THE LEVY SUGAR PRICE EQUALISATION FUND ACT, 1976 

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ARRANGEMENT OF SECTIONS 

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SECTIONS 

1.  Short title, extent and commencement.  

2.  Definitions.  

3.  Levy Sugar Price Equalisation Fund. 

4.  Determination of questions as to making of excess realisations.  

5.  Discharge of persons of liability in respect of amounts credited to the Fund.  

6.  Right of buyer to claim refund. 

7.  Excess realisation not to be paid to any producer of sugar.  

8.  Fund to vest in the Central Government.  

9.  Power to require producers to maintain accounts, etc. 

10. Power of entry, search and seizure.  

11. Power of Central Government to recover excess realisations as arrears of land  revenue.  

12. Dissolution of the Fund. 

13. Penalties.  

14. Removal of difficulties.  

15. Protection of action taken in good faith.  

16.  Power to make rules. 

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THE LEVY SUGAR PRICE EQUALISATION FUND ACT, 1976 

ACT NO. 31 OF 1976 

[16th February, 1976.] 

An Act to provide for the establishment, in the interest of the general public, of a fund to ensure 
that  the  price  of  levy  sugar  may  be  uniform  throughout  India  and  for  matters  connected 
therewith or incidental thereto. 

BE it enacted by Parliament in the Twenty-seventh Year of the Republic of India as follows:— 

1.  Short  title,  extent  and  commencement.—(1)  This  Act  may  be  called  the  Levy  Sugar  Price 

Equalisation Fund Act, 1976. 

(2) It extends to the whole of India except the State of Jammu and Kashmir*. 
(3)  It  shall  come  into  force  on  such  date  1  as  the  Central  Government  may,  by  notification  in  the 

Official Gazette, appoint. 

2. Definitions.—In this Act, unless the context otherwise requires,— 

(a) “controlled price” means the price of the relevant grade of levy sugar, determined from time to 
time  under  sub-section  (3C)  of  section  3  of  the  Essential  Commodities  Act,  1955  (10  of  1955),  or 
under the Defence and Internal Security of India Rules, 1971, in relation to any year of production; 

(b) “excess realisation”, in relation to each grade of levy sugar,— 

(i)  means  the  price  realised  by  any  producer,  on  the  sale  of  levy  sugar  of  such  grade,  in 

excess of— 

(a) the controlled price, or 

(b) where any fair price has been fixed by a court for levy sugar of such grade, such fair 

price, and 

(ii) includes any realisation representing the difference between the controlled price and the 
price allowed by the court by an interim order, if such interim order is set aside, whether by the 
court which made the order or in appeal or revision; 

2[Explanation.—For the removal of doubts, it is hereby declared that where in relation to levy 
sugar of any grade sold by any producer, the producer has realised towards duties of excise with 
respect to such sugar any amount in excess of the amount payable by way of such duties, such 
excess shall also be deemed to be excess realisation within the meaning of this clause]; 

(c)  “fair  price”,  in  relation  to  levy  sugar,  means  the  price  fixed  by  the  court  in  excess  of  the 
controlled  price,  and,  where  an  interim  price, fixed  by  the  court,  is  superseded by  a  price  which  is 
finally fixed by the court, the price so finally fixed; 

(d) “Fund” means the Levy Sugar Price Equalisation Fund, established under section 3; 
3[(e) “levy sugar”  means the sugar requisitioned by the Central Government under clause (f) of 

sub-section (2) of section 3 of the Essential Commodities Act, 1955 (10 of 1955);] 

(f) “prescribed” means prescribed by rules made under this Act; 

(g) “producer” means a person carrying on the business of manufacturing sugar by the vacuum 

pan process. 

1. 1st April, 1976, vide notification No. G.S.R. 251(E), dated 25th  March, 1976, see Gazette of India, Extraordinary, Part II,              

sec. 3(i). 

2. The Explanation ins. by Act 54 of 1984, s. 2 (w.e.f. 23-8-1984). 
3. Subs. by s. 2, ibid., for clause (e) (w.e.f. 23-8-1984). 
*. Vide Notification No. S.O. 3912 (E), dated 30th October, 2019, this Act is made applicable to the Union territory of  Jammu and 

Kashmir and the Union territory of Ladakh. 

