Chinnappa Reddy, J.
1. The same issue were raised in all these writ petitions and therefore they may be disposed of all by a common judgment. Section 5 of the Central Excises Act prescribes that there shall be levied and collected duties of excise on all excisable goods produced or manufactured in India at the rates set forth in the First Schedule, 'Excisable goods' are defined to mean goods specified in the first schedule as being subject to a duty of excise. Item No. 1 of the first schedule is 'sugar' produced in a factory ordinarily using power in the course of production of sugar. The Petitioners in all the Writ Petitions are manufacturers of sugar. In order to achieve maximum production, the Government of India decided to give certain incentives to manufacturers of sugar. One of the incentives was to exempt from the levy of excise duty, sugar produced during certain periods in a year to the extent that it exceeded of the quantity of sugar produced during the corresponding periods of the previous year. By a notification dated 13-10-1971 issued under Rule 5 of the Central Excise Rules, the Government announced a rebate of excise duty at the rate of Rs. 17/- per quintal of sugar produced by any factory during the period 1-10-1971 to 30-11-1971, which was in excess of 80% of the quantity produced during the corresponding period in 1970, i.e. 30-1-1970 to 30-11-1970. A question arose whether a manufacturer of sugar who had worked the factory during the base period 1-10-1970 to 30-9-1970 but who had not produced any sugar during the period 1-10-1970 to 30-11-1970 would be entitled to rebate of excise duty on the entire production achieved during the months of October and November, 1971. The Indian Sugar Mills Association addressed a letter to the Government of India seeking clarification on this question and asking whether they would be right in presuming that the manufacturer in such a situation would be entitled to rebate of excise duty on the entire production achieved in the months of October and November, 1971. The Government of India informed the Indian Sugar Mills Association as follows.
2. I am directed to refer your letter No. VP/150, dated 27-10-1971 on the above subject and to confirm the presumption stated therein 'Pursuant to the clarification sugar manufacturers claimed rebate of excise duty under the notification and rebate was accordingly allowed. For the next 'Sugar year' (1-10-1972 to 30-9-1973), again the Government of India issued another notification in similar terms mentioning the periods during the corresponding periods in the previous year, excess sugar produced would be exempt from levy of excise duty. Once again, the question arose whether a manufacturer of sugar who worked his factory in the base period 1-10-1971 to 30-9-1972 would be entitled to the full rebate on the entire production during the various periods mentioned in the notification, if the production during the corresponding periods in the previous year was nil. The Indian Sugar Mills Association once again addressed a communication to the Government of India on this question and wanted to be in formed whether, as in the previous year, they were entitled to presume that the manufacturer of sugar would be entitled to full rebates in the situation mentioned. The Government of India replied as follows.
3. I am directed to refer to your letter No. VP, dated 14-10-1972 was the above mentioned subject and to say that your presumption is confirmed in respect of established factories only (and not factories which had only a trial run during the base period). Pursuant to the clarification rebates were claimed and allowed.
4. Substantially similar notification with suitable changes was issued for the 'Sugar yarn' 1973-74 corresponding to the base period 1-10-1973 to 30-1-1973 in the writ petition we are concerned with this notification. It will be convenient if the notification is extracted. The notification for the 'Sugar year' 1973-74 was as follows :
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5. Now, on the basis of the clarifications issued in the eariler 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 sugar manufacturers were allowed rebate of excise duty on that assumption and necessary adjustments were made in the accountcurrent of the sugar manufacturers. For example, the petitioner in W.P. No. 3672 of 1976 produced 1974 quintals of sugar during the months of October and November, 1975. During the months of October and November 1972, the petitioner had produced no sugar though during the base period 1-10-1972 to 30-9-1973 the petitioner had worked in the factory. On the basis of the notification issued by the Government of India, the Central Excise authorities gave the petitioner a 'preform credit' for Rs. 3,86,960-00 on 27-3-1974. The proforma credit was allowed by the Chief Accounts Officer Central Excise, Guntur. The Inspector of Central Excise certified that the particulars in the claim in respect of the base and incentive period had been verified with reference to the connected R.G. 1 and other relevant records and found to be in order. The Superintendent of Central Excise endorsed that he had verified the rebate claim with reference to the factorys production records for both incentive and base periods and found them to be in order. On 13-4-1974 'proforma credit' was adjusted in the account-current as excise duty paid on 'self removal method'. I will explain the self removal method later. The stocks of sugar were released. It was in this fashion that rebate of excise duty on certain excess production of sugar was allowed to all the petitioners during the 'Sugar year' 1973-74 more than two years later, the Government of India reversed its previous interpretation of the notification 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 wrongly allowed as rebate. The Trade notice issued by the Government of India on 28-7-1976 was as follows :
'OFFICE OF THE COLLECTOR OF CENTRAL EXCISE, GUNTUR-4' Trade Notice No. 181/76 (Sugar No. 11/76), -- dated 28-7-1976.
