Sugarcane and Sugar – Statutory obligations

Sugarcane and Sugar – Statutory obligations

By Dr. Yashpal Singh

From the Executive Summary of book entitled “Sugarcane and Sugar-Biology, Agriculture, Manufacture, Regulation, Environment and Pollution Control”, 2024 by Dr. Yashpal Singh. Published by The Wealthy Waste School India and U.P. Sugar Mills Association. Available at: https://www.amazon.in/Sugar-Cane-Agriculture-Manufacture-Regulation/dp/936039856X/ref=sr_1_1 

Sugar Industries are covered under a number of legislative provisions and have to conform to these legal requirements which include the obligations of the sugar industry under the:

1. Essential Commodities Act which contains rules related to the regulation and control of production, pricing and distribution of essential commodities with a view to maintain or increase the supply.
2. The Sugar Cane Control order of 1966 which makes a provision for fixing a fair and remunerative price (FRP) payable to a sugar grower by the producers of sugar or their agents, the cane reservation areas and quotas and the quantity of cane that can be grown in a reserved area etc.
3. The Sugar Control Order 1966 empowers the Central Government to prohibit the manufacture of sugar from sugar cane except in accordance with the conditions of license issued in this behalf. It also regulates the storage and transport of sugar, the maximum ex factory price at which sugar may be sold, the allotment of quotas to different states.
4. The Sugar Price (Control) Order, 2018 empowers the Central government to issue directions regarding price of sugar for sale and prescribes a methodology of pricing. The order prescribes the minimum sale price at which sugar may be sold and has also issued direction on the stocks of sugar or refined sugar that can be held at the end of each month by every producer producing sugar by vacuum pan process.
5. The Levy Sugar Supply (Control) order 1979 provided for a mandatory surrender of 10% of the production from each mill as levy sugar at a predetermined price for distribution of sugar through the Public Distribution system. The Rangarajan Committee in 2012 recommended the abolition of levy sugar. Currently the levy system is not being practiced. The Central Government has abolished levy on sugar produce after the 1^st October, 2012. Procurement for public distribution supply is being made from the open market by the States/UT’s and Government is providing a fixed subsidy of Rs. 18.50 per kg for restricted coverage to AAY families only who will be provided 1 kg of sugar per family per month. The Niti Aayog is of the opinion that the levy/quota system on sugar need not be abolished.
6. The Sugar Development Fund Act 1982 provides for the financing of activities relating to the development of the sugar Industry. The Act also created a Sugar Development Fund which was credited with the proceeds of the duty levied under the Sugar Cess Act 1972. Loans for modernization/ rehabilitation, sugar cane development, potentially viable sick units, production of anhydrous Alcohol or Ethanol from Alcohol (or from molasses), loans for conversion of existing ethanol plants into ZLD plants and loans for bagasse-based cogeneration power plants have been discontinued with effect from 21-09-2021.
7. The Sugar Export Promotion Act, 1958 is a Central Act of Parliament which provides for the export of sugar and the levy and collection in certain circumstances of an additional duty of excise on sugar produced in India. The quantity of sugar fixed for export should not be more than 20% in the aggregate of the sugar produced in India. The Act also provides for fixing export quota for individual factories and a levy of duty of excise in case a factory fails to meet this quota. With effect from 1^st June, 2022, export of sugar is allowed only with the specific permission from Directorate of Sugar, Department of Food and Public Distribution.
8. The Sugar (Regulation and Production) Act, 1961 provides for the levy and collection of a special duty on excise on the quantity of sugar produced in excess of the quantities that can be produced by any sugar mills as fixed by the Central Government. The provisions of the Central Excise Act will also apply in the case of this special duty on excise.
9. The Sugar Cess Act (1982) which had provided for an imposition of cess on sugar for the purpose of the Sugar Development Fund act, 1982 has been repealed under the GST regime.
10. The U.P. Sugar Cane (Regulation, Supply and Purchase) Act of 1953 regulates the supply and purchase of sugar cane for use in Sugar factories and Gur, Rab or Khandsari manufacturing units. This Act also empowers the State Government to designate Reserved Areas or Assigned areas. The Act also makes the occupier of a factory responsible for speedy payment of the price of cane purchased by him. The Act also empowers the State Government to notify unsuitable varieties of ratoon cane or seed cane in cultivation.
11. The Uttar Pradesh Sheera Niyantran Adhiniyam 1964 provides for the control of storage, gradation and price of molasses produced by Sugar Factories in Uttar Pradesh and the regulation, supply and distribution of molasses and makes the occupier of a sugar factory responsible for this. Orders for sale and supply of molasses are to be issued by the Controller appointed under this Act by the State Government. Separate funds are to be maintained by the occupier for maintenance of adequate storage facilities. Contravention would invite forfeiture of such molasses in respect of which a contravention has been committed.
