1. This petition under Article 226 of the Constitution of India involves the question of interppretation to be placed on the notification dated 12th October, 1974, a copy of which has been filed as Annexure `A' by which the Government of India, in exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944 granted certain exemptions in regard to sugar. The notification is follows:
NOTIFICATION CENTRAL EXCISE
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 excise livable thereon as is specified in the corresponding entry in columns (3) and (4) of the said table. TABLE-------------------------------------------------------------------------Sr. Description of Sugar Duty of ExciseNo. Free Sale LevySugar Sugar------------------------------------------------------------------------(1) (2) (3) (4)------------------------------------------------------------------------1. Sugar produced in a factory duringthe period commencing on the first dayof October, 1974 and ending with 30thof November, 1974 in excess of theof the average production of thecorresponding period of the precedingfive sugar years in respect of which:(a) The overall production of thefactory for the entire sugar year Rs.60/-per Rs. 16/-perdoes not equal the average quintal quintalproduction of the preceding fivesugar years.(b) The overall production of thefactory for the entire sugar year Rs. 82/-per Rs.22/-perequals or exceeds the average quintal quintalproduction of the precedingfive sugar years.2.Sugar produced in a factory during theperiod commencing on the 1st day ofDecember,1974,and ending with the30th day of September,1975, which isin excess of the average productionof the corresponding period of thepreceding five year,that is:(a) on excess production up to 7.5% Rs.20/-per Rs. 5/-perquintal quintal(b) On excess production on the next Rs.40/-per Rs.10/-per10% quintal quintal(c) On excess production on the next Rs.50/-per Rs.14/-per10% quintal quintal(d) On excess production on the next Rs.60/- per Rs. 18/-per10% quintal quintal(e) On excess production on beyond Rs.82/-per Rs.22/-per37.5% quintal quintal________________________________________________________________________
2. The petitioner company is engaged in the manufacture and sale of sugar and has its sugar mills at Khatauli, District Muzaffarnagar, U.P. The petitioner in the relevant year, that is, year commencing on 1st December 1974 and ending with 30th September 1974 filed a claim of rebate of excise duty for a sum of Rs. 5,52,205/-. The said claim was revised and an amended claim of Rs. 13,44,053.34 was filed on 16th December 1976. The Collector of Central Excise, Kanpur vide letter dated 17th July 1975 informed the petitioner that it had been sanctioned rebate pursuant to the notification dated 12th October 1974 for Rs. 5,52,264/-.
3. The contention of the petitioner is that the percentage of rebate envisaged in Seriall No.2 of the notification has to be worked out with reference to the actual excess production and not with reference to the production of the correspponding period of preceding five sugar years. The contention of the respondents is that the rebate is calculable on the basis of percentage of average production of the previous five years and not on the basis contended to be the petitioner.
4. The said notification has been the subject of judicial interpretation. In India Sugars and Refineries Ltd., Hospet v.Union of India and others, 1983 Excise Law Times 209, a Single Judge of the Karnataka High Court held as under :
'Since the notification dated 12--10-1974 perscribed slabs n accordance with which rebate had to be allowed, thereforee, the rebate was calculable in regard to the percentages of the excess production during the relevant year and not in regard to the precentage of average production of the previous five years.'
5. In Sakthi Sugar Limited, Coimbatore v. Union of India and others 1983 E.L.T. 44484, a Single Judge of the Madras High Court observed :
The expression `on excess production up to 7.5%' and `on excess production on the next 10%' means, 7.5% of the excess production, the next 10% of the excess production and not 7.5% or next 10% of the average production. To illustrate if the average production in the particular five years was 1000 quintals and the excess production to the particular year over that average production is 2000 quintals, the 7.5% of the excess production would be 150 quintals and not 75 quintals as claimed by the excise authorities. The interpretation adopted by excise authorities is possible only if the words `of the average production' are added to the different percentage mentioned in relevant Notifications, in them 2 of the Notification dated 12-10- 1974.'
6. In M/s.Pravara Sahakari Sakhar Karkhana Ltd.v.Union of India and others 1984 Excise and Customs Reporter, page 59, a Division Bench ofo the Bombay High Court held as under :
'On a plain reading of the Notification, the petitioner is entitled to claim rebate on the entire excess production over the average as provided by Item No.2 in Column (2) of the Notification.
It is not permissible for the Courts to ignore the interpretation which isi in favor of the tax-payer by entering upon the inquiry as to what the legislature had in mind while publishing the Notification. Whatever may be the intention of the Government is issuing the Notification, if the words in the Notification are clear, then the citizen is entitled to take advantage of the same.
....in the present case it is impossible to hold that two interpretation are possible while construing Item No.2 in Column (2) of the Notification. The only interpretation possible is that the producers are entitled to the rebate on entire production inexcess of the average production of the correspondingfive sugar years. As no other interpretation is possible, it is essential that we must exercise the jurisdiction and correct the error which is apparent on the face of record.'
7. The Andhra Pradesh High Court in Writ Petition No.4039 of 1976 (M/s.Challapalli Sugar Ltd.v.The Union of India and others) decided on 16th February, 1978 took a contrary view.
8. I have carefully gone through the cited authorities and I am inclined to agree with the view taken by the Bombay High Court in M/s.Pravara Sahakari Sakhar Karkhana Ltd. (Supra).
9. Shri D.K.Kapur, learned counsel for the respondents, has brought to my notice that the Ministry of Finance has filed Special Leave Petition in the Supreme Court of India against the judgment in the case M/s. Pravara Sahakari Sakhar Karkhana Ltd. and also in some other cases involving the same issue. Mr.Kapur has, with his usual fairness, pointed out that in the case of Pravara Sahakari Sakhar Karkhana Ltd. the prayer for stay was refused by the Supreme Court. I find no valid reason to postpone the decision of this writ petition. In case the respondents are dissatisfied with the decision they can go further in appeal.
10. Agreeing with the view expressed by the Bombay High Court, the Karanataka High Court and the Madaras High Court, I allow the petition and direct the respondents to allow rebate to the petitioner calculated on the basis to actual excess production and not with reference to the average production of othe corresponding period of preceding five sugar years. The petition is disposed of accordingly. The parties are left to bear their own costs.