Sub : Sugar incentive rebate on the production during the incentive period when there was no production during the corresponding base period 1973-1974, regarding :
The Government of India orders issued under notification No. 169/73-CE dated 4-10-1973 and notification No. 78/74-CE, dated 20-4-1974 have been eixamined in detail at the highest level as to how the rebate is to be a lowed for the production in a particular slab of the incentive period but there was no production in the corresponding base period. Aftpr thorough examination and consideration it has been decided by the Government of India that the correct interpretation of the notification is that the incentive rebate would not be available in a case at which there was Nil production in the corresponding period of the base year. Accordingly, the exemption admissible under SI. Nos. 1 to 4 of the notification No. 139/73, as amended by notification No. 78/74 shall not be admissible in cases where there was no production during the corresponding base period.
Before taken the above decision certain rebates have been allowed during the 1973-74 season even though there was no production during the corresponding base periods. Such rebates are not admissible as per the decision now taken at the highest level The amounts so allowed are liable to be recovered now in view of the above clarification.
All the Trade Associations, Chambers of Commerce and 'members of of R.A.C. are requested to bring the contents of the trade notice to the Notice of their constituent members.
(Issued from File No. C. No. 111/9/SS/76-A.3)
Sd/- P.R. Krishanan,
Pursuant to the trade notice all the petitioners were served with notices by the Collector of Central Excise asking them to credit the amounts of rebate allowed to them. The petitioners, having protested in vain have filed these applications for the issue of writs to declare the interpretation of the Government of India illegal and restrain the Central Excise authorities from taking further action pursuant to the trade notices and the consequential notices issued to the petitioners.
6. The first submission of the learned counsel for the petitioners was that the interpretation placed by the Government of India in the trade notice dated 28-7-1976 was wrong and that the earlier interpretation of the Government of India was correct. I am inclined to agree with this submission. The object of the notification was to provide an incentive to manufacturers of sugar so as to induce them to produce greater quantities of sugar, particularly during certain lean periods every year. Therefore, it was said if the sugar produced during the certain period in the 'sugar year' 1-10-1973 to 30-9-1974 was in excess of the sugar produced during the corresponding periods in the previous year called the base period, that is, 1-10-1972 to 30-9-1973, the manufacturer was to be entitled to certain rebate of excise duty on the excess sugar produced. Therefore if the manufacturer had not produced any sugar during the relevant period in the base year 1-10-1972 to 30-9-1973, he would be entitled to rebate of excise duty on the whole of the sugar produced during the relevant period in the year 1-10-1973 to 30-9 1974. The argument of the counsel for the Central Government was that in order to entitle the manufacturer to the rebate of excise duty he must have produced, 'some' sugar during the relevant period in the base year. According to him, it was only when some sugar was produced during the relevant period in the year 1972-1973, sugar produced during the relevant period in the 1973-74 could be said to have exceeded the sugar produced during the corresponding period in 1972-73, He drew my attention to the fact that the notification referred to 'quantity' of sugar produced during the corresponding period in 1972-73. If no sugar was produced during the corresponding period in the year 1972-73, his argument was that the notification was inapplicable. This interpretation appears to me to be prima facie unreasonable. If no sugar was produced during the relevant period in the year 1972-73 it must be said that the production of sugar during the relevant period was Nil and the excess sugar produced in the year 1973-74 should be calculated on that basis. The interpretation of the Central Government counsel would lead to absurd results. It would mean that if a manufacturer produced even one ounce of sugar during the relevant period in 1972-73 he would be entitled to rebate but not if he produced 'Nil' sugar. The proviso to the notification in my opinion makes matters clear. It says that the exemption mentioned against Serial Nos. 1 to 4 shall not be admissible to factory which did not work during the base period. In other words it was only, when a factory did not work at all during 'base period' defined in the explanation to the notification as the period (from 1-10-1972 to 30-9-1973) that period the exemptions would not be admissible. The proviso did not make exemptions inadmissible if the factory did not work during the elevant periods mentioned against Section Nos. 1 to 4. If the object of the notification was not to grant any exemption in respect of the sugar produced during any one of the four period mentioned against Section Nos. 1 to 4 if no sugar was produced during the corresponding period in the base year, the proviso to the notification would have been worded differently. In the face. of t he proviso, I find it difficult to accept the arguments of the learned counsel for the Central Government.
