A partnership firm, though not a legal entity, can be treated as a distinct person and entity for the purpose of determining entitlement to rebate on excise duty, if it is directly controlling or responsible for the manufacture of sugar.

( 1 ) THE only question which arises for determination in this petition under Article 226 of the Constitution of India is the construction to be placed on a proviso contained in a notification issued by the Central Government bearing No. 13/65 of February 13, 1965 under the power conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944. This notification was, admittedly, issued with a view to give incentive to the production of sugar in our country. The notification was issued exempting sugar in column 2 of the table therein falling under sub-item (1) of the first Schedule of the Central Excise and Salt Act, 1944 from certain duty leviable thereon as was in excess of the duty specified in column 3 of the said table. In plain language, for production of sugar over and above a certain quantity the manufacturer was entitled to certain rebate.

( 2 ) THE petitioner is a public limited company incorporated under the Indian Companies Act. Its business is to manufacture and sell sugar: The petitioner manufactures sugar in its factory situated at Meerut.

( 3 ) THERE is a sugar factory known as S. B. Sugar Mill at Bijnor. It was originally owned by a. partnership concern comprised of six brothers. The partnership firms was dissolved through court action in 1944. The mill thereafter became the property of the six brothers as co-ownera. Banarsi Dass is one of the brothers. This mill also used to manufacture and sell sugar under the name and style of S. B. Sugar Mills, Bijnor. In 1948 Banarsi Dass purchased the share of one of his brothers. He, therefore, became a co-owner to the extent of 1/3 in this joint property. At the time of the dissolution of the partnership an agreement was arrived at between the six brothers that the running of the factory will be leased out by the co-owners to anyone among themselves on a bid being made by each of the coiowners. The lease was to be for a period of 5 years. Banarsi Dass took the lease of S. B. Sugar Mills, Bijnor in 1961 for a period of 5 years.

( 4 ) IT seems that Banarsi Dass had some financial difficulties. and was looking for finance to run the S. B. Sugar Mills, Bijnor. He, therefore, approached the petitioner to finance the running of the Bijnor Mill. Accordingly, the petitioner, a public limited company, entered into a partnership with Banarsi Dass as an individual, originally, inter alia, on the terms that the profit and losses would be shared half and half by the petitioner and Banarsi Dass. A partnership firm was duly constituted known as S. B. Sugar Mills Lease Firm. Since Banarsi Dass needed more finance, he persuaded the petitioner to put in more money in the running of the Bijnor Mill. The petitioner agreed to put in an investment of Rs. 20 lakhs. In consideration thereof, the terms of the partnership were amended and petitioner s share in profit and losses was agreed to be 3/4 and Banarsi Dass share 1 (4. S. B. Sugar Mills Lease Firm was duly registered and it is said was assessed as such even for the purposes of income-tax.

( 5 ) IN 1965 the Central Goverment announced its policy of giving incentive for greater production of sugar by its notification above-referred to.

( 6 ) THE petitioner as an independent manufacturer of sugar claimed benefit or rebate under the said notification of 1965, issued by the Central Government. It was, however, denied the benefit on the ground that the production of sugar of both the Meerut and the Bijnor Mills had to be clubbed together to find out whether the petitioner was entitled to claim rebate under the policy of. the Government contained in the said notification. The petitioner challenges the same. It is contended that the S. B. Sugar Mills Lease Firm is a distinct person and entity and its production of sugar in the Bijnor mill cannot be allowed to adversely affect the rights of the petitioner vis-a-vis its production of sugar in the mill at Meerut. The proviso in the notification under which rebate is claimed r