to one and same company. Secondly, the words sold or supplied clearly did not envisage levy of administrative charge on self-consumption and rightly so, and if the same were deemed to include transfer for captive consumption, it would have clearly transgressed the legislative competence of the State.

"In Civil Appeal No. 4466/2007 M/s Dhampur Sugar Mills Ltd. Vs State of U.P. and others, the appellant has stated before the Hon'ble Supreme Court, that the molasses produced in his sugar mill is not sufficient for his own consumption in his distilleries and he has to purchase molasses from other sugar mills. Hence the reservation on molasses should not be imposed on them. The Hon'ble Supreme Court in the aforesaid petition has allowed the appeal and passed the direction that reservation on molasses shall not be imposed on those sugar mills that utilize their produce (molasses) for their own purpose. Meaning thereby reservation cannot be imposed on such sugar mills as have their own distilleries and consume molasses in their own distilleries. The sugar mills have also obtained stay order from the Hon'ble Courts on the administrative charges, that is charged on the sale of molasses stating that they are not selling molasses but are using it for their own purpose. There are 30 such cases pending in Hon'ble Courts and around Rs.23 crores has accrued as arrears so far which will increase in future. These sugar mills could get this benefit because there is no clear cut provisions in Molasses Uttar Pradesh Sheera Niyantran Adhiniyam, 1964 and the rules made thereunder regarding Captive Consumption (own use). In view of this, option was sought from expert lawyers who advised for modification in the said Act. According to them 'Captive Consumption' means goods not sold but consumed within factory. With the definition of captive consumption to be incorporated in the said Act and the rules only those sugar mills which have distilleries in the same campus shall be entitled for exemption from reservation/administrative charges, whereas other sugar mills of such groups shall not fall in the ambit of captive consumption. Hence reservation and administrative charges may be imposed on production of molasses in such sugar mills.

It appears that the main object of the amendment of Section 2 (d-1) is to make molasses available for manufacture of country liquor instead of being made available for own consumption by the Distillery owned by the same company for the purpose of over coming the judgment of Apex Court in the Dhampur Sugar Mills Limited (supra). The last part of Section 2(d-1) which defines molasses for 'captive consumption' excludes transportation of molasses by vehicle but if it is transported through Pipe line then it is covered by definition of "captive consumption". The provision regrading mode of transportation whether by pipe line from the sugar factory to the Distillery or by Tanker/Vehicle from the Sugar mill to the Distillery does not change the characteristic of captive consumption and it is wholly arbitrary and unreasonable. The affect of this amendment is that the petitioner Company shall be required to pay administrative changes even on the molasses which are transferred to its own distillery although it does not involve any sale or commercial transaction and molasses is required for own captive consumption.