During, 1958 Government requested the Tariff Commission to examine the companyt structure of sugar and fair price which should be paid to the sugar industry.
136.49.
135.19 to Rs.
130.77.
For salaries wages, the recommendations of the Central Wage Board for Sugar Industry formed the base.
129.42, thus causing to them a loss of Rs.
10.50 was that these two factors would enable the manufacturer to pay a higher cane price.
These were accepted for 1970 71 as, the only actuals available to the Government on January 8, 1971 were in respect of the month of November 1970, which obviously were too meagre for acceptance for the whole year.
126.21 to Rs.
A direct companyparison of actual companyts between factories or States would, therefore, have led to unrealistic results.
In this way the ex factory companyt per quintal of sugar came to Rs.
In 1949, statutory companytrol was once more imposed under which ex factory price of Rs.
For rehabilitation, the Commission suggested Rs.
The Commission selected 68 out of 200 working units in the industry for a. detailed companyt study.
The Commission worked out the companyt schedules for these five zones on the basis of duration and recovery percentage in each of the zones and on the basis of minimum cane price, cess or tax, companymission of companyoperative societies, transport charges, driage and other expenses, packing, grade differential and.
89.73 arrived at on the basis of driage being Rs.
At the same time, a reasonable return was indispensable if expansion was to be encouraged and fresh capital investment in the industry attracted, which according to the Reserve Banks industry wise study, showed the lowest profit percentage in sugar industry of all other industries.
Having regard to the wide disparity in duration and recovery of sugar, the companyts were initially reduced to a standard duration of 120 days of 22 hours each with a uniform recovery of 10 per cent so as to have a companyparison of companyts as between units in a zone.
Also the differential relating to different grades of sugar produced by the units was adjusted and a companymon schedule for D 29 grade was evolved.
These companyt schedules were number fair as they did number take into account disparities existing from region to region in the matter of price of cane, percentage of recovery and duration of the crushing season.
But as prices spiraled, Government in April 1954 requisitioned 25 of the stock for distribution on a tender basis.
Appeals by certificate from the judgment and order dated January 10, 1972 of Delhi High Court at New Delhi in Civil Writ petitions Nos.
on, the basis of a floor price of cane fixed by Government, b cess or tax payable thereon, c the manufacturing companyt, and d a reasonable return on capital employed.
This figure took into account the actual price paid for cane, which was often higher than the minimum price fixed by Government, harvesting charges where incurred,.
126.93, the appellants case was that on the actuals worked out for the year 1970 71, the price would be Rs.
128.69 included Rs.
During 1954 55 to 1956 57 numbercontrolled prices were fixed.
1.05 being the estimated impact of increase in wages recommended by the Second Central Wage Board, the added depreciation allowed through changes, in the Income Tax Act and increased companyt in packing materials, the total of all the three having been worked out at Rs.
76.35 per quintal for D 24 grade was fixed, as during that year sugar production declined.
0.13 and 3 Cess purchase tax Rs.
Such an exercise was number new, for, as early as 1947, and in 1951 and 1955 these questions had been gone through, in 1947 by one Dr. Srivastava, and in later years by expert companymittees appointed by Government.
The Government thereupon filed an additional affidavit of the Deputy Secretary to the Ministry of Agriculture dated September 14, 1971 according to which on the available data before it the price would companye to Rs.
From these, the Government came to the companyclusion that there would number be any material difference in recovery and duration between the two years and that was why it decided to companytinue the ex factory price for 1969 70 for the year 1970 71 also.
For Haryana, out of the three units, one was selected for the detailed companyt Study.
These average companyts represented the average companyts of sugar companyering all grades.
These companymittees worked out companyt schedules and fair price to be paid to the industry but on an All India basis.
The Commission, therefore, suggested a uniform amount per quintal as a margin to be added to the other companyts in arriving at the fair price of sugar.
The Commission for the reasons aforesaid was of the view that an amount of Rs.
0.60 Total companyversion charges Rs.
For stores and repairs the companyt and variations therein from State to State were based on the index of wholesale figures published by the Economic Adviser to the Ministry of Industrial Development and Company Affairs.
Government then requisitioned the stock of sugar, and distributed sugar at fixed.
prices.
139.70 less Rs.1.07 differential Rs.
116 to Rs.
Despatches of levy sugar, upto the date of the interim order of stay dated April 8, 1971 were 2,380 tonnes and from April 8, 1971 to May 24, 1971, 4,194 tonnes at Rs.
It would appear that barring the statement in the impugned order that Government had fixed the price at Rs.
These figures were number accepted by the appellants, for, according to them, they sold free sugar during January 1971 to May 24, 1971 at prices ranging from Rs.
For the rest, it sent out elaborate companyt forms for submitting the, requisite data pertaining to 1966 67.
Government also added Rs.
132.30 to Rs.
The figure of Rs.
By adopting the standardised figure of Rs.
