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Batala Co-operative Sugar Mills Ltd. Vs. Assistant Collector, Central Excise - Court Judgment

LegalCrystal Citation
SubjectExcise
CourtPunjab and Haryana High Court
Decided On
Case NumberLetters Patent Appeal No. 835 of 1980
Judge
Reported in1982(10)ELT19(P& H)
ActsCentral Excise Act, 1944; Central Excise Rules, 1944 - Rule 8(1)
AppellantBatala Co-operative Sugar Mills Ltd.
RespondentAssistant Collector, Central Excise
Appellant Advocate Bhagirath Dass, Adv.
Respondent Advocate Kuldip Singh, Adv.
DispositionAppeal accepted
Cases ReferredThe Etikoppaka Cooperative Agricultural Society Ltd. v. The Union of India and Anr.
Excerpt:
.....knowledge of passing of the said order. - 835 of 1980 did not produce any sugar in the month of may, 1973 as well. 4,67,570/-.the appellant got the rebate of this amount, but was later on issued a show cause notice why this amount be not realised on the ground that the appellant did not produce any sugar in the months of april and may 1973. the appellant resisted the show cause notice, but failed. 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 well deserves the incentive......(2) (3)________________________________________________________________________________ 1. sugar produced in a factory during the period forty rupees per commencing from the 1st day of october, 1973 quintal, and ending with the 30th day of november, 1973 which is in excess of the quantity of sugar pro- duced during the corresponding period in 1972.________________________________________________________________________________(1) (2) (3)________________________________________________________________________________2. sugar produced in a factory during the period twenty rupees per quintal. commencing from the 1st day of december, 1973 thirty rupees per quintal : and ending with the 30th day of april, 1974 which is in excess of 110% of the quantity of sugar pro- duced during the.....
Judgment:

J.M. Tandon, J.

1. This order will dispose of two Letters Patent Appeals Nos. 835 and 854 of 1980, wherein common question of fact and law are involved.

2. The appellants in both the appeals are engaged in the manufacture and sale of sugar. It is admitted that the appellants did not produce any sugar in the month of April, 1973. The appellant in Letters Patent Appeal No. 835 of 1980 did not produce any sugar in the month of May, 1973 as well.

3. The Government of India issued notification No. 189/73-Central Excises, dated October 4, 1973, where sugar incentive rebate on the production during the incentive period detailed therein was allowed. The relevant part of this notification reads as under :-

'(b) Notification No. 189/73-Central Excises, dated 4th October, 1973.

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, 3 944 (1 of 1944), from so much of the duty of excise leviable thereon as is specified in the corresponding entry in column (3) of the said Table.

TABLE

________________________________________________________________________________

S. No. Description of Sugar Duty of Excise

(1) (2) (3)

________________________________________________________________________________

1. Sugar produced in a factory during the period Forty rupees per

commencing from the 1st day of October, 1973 quintal,

and ending with the 30th day of November, 1973

which is in excess of the quantity of sugar pro-

duced during the corresponding period in 1972.

________________________________________________________________________________

(1) (2) (3)

________________________________________________________________________________

2. Sugar produced in a factory during the period Twenty rupees per quintal.

commencing from the 1st day of December, 1973 Thirty rupees per quintal :

and ending with the 30th day of April, 1974 which

is in excess of 110% of the quantity of sugar pro-

duced during the period commencing from the 1st day

of December, 1972 and ending with the 30th day of

April, 1973.

3. Sugar produced in a factory during the period

commencing from the 1st day of May, 1974 and

ending with the 30th day of June, 1974 which is in

excess of 110% of the quantity of sugar produced

during the corresponding period in 1973.

4.**** *** ***

5.*** *** ***

6.*** *** ***

________________________________________________________________________________

Provided that the exemption mentioned against serial numbers 1 to 4 of the said Table shall not be admissible to a factory which did not work during the base period.

** ** **** ** ** In this notification the expression 'base period' means the period commencing from the 1st day of October, 1972 and ending with the 30th day of September, 1973.'

