KESAR SUGAR WORKS Vs. UNION OF INDIA UOI

JUDGEMENT

(1.) These petitions raise a common question and may conveniently be decided by a common judgment.

(2.) The petitioners are public limited companies and manufacture sugar through vacuum pan process. M/s. Kesar Sugar Works Limited and M/s Upper Ganges Sugar Mills Limited manufacture alcohol also in the distilleries ituate within the premises of the sugar mills. The Delhi Cloth and General Mills Company Limited manufacture sugar in Mawana Sugar Works, Mawana and Daurala Sugar Works, Daurala in the district of Meerut. The Daurala Sugar Works also has a distillery for manufacturing alcohol from molasses. Molasses produced at the Mawana and Daurala Sugar Factories is transferred to the distillery situate in the premises of the Daurala Sugar Works, in the petition filed by M/s Amritsar Sugar Mills it is not asserted that the petitioner manufactures alcohol also. In the process of manufacture of sugar molasses is produced as a bye-product which forms the basic material from which alcohol js manufactured. The molasses produced by the sugar mills is consumed in their distilleries. The State of Uttar Pradesh has passed an Act known as U.P. Sheera Niyantran Adhiniyam, 1964. Under the aforesaid Act the Excise Commissioner, U.P. is the Controller of Molasses, who exercises full power over the production, sale, preservation and price of molasses. On 1st March, 1975 the Central Government for the first time imposed excise duty on the manufacture and production of molasses under Item No. 68 of the Schedule to the Central Excises and Salt Act. On 30th April, 1975, however, the Central Government issued Notification No. 118/75-CE whereby it exempted molasses from payment of excise duty manufactured in a factory and intended for use in the factory in which it is manufactured or in any other factory of the same manufacturer. By Finance Act, 1980 the Parliament introduced Tariff Item No. 15CC in the First Schedule to the Central Excises and Salt Act and imposed an excise duty at the rate of Rs. 30/- per metric ton. On 19th June, 1980 the Central Government issued Notification No. 86/80-CE exempting molasses from payment of excise duty which was not produced in the manufacture of sugar by the vacuum pan process.

(3.) The grievance of the petitioners is that they have been directed by the respondents to pay excise duty at the rate of Rs. 30/- per metric tonne plus special excise duty amounting to five per cent of the basic excise duty under Notification No. 86/80-CE dated 19th June, 1980 on the stock of molasses that the petitioners had in their factories on the date Item No. 15CC was introduced in the First Schedule to the Central Excises and Salt Act. The petitioners objected to this demand but without any success. They have prayed for quashing the demands raised by the respondents. The Delhi Cloth and General Mills Company Limited, which has paid the duty demand by the respondents, has prayed for refund of the excise duty paid by it. Certain other prayers have been made in these petitions but since no argument was addressed in support thereof, they need not be set out here.