The Centre has sought a review of the Patna High Court’s single judge bench order on levy sugar at a larger bench.
In January, the court had directed the government to use all unlifted levy sugar obligation by mid-April and said levy sugar of one season should not be carried to the next.
This has not gone well with the food ministry. The ministry, on behalf of the government, levies an obligation on sugar mills to sell 10 per cent of their produce every year at a price fixed for the public distribution system. This price is Rs 1,900 per quintal compared to the open market price of Rs 2,900 per quintal in north India.
Mohan Parasaran, additional solicitor general for the Union government, had appeared in the court last week and sought an early hearing to decide on the hearing by a larger bench. The matter would now be heard on May 17.
The Indian Sugar Mills Association (Isma), the apex private sugar industry body,
has impleaded itself in the case while cooperative sugar body, the National Federation of Cooperative Sugar Factories, will implead itself soon.
In January, the court, regarding a petition filed by Kolkata-based Vishnu Sugar Mills, had directed the central government to liquidate the carryover quota of levy sugar (currently about two million tonne) in three months beginning January 12 (the date of the judgment).
The court had directed the government to “liquidate the accumulated monthly carry forward liabilities within three months beyond which it world not be allowed, and with the next sugar production year, commencing from October each year, there would not be any carry forward of past liability and the levy liability would start with clean slate every year”.
The government, however, could not lift this amount, implying a lapse of the unused levy quota.
While mills are required to sell 10 per cent as levy every year, study of past data shows that government had failed to lift even half of its levy entitlement. Currently, mills continue to carry the obligation of unsold levy sugar quota of one year for two following years. Mills are allowed to sell the unlifted levy sugar in the open market after lapse of three months from the date of allotment. However on demand, the obligation has to be met at a price of the year for which the levy sugar was allotted.
Isma has also sought a reduction of the levy obligation from 10 to 4 per cent in the current sugar year (October-September).
Isma director general Abinash Verma said, “Carrying forward of previous years’ levy obligation is a financial burden for mills as they have to sell it at the previous year’s price. Mills also bear the inventory cost. One will be surprised to know the carry forward obligation of previous years currently stands at 2.1 million tonnes, which is the maximum the government has lifted in any single year.”