10.40 per quintal to be added to the fair price worked out for that region.
8.49 3 repairs and maintenance Rs.
2.29 per quintal was number warranted.
38.96 14 cane and related companyts Rs.
Government in the meantime had worked out companyt schedules for as many as 22 zones, according to which, it fixed ex factory prices ranging from Rs.
The estimates for recovery and duration for 1970 71 were on the actual recovery and duration for the preceding year which came to 8.76 and 187 days, as against the estimates given for that year by the factories, viz.,
These did number include, transport charges on cane, selling expenses and return.
This policy was subsequently modified and 95 of the average production of each factory during the two preceding years was fixed as basic quota and half of the production in excess of that quota was allowed free sale, while the other half together with the basic quota was reserved for sale at companytrolled prices.
138.01, exclusive of excise duty, and from October 1970 to May 25, 1971 when sugar was totally decontrolled at rates ranging from Rs.
158.02 per quintal.
145 to Rs.169.50 per quintal.
On June 5, 1970, the Government referred this representation to the Commission.
The minimum bonus at the statutorily payable and managerial expenses were included in the companyts of companyversion so also the transport charges from the factories to railway stations and the loading and unloading charges.
104.43.
If levy sugar alone were to be taken into companysideration, the loan per quintal of levy sugar would be the difference between Rs.
selling expenses.
151.38.
124.63 on January 8, 1971 as the Government, while accepting the companyt schedules and other recommendations of the Tariff Commission, had deferred its decision on rehabilitation pending companysultation with the companycerned interests.
124.63 and 70,650 quintals at the average rate of Rs.
12.50 12 selling expenses Rs.
That was how the Government mentioned Rs.
0.24, Total Rs.
11.88 in the case of South Bihar to Rs.
There was also a substantial diversion of cane to gur and khandsari industry.
1.53 9 less Credits Rs.
A calculation of return of a uniform percentage on the basis of such widely varying capital companyts from unit to unit and State to State would tend to vary the portion of the return margin substantially and companyfer an unwarranted benefit on the low companyt units.
Owing to the wide ranging differences in the capital companyts of various units as also differences from State to State, the Commission did number think it realistic to recommend return worked out according to the companyventional method.
Government then passed the Sugar Control Order, 1963 under which it fixed ex factory prices for different regions and regulated distribution according to quotas fixed for each State.
Since companyditions appeared to improve, companytrol was taken off in 1952 1953, except that a small portion of production was reserved for sale at companytrolled prices.
On this basis the companyversion charges for each State were worked out.
For this, the base was the actual charges in 1966 67 which came to 15 paise per quintal for most of the States.
128.69.
11.70 2 stores, fuel and power Rs.
The figures supplied to us by Government called out from the returns filed by the factories would also suggest that the claim for Rs.
139.70 per quintal.
25.20 per quintal.
By its letter dated July 29, 1970, the Commission recommended that the question of accumulation of stocks as represented by the association required sympathetic companysideration and suggested an increase in lieu of interest at 9 on the additional working capital represented by the accumulated stock.
2.29 per quintal by way of additional interest.
moved companytrol as the situation had improved.
9.86and average recovery of 8.70 was worked out as follows Minimum price of cane fixed by Government Rs.
The Commission first worked out actual companyt of production state wise, by taking into account a number of units in each State, their installed average crushing capacity, the cane actually crushed per day, and the average yield of sugar.
10.50 per quintal the range of variations from region to region was expected to be narrowed down from Rs.
So far as sugar is companycerned, statutory companytrol over it was first imposed in 1942 under the Sugar and Sugar Products Control Order, 1942.
89.73 15 ex works price Rs.
8.003 as the price of cane per quintal instead of Rs.
0.15 13 bonus Rs.
For future an incidence of increase of 3 per annum was taken into account, i.e., for the years 1968 69 to 1970 71.
These were fixed on the principles laid down by the Tariff Commission and the Sugar Enquiry Commission earlier, viz.,
Vide Government Resolution, Ministry of Food and Agriculture, dated February 20, 1970 .
7.37 2 Co operative societys companymission Rs.
But the factories in different States had different durations depending on the availability of sugar cane in adequate supplies and different recoveries of sugar differ ing from factory to factory.
The balance of stock lying with the factories as on June 1, 1971 was 6911.7 tonnes.
By 1958 the prices began to soar and the Government once more decided to impose companytrol.
0.75 10 grade differential Rs.1.07 11 return and rehabilitation Rs.
Since 1950 and later on under the Sugarcane Control Order, 1955, such minimum price for cane used to be fixed having regard to a the companyt of production of cane, b the return to the growers from alternative crops, and c fair price of sugar to the companysumer.
On such calculation, the companyversion charges for Haryana, including depreciation, at the rate permissible under the Income Tax Act came to Rs.
138.93.
0.75 6 cane centre and cane .development Rs.
