1. Appeal under Section 35-B of the Central Excises and Salt Act, 1944 praying that in the circumstances stated therein, the Tribunal will be pleased to order for grant of full claim of incentive rebate, amounting to Rs. 2,54,142.42.
2. This appeal coming up for orders upon perusing the records and upon hearing the arguments of Shri C. Natarajan, Advocate for the appellants and upon hearing the arguments of Shri S.K.. Choudhury, Senior Departmental Representative, for the respondent, the Tribunal makes the following order : 3. The brief facts of the case are as follows;-The appellants claimed refund of Rs. 11,71,322.88 under Notification Nos. 108/78-C.E., dated 28-4-78 and 151/78 dated 16-8-78 in respect of certain quantities of sugar manufactured by them during the period 1-5-78 to 30 9-78. The Assistant Collector of Central Excise, Madras VIII Division in his Order No. V/l/30/133/81-T.I. dated 26-7-82 determined that a quantity of 46,805.19 Qtls. was the "excess production" during that period in terms of the notification. Thereafter, he rioted how much of this quantity had been cleared in the various months-they were cleared between may 1978 and November 1978. Based on the quantity cleared in each month, the rate of duty and tariff valuat'on existing during the related month of clearance, both for levy sugar and the other sugar (free sale sugar), he arrived at the quantum of concession admissible under the two notifications as Rs. 9,17,180.46. After giving due notice to the appellants, he rejected their claim for the excess sum of Rs. 2,54,142.42. The sum claimed by the appellant was at the rate of Rs. 54 per quintal in respect of free sale sugar from out of the quantity determined as excess production. The appellants appealed to the Appellate Collector of Central Excise, Madras, against this order.
Rejecting that appeal, the Appellate Collector observed in his Order No. V/l/24/82 dated 19-10-82.
"The so-called rebate claimed by a manufacturer under Notification No. 108/78 and 151/78 is, after all, a benefit of an exemption provided by Notification issued under Rule 8 (1) of the Central Excise Rules, 1944 and as such is on par with any other exemption by Notification under this Rule. It is, therefore, not possible to hold that this rebate in terms of Notification No. 108/78 and 151/78 is different and distiuct from an exemption Notification under Rule 8(1). Having regard to this position I may observe that it is a well accepted principle of law that exemption cannot exceed levy as laid down in the case of Terna Shetkar Sahakari Sakhar Karkhana Limited (1980 E.LT. J. 369). Therefore, the lower authority was justified in restricting the rebate claimed by the appellants to the quantum of duty actually paid by them." 4. In the appeal before us, it is urged that in terms of the notification, the appellant is entitled to a "rebate" at a fixed quantum of Rs. 54 per qtl. in respect of free sale sugar upto 15-8-78 and Rs. 25 per quintal thereafter. In support, it is urged that the quantum of duty leviable on the sugar should not depend upon the date of clearance; the notification is intended as an incentive for higher production of sugar during an otherwise lean period: the moment a certain quantity of sugar produced in excess of the production during the base period is accepted as excess production, relief should be at the fixed rate of Rs. 54 per quintal as per Notification No. 108/78 in respect of free sale sugar. This, it is urged, is the intention of the Government even at the time of issue of the notification. This is clear from the fact that the notification came into force on 1-5-78; even when the incentive period commenced, the effective levy was less than Rs. 54 per qutl. The same position obtained on the 16th August, 1978 when the Notification No. 151/78 was issued. It is also urged that the notification exempts sugar from the whole of the duty leviable thereon.
Duty leviable is what is described as the rate of duty in the Schedule to the Central Excises and Salt Act, 1944 without any further modification by way of notification under the Act or the Rules. If this be accepted, the quantum of exemption will not be higher than the quantum of actual "duty leviable". It is further urged that the quantum of relief should not vary from producer to producer and even in the case of the same producer from time to time depending upon the date of the release order and the quantum of release in respect of levy sugar by the Government in the Department of Food. It is also claimed that if the totality of the production during the period 1st May 1978 to 31-10-78 is taken into account, the total amount of duty paid by a manufacturer both on the quantity within the base produc-tion and that on the excess, the amount of duty payable is not less than the net duty leviable. The relief, if any, comes out of the quantum of duty paid both in respect of the base production and excess production.
