Controlled-sale sugar exemption upheld where concessional excise duty applied only to levy sugar, not free-sale sugar.

A notification granting partial excise-duty exemption only for sugar required by the Central Government for controlled sale was upheld as valid. The classification between levy sugar and free-sale sugar was based on the mode of disposal and the level of governmental control, with the concession confined to quantities compulsorily sold at controlled prices under the Essential Commodities Act. The distinction was treated as a real and reasonable one, not an artificial or arbitrary classification, and the exemption was therefore available only to levy sugar.

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Issues: Whether the notification granting partial exemption from excise duty only to sugar required by the Central Government for controlled sale, and not to free-sale sugar, was valid and properly construed.

Analysis: The notification exempted only sugar required by the Central Government to be sold under the control order and calculated the concessional levy with reference to the price fixed by the Government under the Essential Commodities Act. The scheme of control and decontrol treated levy sugar and free-sale sugar as distinct categories. The classification rested on the nature of disposal of the sugar and the governmental control applicable to it, and the concession was intended only for the quantity compelled to be sold at controlled prices. Such differentiation was held to be neither artificial nor unreasonable.

Conclusion: The notification was valid, and the partial exemption was available only to levy sugar. The challenge failed and was decided against the petitioner.

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