1983 (10) TMI 275 - HC - Central Excise

Issues Involved:
1. Imposition and realization of Excise duty and additional Excise duty on levy sugar.
2. Interpretation of Notification No. 35/76 and subsequent notifications.
3. Eligibility for excise duty concessions under the incentive scheme.
4. Determination of applicable rates of Excise duty and additional Excise duty on levy sugar.

Detailed Analysis:

1. Imposition and Realization of Excise Duty and Additional Excise Duty on Levy Sugar:
The petitioner, a Co-operative Sugar Factory, sought orders to prevent respondents from imposing or realizing Excise duty and additional Excise duty at the rates of 15% and 5% respectively on levy sugar. The factory commenced production in November 1975 and was entitled to certain incentives, including concessions in excise duties, as per Government Orders and Notification No. 35/76-C.E. dated 26th April 1976. The petitioner argued that the rates of 15% and 5% were reduced by subsequent notifications, and thus, the demand for the sum of Rs. 6,25,973.63 was illegal.

2. Interpretation of Notification No. 35/76 and Subsequent Notifications:
The court examined Notification No. 35/76, which provided excise duty concessions to new sugar factories commencing production after 1st April 1974. The notification exempted sugar produced in excess of 35% of its production from excise duty in excess of 15% and 5%, calculated on the price determined for levy sugar. The court noted that this notification provided a consolidated scheme of benefits, including a lower rate of duty for a portion of free sale sugar and excise duty calculated on the price fixed for levy sugar.

3. Eligibility for Excise Duty Concessions Under the Incentive Scheme:
The petitioner's factory, being a new unit, was eligible for the incentives, which included a higher percentage of levy-free sugar quota and reduced excise duties. The petitioner had obtained a certificate of eligibility from Respondent No. 2. However, the audit party raised an objection regarding the excise duties payable, leading to a demand notice. The petitioner contended that the excise duty rates had been reduced by subsequent notifications and that the demand was based on a misinterpretation of Notification No. 35/76.

4. Determination of Applicable Rates of Excise Duty and Additional Excise Duty on Levy Sugar:
The court analyzed various notifications issued by the Government of India, including Notification Nos. 223/76, 226/76, 251/76, 254/76, 279/76, 317/77, 81/78, and 153/78, which purported to amend the rates of excise duty on levy sugar. The court found that none of these notifications referred to or superseded Notification No. 35/76. The court concluded that the rates of 15% and 5% specified in Notification No. 35/76 remained applicable to the petitioner's factory, as the notification provided a specific incentive scheme for new sugar factories.

Conclusion:
The court dismissed the writ petition, holding that the demand for excise duty and additional excise duty at the rates of 15% and 5% was justified and in accordance with Notification No. 35/76. The court rejected the petitioner's contention that subsequent notifications reduced the applicable rates for levy sugar produced by new sugar factories. The court also denied the petitioner's request for a certificate under Article 134-A to appeal to the Supreme Court, finding no substantial question of law of general importance involved.

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