5. Rule 9 of the Central Excise Rules, 1944 provides that no "excisable goods shall be removed from any place where they are produced, cured or manufactured or any premises appurtenant thereto, which may be specified by the Collector in this behalf, whether for consumption...until the excise duty leviable thereon has been paid at such place and in such manner...on the form." If the argument of the learned advocate for the appellants that duty leviable on any goods should be taken to mean the quantum of duty calculated at the rate mentioned in the Schedule to the Act without reference to any exemption notification issued under Rule 8 of the Central Excise Rules, 1944, it would mean that irrespective of the existence of an exemption notification an assessee will have to pay the duty at the rate specified in the Schedule every time the goods are removed; obviously, this would be an anomalous position. The view, therefore, that the word "duty leviable" occurring in the notification should refer to the duty set out in the Schedule to the Central Excises and Salt Act, 1944, is not appropriate.
6. The learned Counsel for the appellants referred to the decision of the Division Bench of the Allahabad High Court in the case of Union of India and Ors. v. Delhi Cloth and General Mills Company Ltd.,--1978 E.L.T. (J. 177). The point at issue in that case was whether certain quantity of sugar which was actually produced during 1959-60 season (sugar season ends on 31-10-1960) but reprocessed and cleared after 31-10-60 was entitled to'exemption from duty contained in Notification G.S.R. 706 dated 25-6-1980 which dealt with an exemption from duty in respect of sugar produced during 1959-60 season. Their Lordships held that the concession was admissible in respect of that sugar irrespective of the point of time when it was removed from the factory premises. This case is not directly relevant to the present one where the issue is not whether the concession is at all available but what is its quantum- whether it is relatable to the tariff value etc.
applicable at the time of actual clearance of the goods or at the time of production of the goods.
7. The learned advocate for the appellants also referred to the decision of the Division Bench of the Delhi High Court in the case of Modi Rubber Limited, Modinagar v. Union of India and Ors.-1978 E.L.T.(J. "15. The question then arises whether in construing the notification effect can be given to the alleged intention of the Government that the benefit of the rebate in excise duty was to be passed on to the consumers. While the object of law must be borne in mind in construing it, the words to be construed must be capable of such a construction as would result in achieving the laudable object which the Government wishes to achieve. There is a limit beyond which the Courts cannot bend the meaning of words to achieve the supposed object of the notification. This was plainly stated by the Constitution Bench of the Supreme Court in Hansraj Gordhandas v. H.H. Dave, AIRUnion of India and Ors. v. Tata Iron and Steel Co. Limited., AIR In that case Their Lordships were considering the provisions of a notification which granted exemption from payment of duty in respect of goods which had been produced and cleared from one or more factories in excess of base clearances; the concession was to the extent of 25% of the duty otherwise leviable. The issue was whether the exemption would be available if the benefit of the exemption was not passed on to the consumer. The point had been urged that the object of granting the concession was to benefit the consumer by reduction of the selling price of the goods. As observed by Their Lordships in paragraph 11 of the Judgment: "the contention of the respondent (Union of India and Ors.) was that the petitioner would be entitled to the benefit of the duty rabate only if he reduced the price proportionately to the reduction in duty so as to pass on the benefit of the reduction of the duty to the purchasers of the tyres and tubes." Their Lordships found that the meaning of the words cannot be bent to achieve the supposed object of a notification. What the learned advocate for the appellants wants us to do in the present case is just the opposite. He refers to the intention behind the grant of the concession by the Government, namely an incentive to higher production during an otherwise lean period, and suggests that this intention would be better observed by interpreting the notification in such a way that the maximum amount of concession at a fixed rate is available to the appellants. The ratio of the decision in the judgment referred to is not applicable to the facts of the present case.
8. The Departmental Representative urged that the wording of an exemption notification must be considered strictly and principles of equity are not available in interpretation of a taxing statue. In this connection, he invited our attention to the decision of the Supreme Court in the case of Murarilal Mahabir Prasad and Ors. v. Shri AR. Vad and Ors.-AIR 1976 S.C. 313 (para 29). In that case His Lordship Justice Y.V. Chandrachud (as he then was) observed: "The true implication of the principle that a taxing statute must be construed strictly is often mis understood and the principle is unjustifiably extended beyond the legitimate field of its operation.
