Option 1: This option states that Levy Sugar refers to the portion of sugar production of a country that is meant for export. This is incorrect because Levy Sugar is not related to export, but rather to the supply of sugar within the country.

Option 2: This option suggests that Levy Sugar is the sugar which is imported by the government and allotted to the Public Distribution System (PDS) at a lower cost. This is not correct as Levy Sugar is not imported sugar, but is actually produced within the country.

Option 3: This option provides the correct answer. Levy Sugar refers to the portion of sugar production that the government takes away from sugar mills at lower than market rates. This sugar is then supplied to the Public Distribution System (PDS) in order to ensure its availability and affordability for the general public.

Option 4: This option states that Levy Sugar is the portion of sugar production that the State Governments supply to the Union Government at less than market rates. However, this option is not accurate as Levy Sugar is not supplied by State Governments to the Union Government, but is instead taken from sugar mills directly by the government.

In conclusion, the correct answer is option 3. Levy Sugar is the portion of sugar production that the government takes away from sugar mills