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3.  Levy  Sugar  Price  Equalisation  Fund.—(1)  There  shall  be  established  a  Fund,  to  be  called  the 

Levy Sugar Price Equalisation Fund. 

(2)  Save  as  otherwise  1[provided  in  sub-section  (5)],  there  shall  be  credited  to  the  Fund,  in  such 

manner as may be prescribed,— 

(a)  the  amounts  representing  all  excess  realisations  made  by  the  producers,  irrespective  of 

whether such excess realisations were made before or after the commencement of this Act; 

(b) the amounts representing any loans which may be advanced, or grants which may be made, by 

the Central Government for carrying out the objects of the Fund. 
(3) Save as otherwise 1[provided in sub-section (5)], every producer shall,— 

(a) in the case of an excess realisation made before the commencement of this Act, within thirty 

days from such commencement, 

(b) in the case of an excess realisation made after such commencement, within thirty days from 

the date on which such excess realisation was made, 

credit to the Fund, the amount representing such excess realisations, together with interest due thereon at 
the rate of twelve and a half per cent. per annum, from the date on which such amount was realised by 
him: 

2[Provided that— 

(a) the interest due on so much of any amount of any excess realisation made before the date of 
commencement of Levy Sugar Price Equalisation Fund (Amendment) Act, 1984 (54 of 1984), as is 
not credited to the Fund together with interest at the aforesaid rate of twelve and a half per cent. per 
annum before the expiry of sixty days from the date of such commencement; and 

(b) the interest due on so much of the amount of any excess realisation made on or after the date 
of such commencement as is not credited to the Fund together with interest at the aforesaid rate of 
twelve  and  a  half  per  cent.  per  annum  within  sixty  days  from  the  date  on  which  such  amount  was 
realised, 

shall be at the rate of fifteen per cent. per annum from the date on which such amount was realised by the 
producer.] 
3* 
(5)  Where,  in  pursuance  of  an  4[interim  order  made  by  any  court,  whether  before  or  after  the 
commencement of this Act] any amount representing the difference between the controlled price and the 
interim price allowed by the court is,— 

* 

* 

* 

* 

(a)  held by any producer either with himself or with any other person or with any court, 

Government, bank or other authority, or 

(b) collected and kept by the producer under the cover of any guarantee, 

such producer shall, on the final disposal of the proceedings of the court aforesaid,  5[credit to the Fund, 
within sixty days from the date of such final disposal, such amount, to the extent it represents any excess 
realisation together with interest due thereon at the rate of twelve and a half per cent. per annum from the 
date on which such amount was realised by him: 

Provided that— 

(i) the interest due on so much of such amount as was realised before the date of commencement 
of the Levy Sugar Price Equalisation Fund (Amendment) Act, 1984 (54 of 1984) and is not credited 

1. Subs. by Act 54 of 1984, s. 3, for “provided in sub-section (4)” (w.e.f. 23-8-1984). 
2. The proviso ins. by s. 3, ibid. (w.e.f. 23-8-1984). 
3. Sub-section (4) omitted by s. 3, ibid. (w.e.f. 23-8-1984). 
4. Subs. by s. 3, ibid., for “interim order referred to in sub-section (4)” (w.e.f. 23-8-1984). 
5. Subs. by s. 3, ibid., for certain words (w.e.f. 23-8-1984). 

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to the Fund together with interest at the aforesaid rate of twelve and a half per cent. per annum before 
the expiry of sixty days from the date of such commencement, and 

(ii) the interest due on so much of such amount as is realised after such commencement and not 
credited  to  the  Fund  together  with  interest  at  the  aforesaid  rate  of  twelve  and  a  half  per  cent.  per 
annum within sixty days from the date on which such amount was realised, 

shall be at the rate of fifteen per cent. per annum from the date on which such amount was realised by the 
producer] 

1[(5A) Notwithstanding anything contained in sub-section (5), the interest payable on the amount of 
any excess realisation required to be credited to the Fund under that sub-section in respect of any period 
during which such amount was by reason of any order of any court held by the producer with any other 
person  or  with  any  court,  Government,  bank  or  other  authority  referred  to  in  clause  (a)  of  that    sub-
section, shall be the interest which actually accrued on such amount in respect of such period.] 