Indeed the more well expressed the principle as in the Cape of the Brandy case [(1921) 12 tax Case 358] greater the reluctance to see its limitations. In that famous passed marked by a happy turn of phrase, Rowlatt J. said, "there is no equity about a tax. There is no presumption as to a tax". There is no equity about a tax in the sense that a provision by which a tax is imposed has to be construed strictly, regardless of the hardship that such a construction may cause either to the treasury or to the tax payer. If the subject falls squarely within the letter of law, he must be taxed, howsoever inequitable the consequences may appear to the judicial mind. If the Revenue seeking to tax cannot bring the subject within the letter of law, the subject is free no matter that such a construction may cause serious prejudice to the Revenue. In other words, though what is called equitable construction may be admissable in relation to other statutes or other provisions of a taxing statute, such a construction is not admissible in the interpretation of a charging or taxing provision of a taxing statute." He, therefore, urged that the question of treating various manufactures of sugar during the same period of production who may be clearing the same at different time does not arise if the law did not specifically provide for the same and the "principles of equaity" cannot be applied in such a situation. We agree.
9. The Advocate for the appellant referred to an observation. Their Lordships of the Supreme Court in the case of Shri Ram Krishna Dalmia and Ors. v. Shri Justice S.R. Tendolkar and Ors. (AIR "In order, however, to pass the test of permissible classification two conditions must be fulfilled, namely (i) that the classification must be founded on an intelligible differentia which distinguishes persons or things that are grouped together from others left out of the group and (ii) that differentia must have a rational relation to the object sought to be achieved by the statute in question. The classification may be founded on different bases, namely, geographical, or according to objects or occupations or the like.
What is necessary is that there must be a nexus between the basis or classification and the object of the Act under consideration. It is also well-established by the decisions of this Court that Article 14 condemns discrimination not only by a substantive law but also by a law of procedure." On analogy, he argued that all manufacturers who produced excess sugar at about the same time should be treated on par for purposes of the concession and the notification should be so read that it does not lead to differential treatment. The Departmental Representative contest this stand. As we have observed in 8 supra, principles of equity are not applicable to a taxing statute which is clear in its intendment or wording. Quite apart from this, as we set out hereinafter (Paragraph 10), the Excise Act deals with clearances on a particular date from the factories being treated similarly, irrespective of the time of production of the concerned goods. Excise levy is accepted to be a levy on consumption. Being collected as it is from the manufacturer of the goods, it is related to the first sale of the goods by the manufacturer, a point of time which would be as near the point of consumption as is practicable in the given circumstances. In this view of the matter, there is no inequity in the stand of Revenue that there is no irrational differentiation.
10. The Senior Departmental Representative drew our attention to the decision of the Division Bench of Bombay High Court in the case of Union of India and Ors. v. The Elphinstone Spinning and Weaving Mills Co. Ltd. [1978 E.L.T. (J. 680)-Para 13. In that Judgment His Lordship Madon J. observed.] "The combined effect of Section 3 and Rules 7, 9 and 9-A so far as the present case is concerned, is that in the case of the mills the duty was attracted on the goods in question on the date of the actual removal of the goods from the mill's factory. Tlie point of time at which we have to see whether the goods were liable to duty would be thus the date of removal of the goods from the factory or warehouse and not the date of manufacture or production, for the date when the goods were sought to be removed from the factory or of warehouse they were goods of the description mentioned is one of the items in the First Schedule as being subject to a duty of excise and were goods which were manufactured or produced in India they could not be removed unless duty at the rate set forth in the First Schedule to the Act was paid." He also referred to the judgment the Gujarat High Court in the case of Alembic Chemical Works Co. Ltd. Baroda v. Union of India and Ors. [1979 E.L.T. (J. 258)] where the same view has been expressed. From these judgments, he argued that the rate of duty relevant to a transaction is the one prevent at the time of removal of the goods from the factory and in the present case what is being sought to be enforced.
11. We find that the combined effect of Section 3 and Rules 7, 9 and 9A as laid down by Their Lordships of Bombay and Gujarat High Courts, will be to hold that the impugned order is maintainable in law.
12. In the result, we hold that the order of the Appellate Collector of Central Excise is maintainable on facts and law. Accordingly, the appeal is dismissed.