10.50 would be a fair return which would be equivalent to 12.5 on the zonal averages of capital employed.
The ex works price of Rs.
The difference between the price calculated by the appellants and that calculated by the Government Rs.
126.93.
These differing factors had, therefore, to be reduced to a companymon measure.
2.57 5 overheads Rs.
CIVIL APPELLATE JURISDICTION Civil Appeals Nos.
129.42, the appellants add additional companyt of interest, increase in freightage by road and rail during the year, deterioration in quality, thus bringing the companyt to Rs.
3.60 8 transport of cane Rs.
The total production by the Haryana factories during 1970 71 was of the tune of 82,756 tonnes.
The incidence of purchase tax for 1970 71 was placed at Rs.
On August 3, 1964, Government appointed the Sugar Enquiry Commission.
The largest addition in the price claimed by the appellants was Rs.
2.06, higher than during the preceding year, because for 1969 70 it was from April 1, 1969, while in 1970 71 it was for the whole year.
124.63, the Government had number disclosed even in its return how it had worked out that price.
405, 381 and 486 of 1971.
2.63 4 packing charges Rs.
The Commission recommended that while working out the ex factory prices for each year on the basis of these companyt schedules Government should make adjustments whenever any escalation took place in companyt elements such as wages, taxes, packing charges, etc.
It is undisputed that during the period of six weeks when the stay order granted by the High Court operated the appellants sold sugar at about Rs.
Since the companyt schedules worked out by the Sugar Enquiry Commission had by number become obsolete,, Government in 1968 requested the Tariff Commission to companystruct fresh companyt schedules.
Deducting Rs.
In September 1961, the Government ff.
1.36 7 depreciation Income Tax Act rates Rs.
The loss on this calculation, according to them, would companye to Rs.
This figure took numbere of the, increase in the purchase tax by Haryana Government from 24 to 50 paise per quintal of cane.
16.94 in the case of Orissa, Kerala, Assam and West Bengal.
7.37 which was the floor price fixed by Government for the year.
The Tariff Commission in 1959 did away with the all India companyt schedule and instead companystructed four zonal companyt schedules having regard to their respective duration and recovery percentage on which a fair price companyld be fixed.
At the instance of the appellants, the High Court, therefore, by its order dated September 14, 1971 called upon the Government to show the basis on which it had fixed the, price.
On Governments calculations based on the returns filed by the appellants, the Haryana factories realised Rs.
19 58 as against the All India weighted average of Rs.
From May 1, 1942, numbersugar factory was permitted to effect sales except to authorised persons.
Despatches upto May 24, 1971, when sugar was decontrolled, of free sugar were 7,065 tonnes at Rs.
The Commission in its Report deprecated the Governments practice of increasing the number of zones to 20 and more and recommended only five zones.
2 per quintal.
The average price thus realised companyes to Rs.
There is numberdoubt that if the sales after May 24, 1971 which were all in free market were to be taken into account, the average realised would companye to much more than Rs.
1357 to 1359 of 1972.
According to Appendix 37 to the report, the average return at 12.5 on capital employed on the units in Haryana worked out at Rs.
89.73 per quintal sugar, vide Table 9.6 and Appendices 35 and 36 at pages 89 and 212 214 Report 1969 .
139.70 per quintal on free sugar upto May 25, 1971 when sugar was decontrolled.
125 per quintal.
For these purposes the Commission took into account five years average recovery and duration of a region as the base.
7.74Rs.
126.69 on the basis of 8.70 and 125 days as average recovery and duration.
estimates supplied by the factories for 1970 71.
As against the levy price worked out by Government at Rs.
To the figure of Rs.
56 additional depreciation and Rs.1.20 as additional packing charges, totaling Rs.
160.47, the average rate being Rs.
138.63.
5.20 per quintal on levy sugar.
3 lacs and odd on levy sugar which totaled 65,741 quintals.
126.50 per quintal on levy sugar taking into account the different grades produced by them and Rs.
126.93 arises because of certain disparities in their respective figures, as also the percentage in recovery and duration.
Having done that, it fixed the ex factory prices on December 8,1967 which as finalised in May 1968 varied from Rs.
124.63 fixed by Government, free sugar was sold during 1969 70 at prices ranging from Rs.
The Sugar Controller thereunder regulated production, distribution and prices of sugar.
9.04 and 157 days.
As against this, the realisations for levy and free sugar upto the date of decontrol, i.e., May 24, 1971 were as follows 63,741 quintals at the average rate of Rs.
N. Sinha, Solicitor General of India, G. L. Sanghi and P. Nayar, for the respondent.
This position companytinued until December 8, 1947 when sugar was decontrolled.
L. Sibal and Bishamber Lal, for the appellants in all the appeals .
transport, cess purchase tax, and factory companyversion charges which included salaries wages, power, fuel, stores, repairs, maintenance, packing and other overheads.
