Skip to content


Jai Hanuman Khandsari Sugar Mills Ltd. and ors. Vs. Union of India (Uoi) and ors. - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Petitions Nos. 723, 834, 862, 9-10, 911, 1041 and 340
Judge
Reported in1977(1)ELT49(AP)
ActsCentral Excises Act, 1944 - Sections 3, 35 and 36; Central Excises Act, 1944 - Rules 92A to 93F
AppellantJai Hanuman Khandsari Sugar Mills Ltd. and ors.
RespondentUnion of India (Uoi) and ors.
DispositionPetition allowed
Excerpt:
- .....the petitioners in all these writ petitions are khandsari sugar mills. they manufacture khandsari sugar. normally excise duty is payable on the khandsari sugar manufactured in accordance with item no. 1(2) of the schedule i read with section 3 of the central excises and salt act, 1944. but, the govt. have envolved a scheme generally called 'compounded levy scheme'. it is contained in rules, 92a to 93f in chapter v of the central excise rules, 1944. under the scheme, duty is payable for each centrifugals, instead of a total production of sugar at full rate mentioned in the x schedule. thus the manufacturers of khandsari sugar stand to benefit by opting to that scheme and in fact, the petitioners in all these writ petitions did so.3. it is sufficient for me if i refer to the.....
Judgment:

Gangadhara Rao, J.

1. Since common questions are raised in all these writ petitions I am disposing them of by this common Judgment.

2. The Petitioners in all these writ petitions are Khandsari Sugar Mills. They manufacture Khandsari Sugar. Normally excise duty is payable on the khandsari sugar manufactured in accordance with Item No. 1(2) of the Schedule I read with Section 3 of the Central Excises and Salt Act, 1944. But, the Govt. have envolved a Scheme generally called 'Compounded Levy Scheme'. It is contained in Rules, 92A to 93F in Chapter V of the Central Excise Rules, 1944. Under the Scheme, duty is payable for each centrifugals, instead of a total production of sugar at full rate mentioned in the X Schedule. Thus the manufacturers of Khandsari Sugar stand to benefit by opting to that scheme and in fact, the petitioners in all these writ petitions did so.

3. It is sufficient for me if I refer to the facts in W. P. No. 723 of 1976. The petitioner started functioning his unit with one centrifugal since the last week of November, 1973. He was paying duty on one centrifugal only every week. Due to the availability of sugarcane the petitioner thought it fit to instal another centrifugal from 01.01.1976. So on 22.12.1973 he applied for permission. Permission was granted by the Supdt. of Central Excise on 26.12.73. He installed a second centrifugal. On 07.02.1976, the petitioner intimated the Supdt. that since the supply position of cane was not so encouraging as anticipated he would remove from his factory one centrifugal and would work with the remaining one from the week commencing from 13.02.1976 and requested for exemption of Central Excise duty on the centrifugal that would be removed from its factory. The petitioner also filed A.N.S. dated 12.02.1976 for one centrifugal for the week commencing from 15.02.1976. The request was turned down on 07.02.1976 by the Inspectors of Central Excise, Yellareddy, with a direction that the Central Excise duty should be paid in respect of both the centrifugals, even if the petitioner removed one centrifugal from the factory. The petitioner made a representation to the Superintendent of Central Excise, Medak for permission to pay on one centrifugal only with effect from 15.01.1976 with no result. The petitioner removed one centrifugal from the foundation with scraws and intimated the same by telegram to the Supdt. of Central Excise, Medak. The Supdt. of Central Excise visited the factory on 17.02.1976 and made an endorsement in the registers of the factory that one centrifugal was removed from, the foundation along with the screws and it cannot be refixed. Inspite of this, the petitioner who compelled to pay for the centrifugal for the week commencing from 15.02.1976. He paid under protest. The petitioner made two representations to the Collector of Central Excise on 13.02.1976, and 16.02.1976 in this regard. He says that in addition, he has also made oral representations to him, but the Collector said that the matter was decided by the Govt. of India on the adminis-trative side and the demands issued are correct in law and he cannot help him. He did not pass any written orders or communicate them to the petitioner. Hence he had filed the petition.

4. It is submitted by Sri Jogayya Sarma, the learned Council for the petitioners in these writ petitions, that according to the rules, the duty is payable only on the number of centrifugals that actually work in a week, but not on the centrifugals that are not worked. Secondly, he submitted that when the Deptt. has permitted the petitioner to instal the second centrafugal without informing him that he has to pay duty for the period before the date of its installation, the Deptt. is stopped from contending that he should pay duty even for the earlier period also. On the other hand, it is submitted by Sri Subramanya Reddy, the learned Counsel for the Central Government that duty liability is for the whole season though it is discharged by weekly payments and the petitioner must pay the duty whether he works the centrifugal or not.

5. The primary question for my consideration is whether the petitioner should pay duty on the centrifuguals removed by them or not worked by them, in their factories, after giving due notice to the concerned authorities? In order to decide it, it is necessary to refer to Rules 92A, 92B and 93C of the Central Excise Rules, 1944.

6. Before I discuss these rules, I must say, they are not happily and correctly worded. For instance, in Rule 92A, I am not able to understand the use of the word 'section'. Similarly to me, Rule 92C is a little confusing. But they do not stand in my way of deciding the main question.