1[(5B) Without prejudice to the provisions of sub-section (5), any amount representing the difference 

between the controlled price and the interim price allowed by the court which— 

(a) is held by any producer with any other person or with any court, Government, bank or other 

authority referred to in clause (a) of that sub-section, or 

(b) is under the cover of any guarantee referred to in clause (b) of that sub-section, 

shall, as soon as may be after the final disposal of the proceedings of the Court aforesaid, be credited, to 
the extent such amount represents excess realisation together with the interest, if any, which has accrued 
thereon or been guaranteed in respect thereof, to the Fund by such other person, the court, Government, 
bank  or  other  authority  aforesaid  or,  as  the  case  may  be,  by  the  bank  or  other  person  furnishing  such 
guarantee and the amount so credited shall be set off against the amount (including interest) required to be 
credited by the producer under sub-section (5). 

(5C)  The  provisions  of  sub-section  (5B)  shall  apply  in  relation  to  every  amount  representing  the 
difference  between  the  controlled  price  and  the  interim    price    allowed    by    the    court    which,  
immediately  before  the  commencement  of  the    Levy    Sugar    Price    Equalisation    Fund    (Amendment)  
Act, 1984 (54 of 1984)— 

(a) is held by any producer with any other person or with any court, Government, bank or other 

authority mentioned in clause (a) of that sub-section, or 

(b) is under the cover of any guarantee mentioned in clause (b) of that sub-section, 

notwithstanding  that the final  disposal  of  the  proceedings  of the court  aforesaid  took  place  before such 
commencement and for this purpose the reference in that sub-section to “final disposal of the proceedings 
of the court” shall be construed as a reference to such commencement. 

(5D) Where any amount is credited to the Fund under sub-section (5B), such crediting shall,— 

(a) in a case falling under clause (a) of that sub-section, operate as the discharge of the liability in 
relation  to  such  amount  of  the  person,  court,  Government,  bank  or  other  authority  so  crediting  the 
amount; 

(b)  in  a  case  falling  under  clause  (b)  of  that  sub-section,  have  effect  as  if  it  had  been  made  in 
accordance  with  the  guarantee  given  by  the  bank  or other  person  crediting  the amount  and  for this 
purpose such guarantee shall be deemed to have provided for such crediting.] 

(6) For the removal of doubts, it is hereby declared that the obligation to credit amounts representing 
excess  realisations  to  the  Fund  shall  be  in  addition  to  any  penalty  which  may  be  imposed  for  the 
contravention of any provision of this Act. 

(7) The Fund shall be administered, subject to the provisions of section 8, by the Central Government. 

1. Ins. by Act 54 of 1984, s. 3 (w.e.f. 23-8-1984). 

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4.  Determination  of  questions  as  to  making  of  excess  realisations.—If  any  question  arises  as  to 
whether any producer has realised, on the sale of levy sugar, any amount in excess of the controlled price, 
or,  as  the  case  may  be,  the  fair  price,  it  shall  be  decided  by  the  Central  Government  after  giving  an 
opportunity to such producer of being heard and after making such inquiry as that Government may deem 
fit. 

5.  Discharge  of  persons  of  liability  in  respect  of  amounts  credited  to  the  Fund.—Where  any 
amount  is  credited  to  the  Fund  under  section  3,  1[the  producer  concerned]  shall,  upon  such  crediting,  be 
discharged from the liability to make repayment of such amounts to the persons entitled thereto and such 
discharge  from  liability  to  make  repayment  shall  be  without  any  prejudice  to  any  penalty  which  may  be 
imposed on such producer for each excess realisation made by him. 

6.  Right of buyer to claim refund.—(1) Where any amount is credited to the Fund, a refund shall be 
made from the Fund to the buyer of levy sugar from whom any excess realisation was made by the producer 
or dealer: 

Provided that no buyer shall be entitled to claim a refund under this sub-section if he,— 

(a) 

being a wholesale dealer, had passed on the incidence of such excess over the controlled or 

fair price of levy sugar to the retail dealer by whom the price of such sugar was paid, or 

(b) 

being a retail dealer, had passed on the incidence of such excess over the controlled or fair 

price of levy sugar to the consumer by whom the price of such sugar was paid, 2[or] 

2[(c) being a person who is not a wholesale dealer or a retail dealer had passed on the incidence of 
such excess over the controlled or fair price of levy sugar to any other person as part of the price of 
any  product  in  the  manufacture  of  which  such  sugar  has  been  used  or,  as  the  case  may  be,  to  the 
consumer by whom the price of such sugar was paid.] 