12. The Jute Packaging Materials (Compulsory Use in Packing Commodities), Act 1987 provides for directions to be issued by the Central Government with respect to the percentage of produce to be compulsorily packaged in jute bags for distribution. The mandatory packaging norms approved for 2021-22 provide for 100%reservation of food grains and 20% of sugar to be compulsorily packed in jute bags. The FSSAI in India has also specified packaging norms which may not apply to sugar units dispensing sugar in more than 50 kg packaging norms but may apply to manufactures of smaller packs of 1 Kg, 5 Kg and 10 Kg or so. Sugar Industries are covered under provisions of the Plastic Waste Management Rules 2016 as amended and will have to fulfill the extended producers responsibiity for plastic packaging which involves the environmentally sound management of the product until the end of its life. The mills will also have to obtain the necessary registration and clearances in this behalf.
13. As part of their obligations under the Company Act of 2013. Sugar companies have to invest in Corporate Social Responsibility and spend 2% of the average profits over the past 3 years in this account. S.R. activities have been identified. This is mandatory and non compliance is a cognizable offence.
14. The Indian Boilers Act 1923 provides for matters related to safety of life and property of persons from dangers of explosion of steam boilers and for matters related to uniformity in registration and inspection during operation and maintenance.
15. The Factories Act 1948 focusses mainly on the health, safety and welfare of the workers inside factories, working hours, minimum working age etc. It is the duty of the occupier to provide and maintain systems of work that are safe and without risks. The factories act also makes a provision for constitution of a site appraisal committee for grant of provisions for the initial location of a factory involving hazardous activities and also provides that if an industry possesses a location clearance as above it may not be required to obtain the further consents under the Water Act (1974) and Air Act (1981). This appears anomalous and may need to be reviewed. The Act also provides for drawing up of ‘On site’ Emergency management plan and a detailed disaster management plan. Punitive provisions have been made.
16. The Forest Conservation Act 1980 makes a provision of a prior approval of the Central Government being necessary before a State Government or any other authority issues directions for de-reservation of reserved forests (which have been reserved under the Forest Act of 1927), use of forest land for non-forest purposes, assigning forest land by way of lease and clear felling of naturally grown trees. Procedures and Formats have been prescribed to avail the aforesaid clearances.
17. The Wild Life Protection Act 1972 provides for the conservation and protection of wild life and prescribes a system of clearances form the National Board of Wild life. The Supreme Court has directed that a distance from 1 Km of any protected area be notified as an eco-sensitive zone where only permitted activities be allowed. Industries causing pollution are not allowed. NBWL clearances are to be obtained for activities proposed within eco-sensitive zones and within 10 Kms of national parks and sanctuaries where eco-sensitive zones have not been notified.
18. The Public Liability Insurance Act 1991 is a Central Act of Parliament to provide immediate relief to persons affected by accidents occurred while handling any hazardous substances. This provides for immediate relief and is not a compensation. The victims have a right to seek compensation under any law in force. Every owner handling any hazardous substance (as included in the Manufacture, Storage and Handling of Hazardous Chemical rules, 1989) has to take out one or more insurance policies as prescribed, under their liability to give relief. Every owner is also supposed to pay to the insurer, together with the premium, a sum equal to the amount of premium for a relief fund which would provide for any additional relief granted over and above the maximum aggregate liability under the rules. The owner is supposed to reimburse the Collector for the money which is paid in the relief fund.
19. The Water (Prevention and Control of Pollution) Act 1974 is a Central Act of Parliament prescribed with an objective to control pollution and to maintain the wholesomeness of water. It has created the Pollution Control Boards. The Act also provides functions to the Central and State Pollution Control Boards, provides for setting effluent and ambient water quality standards, prohibits discharge of effluents beyond the standards prescribed, lays down a mechanism of seeking consents to establish and operate and appeals against these orders, gives the Boards powers to issue directions for closure of the industry, operation or process and for suspension of power and water supplies. The Act also lays down procedures for sampling and analysis which have to be strictly followed by the Boards and in the absence of which the samples may not be admissible as legal evidence. The Boards are also empowered to take emergency measures and recover the costs so incurred from the produces as areas of land revenue and to make application to courts for restraining apprehended pollution. Offences under this act are liable to be penalized with imprisonment and with fine. Discharging effluent beyond the prescribed standards or without the consent of the Board or not complying with directions for remedial measures or closure orders issued by the Pollution Control Board is liable to be punished with 18 months to 72 months of imprisonment and with fine.
