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Keshoraipatan Sahakari Sugar Vs. Collector of Central Excise - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Delhi
Decided On
Reported in(1983)LC1413DTri(Delhi)
AppellantKeshoraipatan Sahakari Sugar
RespondentCollector of Central Excise
Excerpt:
.....against the order in appeal no. 2596-ce-76, dated 26-11-1976 passed by the appellate collector of central excise, delhi.the revision application, having been transferred to the tribunal as appeal under section 35p (2) of the central excises and salt act, hereinafter referred as the act, is being disposed of as such.2. the company engaged in the manufacture of sugar falling under central excise tariff item no. 1(1) claimed and received a rebate of central excise duty amounting to rs. 7,64,840/- in respect of sugar produced in its factory during the period from 1st december, 1973 to 30th june, 1974 in terms of notification no. 1s9/73-c.e., dated 4th october, 1973 as subsequently amended by notification no. 78/74-c.e., dated 20th april. 1974.the following graphical chart would give us.....
Judgment:
1. M/s Keshoraipatan Sahakari Sugar Mills Limited, a Government managed Sugar Unit, hereinafter referred as the Company, filed a revision application dated 29th of December, 1976, to the Government of India, Ministry of Finance, against the Order in Appeal No. 2596-CE-76, dated 26-11-1976 passed by the Appellate Collector of Central Excise, Delhi.

The Revision Application, having been transferred to the Tribunal as Appeal under Section 35P (2) of the Central Excises and Salt Act, hereinafter referred as the Act, is being disposed of as such.

2. The Company engaged in the manufacture of sugar falling under Central Excise Tariff Item No. 1(1) claimed and received a rebate of Central Excise Duty amounting to Rs. 7,64,840/- in respect of sugar produced in its Factory during the period from 1st December, 1973 to 30th June, 1974 in terms of Notification No. 1S9/73-C.E., dated 4th October, 1973 as subsequently amended by Notification No. 78/74-C.E., dated 20th April. 1974.

The following graphical chart would give us details as to how the rebate claimed and given was quantified :---------------------------------------------------------------------------------Period of pro- Quantity produced Qty.

S. No. Rate Amount Season Season rebate Table bate bate 72-73 73-74 allowed of per (Rs.)--------------------------------------------------------------------------------Dec-Mar.

68,590 80,760 5311 2 Rs. 20/- 1,06,220April 332 20,288 232 2A Rs. 20/- 4,640May-June Nil 1,582 19690 2B Rs. 30/- 5,90,700 1582 3A Rs. 40/- 63,280 ---------------------------------------------------------------------Total : 68,922 102630 7,64,840-------------------------------------------------------------------------------- 3. After verification, the Central Excise Collectorate, New Delhi gave a credit to the ledger account of the Company on 5th of March, 1975 of the full rebate.

4. On 25th of February, 1976, the Superintendent of Central Excise issued a show cause notice that rebate to the extent of Rs. 63,280/- allowed on the sugar produced during May-June 1974 was not admissible and that the amount was recoverable under Rule 10 of the Central Excise Rules, 1944. Though the Company resisted, the Assistant Collector confirmed the demand of Rs. 63,280/- as recoverable. The Appellate Collector also dismissed the appeal on the ground that the Notification No. 189/73-Supra did not warrant that even if there was no production or there was nil production in the corresponding period, the exemption/rebate claim was admissible on the total production.

5. We have several judgments now which dealt with the interpretation of Notification No. 189/73-C.E., dated 4th October, 1973 as amended by Notification No. 78/74-C.E., on 20th April, 1974. The leading judgment is that of the Andhra Pradesh High Court in the case of Etikoppaka Cooperative Agricultural Society Ltd, Darlapudi, Petitioner v. Union of India and Ors., Respondents, cited as 1979 Tax L.R. 2454. The Hon'ble Andhra Pradesh High Court after reproducing the Notification No. 189/73 in extenso, observed that on the basis of the clarifications issued in the earlier years, it was assumed by the Sugar manufacturers as well as the Central Excise officials that a sugar manufacturer who worked his factory during the previous year, i.e. base period, but did not produce any sugar during the periods mentioned in the Notification would be entitled to full rebate of excise duty on the entire production achieved during the corresponding periods in the "sugar year". The manufacturers accordingly were allowed rebate on that assumption and necessary adjustments were made in the account-current of the sugar manufacturers.

