1986 (5) TMI 136 - AT - Central Excise

Summary

Issues:
1. Calculation of base average production and excess sugar production.
2. Application of ratio 65:35 for levy and free sale sugar clearance.

Analysis:

Issue 1: Calculation of base average production and excess sugar production
The case involved a dispute regarding the calculation of base average production and excess sugar production. The appellants availed benefits under Notification No. 135/83 for excess sugar produced during a specific period. The show cause notice challenged the methodology used for calculating base average production, specifically objecting to the deduction of processing losses from brown sugar. The lower appellate authority upheld the original adjudicating authority's decision, stating that the methodology adopted was correct. However, the appellants contested this, arguing that losses from reprocessing brown sugar should not be deducted when calculating average production. The Tribunal analyzed the notification's provisions and concluded that reprocessed brown sugar losses should not be deducted, aligning with the original adjudicating authority's decision.

Issue 2: Application of ratio 65:35 for levy and free sale sugar clearance
The second issue revolved around the application of the ratio 65:35 for levy and free sale sugar clearance. The appellants argued that the notification did not specify this ratio and that it should be determined by the Directorate of Sugar based on overall production targets for each factory in a sugar year. The Tribunal agreed with the appellants, stating that there was no basis in the notification to apply the 65:35 ratio to clearances made each month. The Tribunal allowed the appeal on this issue, emphasizing that the ratio should be determined by the Directorate of Sugar and not applied on a monthly basis as done by the Department.

In conclusion, the Tribunal upheld the methodology for calculating base average production and excess sugar production but ruled in favor of the appellants regarding the application of the 65:35 ratio for levy and free sale sugar clearance. The judgment directed a revision of the duty demand in line with the decisions made on these issues.