B.P.Jeevan Reddy, C.J. - (1.) Heard Sri Rishi, Ram, learned Counsel for the petitioners and Sri AK. Gupta, learned Additional Standing Counsel for the Central Government.
(2.) This writ petition is directed against a notice dated 9.9.1980 issued by the Superintendent, Customs, and Central Excise, MOR II Dhampur, District Bijnor, calling upon the petitioners to show-cause as to why they should not be made liable to pay a duty in a sum of Rs. 23,489.93 under Rule 10 of the Central Excise Rules, 1944.
(3.) The petitioner, Upper Ganges Sugar Mills Limited, is engaged in manufacture of sugar. Bagasse is a by-product. The petitioners' case is that a Company by name Alcho-Chem. Limited owned a distillery at Sheohara and that by virtue of the order of the Calcutta High Court dated 19.4.1977 in Company Petition No. 60 of 1977. M/s Alcho-Chem. Limited was merged with the petitioners' company with effect from 1.4.1976. It is, therefore, submitted that the distillery at Sheohara came to be owned by the petitioner-company. The petitioners submit that the bagasse which is produced by the Sugar Mill, was supplied to their distillery at Sheohara and, therefore, it is exempted from duty by virtue of Notification No. 118/ 75-CE dated 30.4.1975 issued by the Government of India under Rule 8(1) of the Central Excise Rules, 1944. The said Notification is extracted in paragraph No. 11 of the writ petition. The Notification says that in case of goods falling under T.I. 68 of the First Schedule to the Act, manufactured in a factory and intended for use in the same factory or in another factory of the same manufacturer, they are totally exempt from duty. The petitioners say that the bagasse supplied to Sheohara Distillery is thus exempted totally from duty. In spite of the same, petitioners complain, the impugned show-cause notice was given where under the duty is sought to be levied on bagasse supplied to Sheohara Distillery during the period 1.3.1979 to 31.3.1980.;