(2)  Every  application  for  refund  under  sub-section  (1)  shall  be  made  to  the  Central  Government 
within  six  months  from  the  date  on  which  the  excess  realisation,  in  relation  to  which  such  refund  is 
claimed, is credited to the Fund, and every such application shall be in such form as may be prescribed 
and  shall  be  accompanied  by  such  documentary  or  other  evidence  as  the  applicant  may  furnish  to 
establish that the excess realisation, in relation to which such refund is claimed, was made from him. 

(3) The Central Government shall, if satisfied, on a scrutiny of the claim made under sub-section (1), 
that an excess realisation was made from the claimant, direct that refund be made from the Fund to the 
claimant  to  the  extent  of  the  3[excess  realisation  made  from  him  together  with  interest  (if  any)  thereon 
credited to the Fund]: 

Provided that if the amount standing to the credit of the Fund is not sufficient to enable the Central 

Government to make the refund, such refund shall be made from the Central revenues. 

7.  Excess realisation not to be paid to any producer of sugar.—Notwithstanding anything to the 
contrary contained in any other law for the time being in force or in any contract, no amount, representing 
excess realisations made by a producer or excess realisations made by a producer under the cover of any 
guarantee given by any person shall be paid to any producer. 

8.  Fund to vest in the Central Government.—(1) Any  money paid into the Fund, which remains 
unclaimed after the expiry of the period of six months from the date on which it is credited to the Fund, 
shall vest in the Central Government and such amount shall be utilised by that Government in such manner 
as may be prescribed having regard to the interests of the consumers of levy sugar as a class and the need 
to ensure that the retail price of levy sugar throughout India is uniform: 

Provided that, notwithstanding the vesting of such money in the Central Government, a claim for the 
refund of money standing to the credit of the Fund may be made [in  the  manner  specified  in  sub-section 
(2) of section 6] at any time by a buyer who is lawfully entitled to make such claim, and every such claim, 
if  admitted,  shall  be  dealt  with  as  if  the  money  relatable  to  such  claim  had  not  vested  in  the  Central 

1. Subs. by Act 54 of 1984, s. 4, for “the producer by whom such amount is credited” (w.e.f. 23-8-1984). 
2. Ins. by s. 5, ibid. (w.e.f. 23-8-1984). 
3. Subs. by s. 5, ibid., for “excess realisation made from him” (w.e.f. 23-8-1984). 

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Government. 

(2) The Central Government shall not grant any loan or give any financial assistance from the Fund 

except for the purposes of this Act. 

(3)  The  Central  Government  shall  maintain,  or  if  it  thinks  fit  specify  the  authority  which  shall 
maintain, proper and separate account and other relevant records in relation to the Fund in such form as 
may be prescribed in consultation with the Comptroller and Auditor General of India. 

9. Power to require producers to maintain accounts, etc.—The Central Government may, if it is 
satisfied that it is expedient or necessary so to do for carrying out the provisions of this Act, by an order, 
direct any producer to maintain such books of account and other records in relation to levy sugar as it may 
think fit and to produce such books of account and other records for inspection and may also direct such 
producer to furnish such information relating to levy sugar as may be specified in the order. 

10. Power of entry, search and seizure.—(1) Any authority specified by the Central Government in 
this  behalf  may,  if  it is  satisfied that  any  provision of  this  Act  has  been,  or is being,  or is  about to  be, 
contravened, authorise any person to enter and search any premises where any accounts, books, registers 
and other documents relating to levy sugar and belonging to, or under the control of, a producer or his 
agent, are maintained or kept for safe custody. 

(2) The person so authorised may seize any such accounts, books, registers or other documents if he 
has  any  reason  to  believe  that  a  contravention  of  this  Act  has  been,  or  is  being,  or  is  about  to  be, 
committed: 

Provided that the accounts, books, registers or other documents seized under this section shall not be 

retained in custody of the Central Government for a period exceeding ninety days: 

Provided further that where such accounts, books, registers and other documents are required for the 
purposes of any prosecution, they may be retained in the custody of the Central Government for a further 
period, not exceeding ninety days, for the purposes of such prosecution. 

