UNION OF INDIA Vs. ARUNA SUGARS LIMITED

JUDGEMENT

(1.) This judgment will dispose of W.A. Nos. 303, 309 and 311 of 1980 which respectively arise out of W.P. Nos. 550, 2467 and 436 of 1977. All these three petitions along with some other petitions have been disposed of by a common judgment of this Court delivered on 28th of September, 1979. The appeals involve the construction of a notification issued by the Central Government in exercise of its powers under sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, hereinafter referred to as 'the rules'. The relevant part of the notification reads as follows- "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, from so much of the duty of excise leviable thereon as is specified in the corresponding entry in clauses (3) and (4) of the said Table. Explanation. - In this notification, - (a) 'average production' in relation to sugar produced in a period by a factory which had gone into production for the first time in 1967-68 or earlier, means, the simple average production during the corresponding period of the preceding five sugar years. 4. Where production in one or more sugar years among five sugar years was nil, the production in such year or sugar years shall be ignored and the average production shall be the average production of the corresponding period of the remaining sugar years.'

(2.) The sugar year admittedly commences from the first day of October and ends on the 30th day of September next following. The three petitioners in the three writ petitions are manufacturers of sugar and their claim for incentive in accordance with the above-mentioned notification in all the cases is for the period 1-10-1974 to 30-9-1975. In respect of each of these petitioners, for the above incentive period, their production of sugar exceeded the average production of the base period which is the corresponding period of the preceding five sugar years. All the three petitioners have originally claimed certain amounts representing the duty of excess from which sugar manufactured by them was exempted. Later on, however, each of the three petitioners made a claim of additional rebate because according to them if the notification is construed in the manner in which they wanted to construe it, they were entitled to a large amount of additional rebate. The original rebate and the additional rebate claimed by each of the petitioners were as follows - The claim made by the petitioners for additional rebate having remained undetermined for a long period the petitioners had filed three writ petitions in this Court. The petitioners' case before the learned Single Judge and in these appeals is that the quantity indicated in Clauses (a), (b), (c), (d) and (e) of the Notification dated 12-10-1974, for the purpose of computation of the rebate in excise duty is to be determined with reference to the excess production. Their case is that when Clauses (a), (b), (c) and (d) refer to 7.5%, 10%, 10% and 10%, the quantity of sugar which qualifies for the rebate is to be determined as the percentage of the excess production over the average production of the corresponding period of the preceding five sugar years. For example, when the total production is 7000 quintals of sugar and the average production for the preceding five years is 3000 quintals the rates at which the rebate is to be calculated should be on the basis of the percentage of the excess production of 4000 quintals. According to the Department, however, when the quantity qualifying for rebate under the different clauses is to be determined it is with reference to the average production that the percentage has to be applied. In short, the difference lies in whether it is the figure of excess production of which the percentage is to be calculated or whether it is the figure of average production of which the percentage is to be taken. To put it differently, in the illustration given whether 7.5%, 10%, 10% and 10% has to be with reference to the four thousand quintals or with reference to the average production of 3000 quintals. The learned Judge has taken the view that the percentage has to be taken with reference to the total excess production and not with reference to the average production. The learned Judge has approved of the time taken in a notice which was issued by the Government of India being Trade Notice 51/76, dated 4-3-1976, with reference to Central Excise Sugar incentive rebate and the method of calculation of the rebate for 1974-75. This Trade Notice superseded an earlier Trade Notice dated 3-9-1975 in which a clarification was issued with regard to Notification dated 12-10-1974, in the following words -" * It is clarified that the expressions like the one such as 'on excess production upto 7.5%' refer to percentage of the average production during the relevant period, and not to the percentage of excess production. "By the Trade Notice dated 4-3-1976 a modification was made in this Trade Notice dated 3-9-1975 by stating as follows -" * In paragraph 2 of the said notice the words refer to percentage of the average production during the relevant period, and not to percentage of the excess production may be substituted to read as refer to the percentage of excess production and not to the average production during the relevant period.' The learned Judge therefore allowed the petitions and held that all the petitioners were entitled to the larger amounts of excise duty rebate as claimed by them.

(3.) In these three appeals filed on behalf of the Department the stand now taken is that the interpretation contained in the Trade Notice dated 3-9-1975 was the correct interpretation and a reference has been made to a Press Communique which was issued contemporaneously with the Notification dated 12-10-1974. In this Press Note the working of the notification was explained as follows- "Incentives for excess production for the period from December, 1974 to September, 1975 are being provided on a slab basis. On excess production of sugar upto 7.5% of the average production of the preceding five years, the rate of rebate would be Rs. 20 per quintal on free sale sugar and Rs. 5 per quintal on levy sugar. On the next 10% of the excess production the rate of rebate would be Rs. 40 and Rs. 10 per quintal respectively. Excess production beyond 17.5% but not above 27.5% would get a rebate of Rs. 50 and Rs. 14 per quintal respectively. Production exceeding 27.5% but not exceeding 37.5% of the base production would be entitled to a rebate of Rs. 60 and Rs. 18 per quintal respectively. On production, exceeding 37.5% of the base production a factory would be entitled to Rs. 82 and Rs. 22 per quintal as rebate for free sale and levy sugar respectively." *