2005 (2) TMI 134 - SC - Central Excise

Non grant of rebate in excise duty in accordance with the Notification No. 132/82 issued by the Government of India on April 21 1982 Held that - Grant of rebate exemption or concession is in the nature of policy of the Government. Normally in such policy matters a court of law will not interfere unless the policy is shown to be contrary to law inconsistent with the provisions of the Constitution or otherwise arbitrary or unreasonable. Since the policy decision as reflected in Clause 3 of Notification No. 132/82 cannot be said to be arbitrary unreasonable or inconsistent with statutory provisions a person claiming the protection under the said notification has to comply with the conditions laid down in the notification. As the appellant has been granted benefit of rebate in excise duty as per Clause 3 of the notification the action cannot be held unlawful and the appellant-society has no reason to make grievance against the action of the Revenue. Appeal dismissed.

Summary

Issues Involved:

1. Entitlement to rebate in excise duty under Notification No. 132/82.
2. Calculation of average production for rebate purposes.
3. Legality of the action taken by the respondent-authority.
4. Interpretation of Clause 3 of Notification No. 132/82.
5. Maintainability of the writ petition under Articles 226 and 227 of the Constitution.
6. Policy considerations behind the notification.

Detailed Analysis:

1. Entitlement to Rebate in Excise Duty:

The appellant, a co-operative society engaged in sugar manufacturing, claimed entitlement to a rebate in excise duty under Notification No. 132/82 issued by the Central Government. The notification aimed to incentivize excess production of sugar during the lean crushing period from May to September 1982. The appellant claimed a rebate of Rs. 19,96,516.17 for the excess production of 66,717.33 quintals of sugar during this period.

2. Calculation of Average Production:

The core issue revolved around the calculation of average production. The appellant argued that the average production should be calculated by dividing the total production of 33,029 quintals in the year 1978-79 by three years, resulting in an average of 11,009.67 quintals per year. The respondent-authority, however, considered only the production of 33,029 quintals in 1978-79, ignoring the 'nil' production years of 1979-80 and 1980-81, and granted a provisional rebate of Rs. 11,10,820.62 for an excess production of 44,698 quintals.

3. Legality of the Action by Respondent-Authority:

The Assistant Collector of Central Excise and Customs, Aurangabad, upheld the respondent's interpretation, stating that Clause 3 of the notification was clear in specifying the method for calculating average production. The appellant's claim was rejected, and the provisional rebate was made final.

4. Interpretation of Clause 3 of Notification No. 132/82:

Clause 3 of the notification explicitly stated that the average production should be calculated by considering only the years in which the factory had actually produced sugar, ignoring the years with 'nil' production. The appellate authority initially sided with the appellant, but the Customs, Excise and Gold (Control) Appellate Tribunal (CEGAT) reversed this decision, supporting the respondent's interpretation that the 'nil' production years should be ignored.

5. Maintainability of the Writ Petition:

The appellant moved a writ petition under Articles 226 and 227 of the Constitution after the CEGAT dismissed their application under Section 35G of the Act as not maintainable. The High Court dismissed the writ petition, stating it was not maintainable and also observed that no prima facie question of law had arisen. The Supreme Court acknowledged that the High Court should have considered the merits of the case but ultimately agreed with the High Court's decision on the merits.

6. Policy Considerations Behind the Notification:

The Supreme Court emphasized that the notification's objective was to incentivize sugar production during lean periods. The Court noted that the language of the notification was clear and unambiguous, indicating that only the years with actual production should be considered for calculating the average. The Court also highlighted that policy decisions regarding rebates, exemptions, or concessions are generally not subject to judicial interference unless shown to be arbitrary, unreasonable, or inconsistent with statutory provisions.

Conclusion:

The Supreme Court dismissed the appeal, upholding the respondent's action as legal and consistent with the notification. The Court found that the appellant's interpretation was not supported by the clear language of Clause 3 and that the policy objective of the notification was to incentivize production during lean periods, not to grant benefits for years with 'nil' production. The appellant's claim for a higher rebate was thus rejected.