KESAR ENTERPRISES LTD Vs. COMMISSIONER OF C. EX.

JUDGEMENT

(1.) THESE appeals have been referred to Larger Bench to resolve the conflicting decisions given by two benches of co -ordinate jurisdiction in Sahakari Khand Udyog v. CCE, Surat, 1999 (33) RLT 767 and National Co -operative Sugar Mills Ltd. v. CCE, Madurai, 1999 (33) RLT 978. In the first decision the Bench took the view that rebate allowable to manufacturers of sugar as per Notification No.108/78 comes under the provisions contained in Section 11B of the Act are hit by the principle of unjust enrichment. In the second decision in National Cooperative Sugar Mills Ltd. the South Regional Bench took the view that incentive provided to manufacturers of sugar under Notification No. 237/87 (successor notification to Notification 108/78) is in the nature of subsidy falling outside the purview of unjust enrichment and hence not falling under Section 11B of the Act.

(2.) THE facts of the two cases before us are virtually identical. Appellants in both the cases are manufacturers of sugar. Contentions raised by them are also identical. So we refer to the facts in M/s. Kesar Enterprises Ltd. to highlight the point raised for consideration by us. In this case the appellant wanted the benefit of Notification No. 132/82, dated 21 -4 -1982 in relation to sugar manufactured in their factory during the period from 1 -5 -1982 to 30 -9 -1982. As per this notification sugar was given exemption from duty as mentioned in columns 2 and 3 to that notification. Free sale sugar produced in the factory during the period from 1 -5 -1982 to 30 -9 -1982 in excess of the average production of the corresponding period of the previous three years was liable to duty at Rs. 40.00 per quintal, whereas in the case of levy sugar it was Rs. 24.50. Exemption from duty over and above these rates has been granted by the notification. The question to be tackled in these appeals is as to what benefit accrues to the manufacturer under the said notification.

(3.) SUPREME Court in the decision in Belapur Sugar & Allied Industries Ltd. v. CCE, Aurangabad - 1999 (82) ECR 209 (SC) went into the scope and ambit of Notification No. 132/82. As to how the notification is to be interpreted has been stated by Their Lordships as "if there be two possible interpretations, it is that interpretation which subserve the object and purpose should be accepted. The objective of this Notification is by conferring rebate in excise duty, an incentive is given to a factory for increasing the sugar production during the lean period". With this objective, when the notification was examined, Their Lordships opined that it conferred benefit on the manufacturer. The benefit that was conferred on the manufacturer of sugar is by giving credit in their PLA of excess amount paid by them by way of duty. The credit so made in the PLA cannot be treated as refund as understood in common parlance, falling under Section 11B of the Act. Their Lordships went on to observe -