7. These Rules show that when a manufacturer of Khandsari Sugar want to opt to the Compounded Levy Scheme he should make an application in the proper form under Rule 92A to the Collector. When the Collector grants such an application these rules apply but not the other provisions. The application should be made every year so as to cover a period of at least one manufacturing season. Under Rule 92B, the Central Govt. fixes from time to time a rate of duty by a Notification in the Official Gazette. It is fixed having regard to two factors (i) average production in India of khandsari sugar per week, for different sizes of centrifugals installed for the manufacture of khandsari sugar, and (ii) any other relevant factor. The rate of duty is fixed per week or per month for each such centrifugals. Payment of such duty shall be in full discharge for the duty leviable on his production of khandsari, sugar during the period for which the said amount has been paid. If there is an alteration in the rate of duty or in the limit of exemption or both, the sums payable will be accordingly re-calculated by applying the appropriate rate for the number and the size of centrifugals declared by the manufacturer in his application and installed by him. It shall be payable from the date on which the unit commences manufacturing operations during a season till the date on which the unit closes down at the end, of that season. The season is from 1st Nov. to 30th June and from 1st July to 31st October. The Unit is deemed to commence manufacturing operation from the date in which its centrifugal starts producing khandsari sugar in a season and shall be deemed to be closed down from the date on which its centrifugal finally stops for the season. If the unit remains entirely closed for a continuous period of not less than fifteen days, that period is excluded in computing the liability. For the period from 1st July to 31st October, the rates of duty applicable to any type of centrifugal is two thirds of the rates fixed for the type. The manufacturer should tender the duty at the time of submission of his application under Rule 91C initially for a period of two weeks. Thereafter he should make weekly payments.

8. Under Rule 92C, the manufacturer should make an application for leave to remove khandsari sugar from his premises during the ensuing season. That application should be made during the calendar month immediately preceding the season. In that application he should declare the number and size of centrifugals installed or proposed to be installed together with their height and diameter, the permission so granted for a whole season is subject to the condition of his making weekly payment of duty. If such application is not made or weekly deposits are not made, the manufacturer is liable to pay duty on his entire production of khandsari sugar during the season.

9. The Government of India issued Notification No. 96/75, dated 30.04.75 under Rule 92B, fixing weekly rate of duty for different sizes of centrifugals. The application to be made under Rule 92A should be in Form A.S.P. The application made under Rule 92C should be in Form A.R. 8.

10. Four prominent features stand out in these rules which help to solve the problem. First the Govt. of India fixes the rate of duty taking into consideration the average production of khandsari sugar in the country per week, for different sizes of centrifugals installed for manufacturing that sugar. It means centrifugals not installed or removed will not be taken into consideration, for they do not produce khandsari sugar. There is no production without installation. If a person removes a centrifugal, it cannot be said he is producing khandsari sugar. Secondly, the rate of duty is fixed with reference to a centrifugal that is installed for manufacturing khandsari sugar. When a centrifugal is removed, it is not installed, much less does it manufacture khandsari sugar. Consequently, no duty is payable with reference to it. Thirdly the unit is deemed to commence manufacturing opera-ticns from the date when the centrifugals starts producing sugar. Similarly it is deemed to close on the date when the centrifugal stops for the season. It postulates a working centrifugal but not a non-functioning or a removed centrifugal. Fourthly, he pays this duty in discharge of duty otherwise payable by him on his production of sugar under Schedule I. If there is no pro-ductiou of sugar, he need not pay. There is no production, if the centrifugal does not work. Therefore to my mind, these features show that duty need not be paid for centrifugal that was removed.

11. Further I do not gather from the rules that he should pay duty even for centrifugals that were removed by him during the season. It is true that under the rules he must pay duty for the period. But that can only be for a centrifugal that worked. The rules do not say that even if a centrifugal is removed, he should pay for it for the season or the period. Consequently, I am not able to agree with the learned counsel for the Central Govt. that the petitioner should pay duty for the whole season for all the centrifugals even if they were removed. I agree with the learned counsel for the petitioners that the petitioners need not pay duty for the centrifugal that were removed.

12. I do not also agree with the learned counsel for the Central Govt. that the petitioner should pay duty for a centrifugal even for the period prior to the date of installation. Clause (e) of Sub-rule (2) of Rule 92B says that the unit shall be deemed to commence manufacturing operations from that date on which its centrifugal starts producing khandsari sugar in a season. If so, centrifugal starts producing khandsari sugar but not for the previous period of the season.

13. It is also submitted by the learned counsel for the Central Government that these writ petitions are not maintainable since the petitioners can agitate these questions before the Departmental authorities by way of applications before the competent authorities by way of applications before them and they can further agitate them by way of, appeal and revision as provided under Section 35 and Section 36 of the Cenlral Excises and Salt Act, 1944, But the petitioners in their writ petitions have stated they had. made written representations to the Collector of Central Excises and they also made a personal representations to him to which he had replied that the collection of duty on the two centrifugals was correct and that the matter was already decided by the Government of India. These averments are not denied in the counter affidavit filed by the Collector, Customs and Central Excise. He has not also passed any orders on their representation and communicated them to the petitioners. If so, no useful purpose would be served by directing the petitioners to make once again a representation to the Collector. Apart from, that, an appeal can be filed only against an order passed by an authority and not otherwise. When the Collector has not passed any orders and communicated them to the petitioners, I do not see how the petitioners could file an appeal against his order. Consequently, I reject this contention.

14. In the result, I allow these writ petitions and I direct the respondents not to collect duty on the centrifugals not in existence, in the factories of the petitioners in W.P. Nos. 725/76 and 834/76 from the week commencing from 14.02.1976, of the petitioners in W.P. Nos. 862/76 and 911/76 from the week commencing from 21.12.1975, of the petitioner in W.P. No. 910/76 from the week commencing from 13.01.1976, of the petitioner in W.P. No. 1061/76 from the week commencing from 01.02.76 and of the petitioner in W.P. 3439/76 from the week commencing from 22.01.1975. In the circumstances of the case, I direct each party to bear his, costs in these writ petitions.


Save Judgments// Add Notes // Store Search Result sets // Organizer Client Files //