20. The Air (Prevention and Control of Pollution) Act 1981 is a subsequent Act of Parliament with the objective of controlling Air Pollution. It provides for setting of emission and ambient air quality standards, prohibits emissions beyond these standards and provides for maintaining the ambient air quality standards. Like the Water Act of 1974 it also provides for a system of consents to establish and operate, appeals against these orders and empowers the Pollution Control Boards to issue directions for closure or suspension of power and water supplies. Amongst others, punitive provision provide for 18 months to 72 months of imprisonment and with fine to such occupiers who are discharging beyond the standards, without consent of the Board or who have violated the directions for closure, suspension of water supply or suspension of power supply.
21. The Water (Prevention and Control of Pollution) Cess Act, 1977 was an Act of Parliament which provided for the levy and collection of Cess on water consumed by industries covered under the Schedule therein and on local authorities with a view to augment the resources of the Central Boards and the State Boards. This act has been repealed under the Taxation laws (Amendment) Act 2018. No fresh assessments are to be made beyond 01-07-2017 but all persons liable to pay Cess before 1^st July, 2017 shall continue to be assessed and Cess collected from the date of acquisition of such liability.
22. The Environment Protection Act, 1986 is a Central Act of Parliament, administered by the Central Government. The Central Government has been however, empowered to delegate its responsibilities to the State Board, State Government or any other agency as prescribed. The Act regulates a number of polluting and environmentally significant activities and prescribes standards and procedures. The standards for effluents and emissions to be discharged prescribed under this Act cannot be relaxed by the State Pollution Control Boards but may be made more stringent on a case-to-case basis. The Act regulates emissions, effluents, solid wastes, construction and demolition wastes, hazardous and other wastes, storage and handling of hazardous chemicals, chemical accidents and safety, bio medical wastes, plastic wastes, electronic waste and also provides for implementation of the extended producers responsibility. It also provides for procedures for collecting and analyzing samples and for issuing directions. A mandatory requirement for submission of Environmental statement is given. The Act also empowers the Central Government or any officer authorized by the Central Government, to issue directions for closure, suspension of water supply or suspension of power supply. Punitive provisions have been mentioned. This Act also establishes a regime in the form of the Central and State Environmental Impact Authorities and the Central and State Expert Appraisal Committees which examine the issue of Environmental Clearances under the E.IA. notification of 2006 and provides for implementation of Environmental management and corporate social and environmental management plans. Standards conditions to be complied on grant of E.C. have been presented and also include sugar mills and distilleries. The act makes provisions for authorizations and permissions under the solid waste, construction and demolition waste, E-waste, plastic wastes and biomedical waste handling rules.
23. The Central Ground Water Authority has been constituted under section 3(3) of the Environment Protection Act, 1986 to regulate and control Ground Water Resources. The authority considers applications for issue of No objection Certificates for ground water extraction. The authority has framed guidelines on September 2020 for consideration of projects for clearances. No objection for new projects or for reoperation is not granted for Industrial use (except MSME) in over exploited areas. The guidelines provide for a system of submission of impact assessment reports water audit reports (as prescribed) and socio economic impact assessment reports. It has been provided that in those states which have then own regulation, regulation shall be done by the State and in all other states by the Central Authority. The guidelines of CGWA will prevail in case of discrepancies and the State can only provide for more stringent systems.
24. The National Green Tribunal Act 2010 has established the National Green Tribunal which deals with the effective and expeditious disposal of cases related to environmental conservation and conservation of forests and other natural resources. It also adjudicates on legal rights and compensation for damage. The Tribunal has a jurisdiction of all civil cases where a substantial question relating to environment, including enforcement of legal right relating to environment, is involved and such question arises out of the implementation of the enactments specified in the schedule to the Act. In its appellate jurisdiction, appeals under this Act can be preferred by any person aggrieved by decisions made by the appellate authorities under the Air (Section 31) and Water Act (Section 28), directions for closure, suspension of water and power supply issued by the State Boards under Water Act (section 33A), directions revising consent order under Water Act 1974 (Section 29), directions issued by appellate authority under the Water Cess Act (Section 13), directions issued under section 2 of the Forest Conservation Act, directions issued under section 5 of the E.P. Act, any order granting or refusing Environmental Clearance under the E.P. Act. 1986, specified orders passed by the National Biodiversity Authority or a State Biodiversity Board. Directions given by the NGT can only be appealed in the Supreme Court. The Act also provides procedures for levy of environmental compensation and penalty and makes all contributors equitably responsibility in case jointly responsible for environmental damage.

Click here for table of content of book entitled “Sugarcane and Sugar-Biology, Agriculture, Manufacture, Regulation, Environment and Pollution Control”