4. The notification 189/73 was later on amended by another notification dated April 20, 1974 and the entries at serial numbers 2, 3 and 4 in the earlier notification were substituted. The relevant part of the amending notification dated April 20, 1974 reads as under :-

'In exercise of the powers conferred by Sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby makes the following amendments to the notification of the Government of India in the Ministry of Finance (Department of Revenue and Insurance) No. 189/73-Central Excises, dated the 4th October, 1973, namely :-

In the said notification-

(a) in the table-

(i) for serial Nos. 2, 3 and the entries relating thereto, the 4 and following shall be substituted namely-

'2. Sugar produced in the factory during the period Twenty rupees per

commencing from the 1st day of Dec, 1973 and Quintal.

ending with the 31st day of March, 1974 which is

in excess of 110% of the quantity of sugar produced

during the period commencing from the 1st

day of December, 1972 and ending

with the 31st day of March, 1973,

Twenty rupees per quintal.

2A. Sugar produced in a factory during the month of Twenty rupees per

April, 1974 which is in excess of 110% and not quintal.

in excess of 180% of the quantity of sugar produced

during the month of April, 1973.

2B. Sugar produced in a factory during the month of Thirty rupees per

April, 1974 which is in excess of 180% of the quintal.

quantity of sugar produced during the month of

April, 1973.

3. Sugar produced in a factory during the period Thirty rupees per

commencing from the 1st day of May, 1974 and quintal :

ending with the 30th day of June, 1974 which is in

excess of 110% to 18% of the quantity of sugar

produced during the corresponding period in 1973.

3A. Sugar produced in a factory during the period Forty rupees per

commencing from the 1st day of May, 1974 quintal.

and ending with the 30th day of June, 1974

which is in excess of 180% of the quantity of

sugar produced during the corresponding period in 1973'.

5. The appellant in Letters Patent Appeal No. 835/80 produced sugar in the months of April and May, 1974 which was in excess of 180 percent of the corresponding months of the previous year (the production in April and May 1973 being nil) and claimed sugar incentive rebate at the rate of Rs. 30/- and Rs. 40/- per quintal under Items 2B and 3A respectively of the notification dated April 20, 1974. The total amount of rebate for these two months of 1974 admittedly comes to Rs. 4,67,570/-. The appellant got the rebate of this amount, but was later on issued a show cause notice why this amount be not realised on the ground that the appellant did not produce any sugar in the months of April and May 1973. The appellant resisted the show cause notice, but failed. The Assistant Collector Central Excise, Appellate Collector, Central Excise and Government of India vide their orders P4, P6 and P8 respectively disallowed the claim of rebate. The appellant consequently filed Civil Writ Petition No. 1034 of 1978 which was dismissed by the learned Single Judge vide order dated September 9, 1980. The appellant has now filed Letters Patent Appeal No. 835 of 1980.

6. The appellant in Letters Patent Appeal No. 854 of 1980 produced sugar in April 1974 which was in excess of 180 per cent of the sugar produced in April, 1973 (the production in April 1973 being nil) and claimed rebate at the rate of Rs. 30/- per quintal under Item 2B of the notification dated April 20, 1974. The total amount of rebate comes to Rs. 5,80,500/-. The claim of rebate having been denied by the various authorities, the appellant filed Civil Writ Petition No. 4092 of 1977 which was dismissed by the learned Single Judge vide consolidated order dated September 9, 1980. The appellant has filed Letters Patent Appeal No. 854 of 1980.