6. In the graphical chart reproduced above, figures of quantities produced in the year of rebate in relation to the corresponding base year is given as also quantity on which rebate was allowed. Rate of rebate as also the amount of rebate are indicated so as to clearly project that though the rebate allowed was Rs. 7,64,840, the withdrawal sought to be made was in relation to two months production, i.e. for May, June 1973 on the ground that for the corresponding months in 1972 the production was nil.

7. More than two years later, i.e. on 28th of July, 1976, the Government of India reversed its previous interpretation of the Notifications regarding eligibility for rebate where production during the relevant periods of the base year was nil. Holding that such rebate was wrongly allowed, instructions were issued to recover amounts.

8. Before the Hon'ble Andhra Pradesh High Court, it was contended that the interpretatton of the Government in relation to Notification No.139/73 supra on the basis of which rebates were allowed was correct in contradistinction to later interpretation projecting from the Trade Notice No. 181/76, dated 28th of July, 1976. We do not propose to go into great details because all aspects of the case have been dealt with by the said Hon'ble High Court. Their Lordships also noticed the Patna High Court judgment in Civil Writ Jurisdiction Case No. 865 of 1976 [as mentioned in para 6 of the judgment in Etikoppaka Co-operative Agricultural Society Ltd., case supra,] but held that the view taken therein that if there was no manufacture in the corresponding months of the base year, exemption was not permissible as per Notification No.189/73, was not correct.

9. For the Company, Shri T.C. Seth, Advocate, appearing, brought to our notice that the Andhra Pradesh High Court judgment came to be followed by a Division Bench of the Hon'ble Punjab & Haryana High Court in the case of Batala Co-operative Sugar Mills Ltd. v. Assistant Collector of Central Excise, Jullunder cited as 1982 E.L.T. 19. Not only the learned Advocate's submission is correct, but we are aware that even in M/s Doaba Co-operative Sugat Mills Limited, the Hon'ble Punjab & Haryana High Court followed the view taken by the Andhra Pradesh High Court in preference to the Patna High Court view.

10. For the Revenue, it has been contended in some other cases that there is some judgment of the Allahabad High Court in which a view has been taken which is in favour of the Revenue. So far, no judgment has been placed before us. On the other hand, in the present case, a judgment of the Allahabad High Court in the case of L H. Sugar Factories Limited v. Union of India and Ors. (Civil Miscellaneous Writ Petition No. 306 of 1981) dated 13th of October, 1982 has been brought to our notice. A copy of the judgment has been filed. The judgment is cited as 1983 E.L.T. 205 All. We find that in this judgment the view taken by the Andhra Pradesh High Court has been endorsed in preference to the decision of the Hon'ble Patna High Court. We like to notice Para 7 of the judgment to project that the Punjab & Haryana High Court's judgment was also in their Lordships' focus :- "7. Learned Counsel for the respondents, however, brought to our notice a decision of the Patna High Court in Civil Writ Jurisdiction Case No. 865 of 1966 wherein while interpreting similar provision, the Patna High Court had held that in a case where there was nil production in the corresponding period, the exemption in respect of excess production would not be admissible. The decision of the Patna High Court has been noticed by the Punjab and Haryana High Court as well as by the Andhra Pradesh High Court in the decisions cited above. Both the Courts have disagreed with the view of the Patna High Court. We are in respectful agreement with the view expressed by the Andhra Pradesh and Punjab and Haryana High Courts." 11. From the above, it transpires that the Patna High Court judgment was viewed by the Hon'ble Andhra Pradesh High Court, by the Hon'ble Punjab & Haryana High Court as also by the Hon'ble Allahabad High Court and all the three High Courts in terms were involved with the interpretation of the Notification No. 189/73 whereas the Hon'ble Patna High Court judgment is of 1966. Since interpretation of the same Notification is before us, we find no reason or justification to take a view different than the one taken by the three said High Courts. If we have not dwelt with the facts of the Notification in any greater length, it is because we are in agreement with the views expressed by the Hon'ble Punjab High Court in the case of Doaba Co-operative Sugar Mills Ltd., Supra, where Single Judge decision came to be reversed by a Division Bench in L.P. Appeals. Therefore, allowing the Appeal, we hold that the show cause notice issued for withdrawing the rebate of Rs. 63,280/7 was misconceived and adjudication against the assessee has been wrong Since assessee shall be entitled to consequential relief, it follows that if the recovery has been made in relation to the said rebate, it shall be refunded. If no recovery is made, the Respondent shall be debarred from making recovery claim. Appeal allowed.


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