7 The submission of the learned counsel for the Central Government is, however, supported by the decision of the Patna High Court in Civil Writ Jurisdistion Case No. 865 of 1966. According to the learned Judges, the interpretation placed by the manufacturers on the notification would lead to absurdity. They said :
'For example, if a factory produces 1,000 quintals of sugar between 1-1-1964 and 30-6-1964 but produces only 900 quintals of sugar during the period 1-1-1965 to 30-6-1965 the factory will not be entitled to any rebate under the general provisions, and a factory which has no productions during the period 1-1-1964 to 30-6-1974, but produces only 900 quintals of sugar during the relevant period, that is, 1-1-1975 to 30-6-1965 will be eutitlecd to rebate over the entire quantity at the scale as indicated above. Such a result would be against the terms and spirit of the notification.'
I am unable to see how such a result would be against the terms and spirit of the notification. The object of the notification was to give an incentive to manufacturers to increase their production. If a manufacturer who was unable to produce any sugar during a certain period is induced to produce a large quantity of sugar during the corresponding period next year, it, certainly, is a notable achievement, which will deserves the incentive. On the other hand, if a manufacturer producing 1,000 quintals during a certain period in one year produces less during the corresponding period next year, he cannot claim to be entitled to any incentive as he has actually produced less than what he used to produce before. The learned Judges of the Patna High Court also observed, 'the rebate being for excess production it postulates production for the base period also.' That is correct with this qualification that under the present notification the base period is the year 1-10-1972 to 30-9-1973 and not the smaller periods mentioned against Serial Nos. 1 to 4 in the notification. I am not inclined to agree with the view of the Patna High Court.
8. It was also argued by the learned counsel for the Petitioners that pursuant to the exemption which was granted by the Central Excise authorities the petitioners had paid bonus, dividends, taxes, etc., and has so altered their portition that the Government of India should be equitably estopped form putting a different interpretation on the notification at a later stage. Reliance was placed on the decision of the Supreme Court in Union of India v. Anglo-Afghan Agencies (AIR 1968 S.C. 718). There is no force in this submission. There can be no estoppel against a statute. The notification issued by the Government of India under Rule 8 of the Central Excise Rules is 'law' owing its source of power to statute. If the Central Government had placed an incorrect interpretation over the notification it one stage, It does not give the rise to an equitable estoppel, so as to prevent the Government from interpreting the notification correctly at a later stage. It is unnecessary to refer to the case law on this point. I may mention that most of the cases on the subject were considered by me in State of Punjab v. Amrit Banaspati Co. Ltd, .
9. It was also urged by the learned Counsel that the Government of India was wrong in issuing directions such as those contained in the trade notice dated 28-7-1976. Reliance was placed upon the decision of the Suprime Court in Orient Paper Mills v. Union of India (AIR 1969 S.C., 48). I agree with the submission of the learned Counsel that the Government of India ought not to have issued directions of the nature contained in the Trade Notice.
10. In the counters filed in the several Writ Petitions a point was raised that the petitioners had an alternate remedy by way of an appeal under Section 35 of Central Excises Act, and Revision to the Central Government under Section 35. In my view, the pursuit of the remedy provided by the Act, in the circumtances of the case, having regard to the instructions issued by the Central Government, the highest authority under the Act, would only be an exercise in futility. The highest authority constituted under the Act having already pre-determined the question and directed all the subordinate tribunals constituted under the Act to interpret the notifications in a particular manner the statutory remedy has ceased to be a remedy. There can, therefore, be no bar to the maintainability of these Writ Petitions. The Writ Petitions are accordingly allowed with costs. Advocate's fee. Rs. 150/- in each.