7. The short point for consideration in both the Letters Patent Appeals is whether the appellants having not produced any sugar in the months of April and May, 1973 are entitled to the sugar incentive rebate in terms of the amended notification dated April 20, 1974. The contention of the learned counsel for the appellants is that as the appellants did not produce any sugar in the months of April and May, 1973, their production for those months shall be taken as nil. The object of the sugar incentive rebate is to allure the sugar mills to produce sugar in the lean months when due to dryness in sugar-cane the production of sugar becomes uneconomical. The sugar incentive rebate is allowed in the larger national interest and not for the specific benefit of sugar manufacturing units. In this situation to hold that the sugar mills which did not produce sugar in April and May, 1973 were not entitled to sugar incentive rebate in terms of notification dated April 20, 1974 would not only be incorrect interpretation thereof but would also negate the very object for which it was issued. The contention of the learned counsel for the Union of India is that for the sugar incentive rebate under the notification it is necessary that in the corresponding months of 1973 some sugar was produced. The argument proceeds that the words 'sugar-cane produced during the months of . .1973' presupposes that there was some production of sugar in the corresponding months of 1973. If the intention of the notification had been as interpreted by the learned counsel for the appellants then it would have been so clarified in the notification itself. In our opinion the contention of the learned counsel for the appellants must prevail.

8. A similar point in context of a similar notification arose in the unreported judgment dated February 3, 1978 of Andhra Pradesh High Court in Writ Petition No. 3672 of 1976 The Etikoppaka Cooperative Agricultural Society Ltd. v. The Union of India and Anr.-1979 E.L.T. (J 533). The argument of the Central Government in that case was that in order to entitle the manufacturer to the rebate of excise duty the manufacturing unit must have produced some sugar during the relevant periods in the base year and if no sugar was produced during the corresponding year of the previous year, the notification was inapplicable. This contention was repelled. It was held if no sugar was produced during the relevant period in the previous year it must be said that the production of sugar during the relevant period was nil and the excess sugar produced in the current year should be calculated on that basis. It was further held that if the interpretation as advanced on behalf of the Central Government was to be upheld it would lead to absurd results. It would mean that if a manufacturer produce even one ounce of sugar during the relevant period of the previous year, he would be entitled to rebate, but not if he produced nil sugar. The proviso to the notification that the exemption mentioned against serial numbers 1 to-4 of the notification shall not be admissible to a factory which did not work during the base period was also taken notice of. In the context it was held that the base period was defined in the explanation to the notification as the period from 1st October to 30th September of the previous year and according to the proviso the exemptions were inadmissible if the factory had not worked at all during the base period. In other words the proviso to the notification did not make exemptions inadmissible if the factory did not work during the corresponding periods in the base year. If the object of the notification was not to grant any exemption in respect of sugar produced during any one of the periods mentioned at serial numbers 1 to 4 if no sugar was produced during the corresponding periods in the base year then the proviso to the notification would have been worded differently. In this very judgment notice was also taken of the decision of the Patna High Court in Civil Writ Petition No. 865 of 1966 wherein taking a contrary view, it was held :

'For example if a factory produces 1000 quintals of sugar between January 1, 1964 and June 30, 1964, but produces only 900 quintals of sugar during the period January 1, 1965 to June 30, 1965 the factory would not be entitled to any rebate under the general provisions, and a factory which has no production during the period January 1, 1964 to June 30, 1964, but produces only 900 quintals of sugar during the relevant period, that is, January 1, 1965 to June 30, 1965 will be entitled 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.'

9. The Patna view was not approved in the Andhra Pradesh judgment. It was held that 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 well deserves the incentive. On the other hand, if a manufacturer producing 1000 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.

10. We are in agreement with the view taken by the learned Judge of the Andhra Pradesh High Court. The points now argued by the learned counsel for the Union of India were raised in the Andhra Pradesh case and the learned Judge in his order dated February 3, 1978 fully met and rightly repelled them. We, therefore, hold that the appellants are entitled to sugar incentive rebate in terms of notification dated April 20, 1974 for the sugar produced by them in the months of April and May, 1974 irrespective of the fact that they did not produce any sugar in the corresponding months of 1973. It is understood that the position would have been different if the appellant had not produced any sugar during the entire base period of 1st October, 1972 to 30th September, 1973. The contrary finding of the learned Single Judge in the impugned order dated September 9, 1980 is reversed.

11. In view of the discussion above, we accept both the Letters Patent Appeals, set aside the consolidated order of the learned Single Judge dated September 9, 1980 and further allow Civil Writ Petitions Nos. 1034 of 1978 and 4092 of 1977 with no order as to costs throughout.


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