Duty demand on unauthorised sugar production fails where factual basis for commencement and quantity remains undetermined.

Duty on khandsari sugar produced through an unauthorised centrifugal could not be sustained on the footing adopted below, because the actual commencement date of production and the quantity manufactured and removed had not been determined. The writ court held that, in the absence of such factual findings, the demand under the special excise procedure was not properly assessable. The duty demand was therefore quashed and the matter was remitted for fresh proceedings in accordance with law.

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Issues: Whether duty could be demanded on khandsari sugar produced through an unauthorised centrifugal by applying the special procedure under the Central Excise Rules, and whether the demand required fresh factual determination.

Analysis: The petitioner was found using an additional centrifugal without declaration and without payment of duty. The authorities proceeded on the basis that duty could be levied under the special procedure, but the writ court held that the duty demand in respect of the unauthorised centrifugal could not stand on the footing adopted below. Since the actual date of commencement of the unauthorised production and the quantity produced and removed had not been determined on facts, the duty liability could not be sustained in the manner assessed. The court therefore quashed the demand for duty on the unauthorised centrifugal and sent the matter back for fresh proceedings according to law.

Conclusion: The duty demand on the unauthorised centrifugal was set aside and the matter was remitted for fresh consideration.

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