Levy sugar classification: excess clearances under release orders remained levy sugar, not free sale sugar, for excise purposes.

Sugar cleared in excess of a factory's levy entitlement, but under release orders issued under the Levy Sugar Supply (Control) Order, 1979, retained the character of levy sugar for tariff classification. Because the clearances were authorised under Section 3 of the Essential Commodities Act, 1955 and clause 2(1) of the Control Order, and the Explanation treated such sugar as levy sugar requisitioned by the Central Government, the excess quantity was classifiable under Heading 1701.31 rather than as free sale sugar under Heading 1701.39. The same classification approach had been applied in earlier Tribunal proceedings on similar facts.

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Issues: Whether sugar cleared in excess of the factory's levy entitlement, but under release orders issued under the Levy Sugar Supply (Control) Order, 1979, was classifiable as levy sugar under Heading 1701.31 of the Central Excise Tariff Act, 1985 or as free sale sugar under Heading 1701.39.

Analysis: The excess clearances were made pursuant to orders issued by the competent authority under Section 3 of the Essential Commodities Act, 1955 and clause 2(1) of the Levy Sugar Supply (Control) Order, 1979. The Explanation to clause 2(1) treated levy sugar as sugar requisitioned by the Central Government under Section 3(2)(f) of the Essential Commodities Act, 1955. On that basis, the clearances covered by the release orders retained the character of levy sugar, even if the quantity exceeded the factory's allotted levy quota. The same issue had also been covered by the Tribunal in earlier proceedings on similar facts.

Conclusion: The excess clearances were correctly classifiable as levy sugar under Heading 1701.31 and not as free sale sugar under Heading 1701.39; the Revenue's appeals therefore failed.

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