(3)  The  provisions  of  the  Code  of  Criminal  Procedure,  1973  (2  of  1974),  relating  to  searches  and 

seizures, shall, so far as may be, apply to searches and seizures made under this Act. 

11. Power of Central Government to recover excess realisations as arrears of land revenue.—If 
any  producer  makes  any  default  in  crediting  to  the  Fund  1[any  excess  realisation  made  by  him,  or  any 
interest  due  on  such  excess  realisation  or  any  part  of  such  excess  realisation  or  interest,  such  excess 
realisation  or  such  interest  or  such  part],  as  the  case  may  be,  shall  be  recoverable  by  the  Central 
Government from such producer as an arrear of land revenue. 

12. Dissolution of the Fund.—The Central Government may, by notification in the Official Gazette, 
declare that, with effect from such date as may be specified in the notification, the Fund shall cease to 
exist  and  thereupon  all  the  amounts  lying  to  the  credit  of  the  Fund  shall  be  credited  to  the  Central 
revenues  and  refund,  if  any,  made,  by  the  Central  Government,  after  such  cesser,  to  any  buyer  of  levy 
sugar shall be treated as an order for the refund of revenue. 

13. Penalties.—(1) If any producer— 

(a) makes any default in crediting to the Fund any excess realisations made by him or any part 
thereof 2[any excess realisation made by him or any interest due on such excess realisation or any part 
of such excess realisation or interest], or 

(b) having been required by the Central Government so to do, omits or fails to— 

(i) maintain any books, accounts or other records in relation to levy sugar, or 

(ii) produce any books, accounts or other records for inspection, or 

1. Subs. by Act 54 of 1984, s. 6, for “any excess realisations made by him or any part thereof, such excess realisations or such         

part” (w.e.f. 23-8-1984). 

2. Ins. by s. 7, ibid. (w.e.f. 23-8-1984). 

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(iii)  furnish  any  information  or  furnishes  any  information  which  is  incorrect  or  false  in 

material particulars, 

he shall be punishable with imprisonment for a term which may extend to two years, or with fine which 
may extend to five thousand rupees, or with both. 

(2) No court shall take cognizance of any offence punishable under this Act except on the complaint 
in writing made by the Central Government or by any officer or authority authorized, in writing, by that 
Government in this behalf. 

14. Removal of difficulties.—If any difficulty arises in giving effect to any provision of this Act, the 
Central Government may make such order, not inconsistent with the provisions of this Act, as may appear 
to it to be necessary to remove the difficulty. 

15. Protection of action taken in good faith.—No suit, prosecution or other legal proceeding shall 
lie  against  the  Central  Government  or  any  person  authorised  by  the  Central  Government  for  anything 
which is in good faith done or intended to be done under this Act or any rule or order made thereunder. 

16.  Power  to  make  rules.—(1)  The  Central  Government  may  make  rules  for  carrying  out  the 

provisions of this Act. 

(2)  In  particular,  and  without  prejudice  to  the  generality  of  the  foregoing  power,  such  rules  may 

provide for all or any of the following matters, namely:— 

(a) the manner in which amounts shall be credited to the Fund under section 3; 

(b) the form in which an application for refund, referred to in section 6, shall be made; 

(c) the manner in which amounts standing to the credit of the Fund shall be utilised, as required 

by section 8; 

(d)  the  form  in  which  the  account  and  the  relevant  records,  referred  to  in  sub-section  (3)  of 

section 8, shall be maintained; 

(e) any other matter in relation to which such rules are required to be, or may be, made. 

(3) Every rule made by the Central Government under this Act shall be laid, as soon as may be after it 
is made, before each House of Parliament while it is in session for a total period of thirty days which may 
be comprised in one session or in two or more successive sessions, and if, before the expiry of the session 
immediately following the session or the successive sessions aforesaid, both Houses agree in making any 
modification in the rule or both Houses agree that the rule should not be made, the rule shall thereafter 
have effect only in such modified form or be of no effect, as the case may be; so, however, that any such 
modification  or  annulment  shall  be  without  prejudice  to the  validity  of  anything  previously  done  under 
that rule. 

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