1. The Krishna Sahakari Sakhar Karkhana Ltd., hereinafter referred as the appellant, filed a revision application" under Section 36 of the Central Excises & Salt Act, shortly referred as the Act, against the Order No. V(1)2-8/75/6011 dated 6.3.76 passed by the Appellate Collector of Central Excise, Bombay. The related Order of Adjudication was made on 14.3.1975 (bearing No. 782/75) by the Superintendent of Central Excise, A.G. Karad. The revision application has been transferred to the Tribunal by virtue of the provision of Section 35-P of the Act, to be disposed of as appeal. In compliance to hearing notice, Shri B.D. Deshmukh, Advocate, appeared for the appellant and for the Revenue we had the assistance of Shri Hem Prakash: Junior Departmental Representative.
2. The only contention in the appeal is that the average production of the appellant for the period October-November 1974 be ordered to be worked out on the basis of the production of all the preceding five sugar years i.e. 1969-70, 1970-71, 1971-72, 1972-73 and 1973-74 and on that basis the rebate of Rs. 2,88,458.SOP be ordered to be sanctioned and paid to the appellant which came to be withdrawn.
3. Reproduction of relevant portion of the Assistant Collector's order and the memo of R. A. would establish that there is only one question to be decided and which is whether the average production of the preceding years in the case of notification dated 12,10.1974 was to be worked out by dividing the total production by live even though there was no production in the lean months of any of the preceding five years but product ion otherwise was there in other months, or the Revenue's approach that when there was no production in part of any sugar year that year itself had in be omitted was correct- that the average production of the Petitioners for the period October-November, 1974 be ordered to be worked out, on the basis of the production of all the preceding five sugar years viz. 1969-70, 1970-71, 1971-72, 1972-73 and 1973-74.
That on the above basis the Rebate of Rs. 2,88,45S.H0 wrongly withheld by the Superintendent be ordered to be sanctioned and paid to the Petitioners, forthwith." On going through the Rebate claim presented by the factory it will be seen that the correct average production of sugar during Oct.
Nov., 1974 comes to 49396.6 Qtl. instead of 39514.88 Qtl. calculated by the Factory. As such the claim for Rs. 13,99,705.68 presented by the factory is not in order. And therefore the same is revised and the factory is entitled for rebate of Rs. 1 1,11,246,88 only and the same is sanctioned to M/s. Krishna S.S.K. Ltd. Rethare Bk. The factory is therefore advised to take credit of Rs, 11,11,246.88 in their P.L-A. for sugar and report the date of taking credit in P.L.A.4. To understand the controversy and the question and for deciding the same, relevant portions of the Notification are to be brought in focus and for the purposes the same are reproduced below : G.S.R. in exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts sugar, described in column (2) of the Table below and falling under sub-item (1) of Item No. 1 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), from so much of the duty of excise leviable, thereon as is specified in the corresponding entry in columns (3) and (4) of the said Table.
_______________________________________________________________________ SI. Description of Sugar Duty of Excise _______________ _________________________________________________________________________ 1 2 3 4 __________________________________________________________________________ 1 2 3 4 ___________________________________________________________________________ (a) The overall production of the factory Rs. 60/- per Rs. 16/- per for the entire sugar year does not, quintal quintal equal the average production of (b) The overall production of the factory Rs. 82/- per Rs. 22/- per for the entire sugar year equals or quintal quintal exceeds the average production of the _____________________________________________________________________________ 5. The above notification has come up for consideration by various High Courts. The Hon'ble Madras High Court vide its judgment dated 28th of September, 1979 in writ petition No. 436/77 in the case of Sakthi Sugars Ltd., Coimbatore cited as 1983 EL.T. 4841980 CEN-CUS 505D have held that for working out average production under notification dated 10th of October, 1974 production of the preceding 5 years is to be divided by five even if there was no production during a part of the year in any of the preceding five years.
6. The above mentioned judgment came to be followed by the -Hon'ble Karnataka High Court in the case of India Sugars and Refineries Ltd., Hospet cited as 1983 E.L.T. 209. We find that the two judgments fully take care of the question arising in this case in favour of the appellant.
7. Shri B.D. Deshmukh, Advocate, appearing for the appellant submitted that not only the above two cited judgments favour the appellant but in respect of an earlier judgment dated 2.8.79 of the Hon'ble Madras High Court wherein a similar view was taken, the Revenue sought permission of the Hon'ble Supreme Court of India to file SLP which came to be dismissed on 13.2.81. The said judgment was in the case of New Horizon Sugar Mills Pvt. Ltd. A copy of the record of proceedings before the Hon'ble Supreme Court of India has been filed before us and we notice that the petition was dismissed after hearing Shri L.N. Sinha, Attorney General of India and the Mills' Advocates M/s. S. Ramasubramaniam, U.K.Dutt and D.N. Gupta.
9. The Hon'ble Madras High Court in the case of Shakti Sugars Ltd., came to take a view different than the one taken earlier by the Hon;ble Andhra Pradesh High Court. The Karnataka High Court in the cited judgment has also favoured the view taken by the Madras High Court. For the reasons recorded in the Madras and the Karnataka cases supra, we are inclined to take the view as done by the said High Courts on the issue before us.
10. While deciding this appeal we have in focus the definition of sugar year in paragraph 2(d) of the notification No. 146/74 reproduced above which defines such year as the period of 12 months beginning with the first day of October and ending with 30th day of September next following-Accordingly a year out of the previous five years is to be dropped of omitted only if the production in the entire sugar year i.e., to say in the whole period of 12 months, is nil and not otherwise. The appellant though had not produced sugar in October-November 1970 but had produced 4,15,070 quintals of sugar during the remaining period of that year and, therefore, was entitled to count that year also for working out the average production of the preceding 5 years. To repeat ourselves, non-production in a part of the sugar year could not entitle the Revenue to omit such year altogether.
We, therefore, allow the appeal with direction that effect to this order be given within a period of two months from the receipt of this order.