B.P.Jeevan Reddy, C.J. - (1.) Common questions arise in these writ petitions which may be disposed of altogether. The petitioners are Sugar Factories. Molasses is a by-product of sugar manufacturing. It is a dutiable goods under the Central Excise Act. Molasses is also a controlled commodity. U.P. Sheera Niyantran Adhiniyam, 1964, and Rules made thereunder provides for its distribution, allotment and price. Though the central excise duty is payable on the manufacture, it is well known that for the sake of convenience it is collected at the stage of removal of goods from the bonded warehouse or approved place of storage, as the case may be. According to the licence granted to the petitioner-sugar Mills they have to provide steel tanks or construct Pucca tanks for storing molasses. This molasses has to be supplied to various allottees in accordance with allotment orders issued by the Excise Commissioner and at the rate specified.
(2.) We may take the facts in Civil Misc. Writ No. 251 of 1990 as representative of the facts in all the writ petitions herein. Of course, wherever necessary we shall indicate facts of an individual writ petition. The petitioner in Civil Misc. Writ No. 251 of 1990 is L.H. Sugar Factory, Pilibhit. It is asking for an appropriate order or direction quashing the show-cause notice dated 28-4-1989 issued by the Superintendent, Central Excise, Bareilly under Section 11-A of the Central Excise Act. It is also asking for quashing the order dated 29-1-1990 passed by the Assistant Collector, Central Excise, Bareilly. Under the show-cause notice dated 28-4-1989 the petitioner was called upon to explain as to why he should not be made liable to pay duty amounting to Rs. 13,62,251.20 on the quantity stored by him in Kachcha pits as on 26-4-1989. It was alleged that the said storage is in contravention of Rules 9(1) and 49(1) of Central Excise Rules, 1944. Under the order dated 29-1-1990 the Assistant Collector, Central Excise, Bareilly has confirmed the said demand in a sum of Rs. 13,62,251.20. The petitioner has come forward with the following averments :
(3.) During the year 1987-88 the petitioner Sugar Factory produced 2,17,754.57 quintals of molasses. Till 1988 the Controller of Molasses had allotted 1,62,450 quintals to certain distilleries (allottees). They did not, however, lift the quantity in time. The petitioner sent several telegrams to the Excise Commissioner (Controller of Molasses) inviting his attention to the accumulation of stock of molasses and finding no response, filed Civil Misc. Writ No. 1193 of 1988 in this court to permit the petitioner to sell the said molasses in open market. The writ petition was disposed of on 20-7-1988 directing the petitioner to sell the molasses stored in open tank within a period of two months under the Supervision of and control of the departmental officer posted at the factory. It was directed that any stock remaining unsold at the end of two months shall be dealt with and released/sold by the petitioner only in accordance with the directions of the Excise Commissioner. However, there were heavy rains during June to August, 1988, the molasses stored in open tanks got deteriorated. The distilleries were not lifting the molasses on account of deterioration. The petitioner could sell only about 2500 quintals in pursuance of the orders of this Court. The remaining stock continued to lie in open pits. On 1-10-1988 the petitioher requested the Excise Commissioner to permit him to sell the said stock in open market. At that stage, the Superintendent, Central Excise, Pilibhit sent a letter dated 3-4-1988 informing that in view of the Circular dated 1-8-1988 issued by the Central Board of Excise and Customs, the non-duty paid molasses cannot be stored in Kachcha pits and that it can be stored in Kachcha pits only on payment of duty under Rules 173-H. He was called upon to pay the appropriate duty. Thereafter a showcause notice was issued under Section 11-A on 28-4-1989. The petitioner submitted explanation to the show-cause notice but the Assistant Collector passed the impugned order on 29-1-1990 confirming the demand.;