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TMI Blog1985 (8) TMI 187X X X X Extracts X X X X X X X X Extracts X X X X ..... (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. S. No. Description of sugar Duty of excise free sale sugar Levy sugar **** 2. Sugar produced in factory during the period commencing on the 1st day of December, 1974, and ending with the 30th day of September, 1975 which is in excess of the average production of the corresponding period of the preceding 5 sugar years, that is- (a) On excess production upto 7.5% Rs. 20 per quintal Rs. 5 per quintal (b) On excess production on the next 10% Rs. 40 per quintal Rs. 10 per quintal (c) On excess production on the next 10% Rs. 50 per quintal Rs. 14 per quintal (d) On excess production on the next 10% Rs. 60 per quintal Rs. 18 per quintal (e) On excess production beyond 37.5% Rs. 82 per quintal Rs. 22 per quintal (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 f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Department also contends that in a judgment delivered by the Andhra Pradesh High Court the construction of the notification canvassed by the Department has been accepted. That judgment is in W.P. 4039 and 3502 of 1976, decided on 16-2-1978. According to Mr. Vijayaraghavan who appears on behalf of the original petitioners, if the notification dated 12-10-1974, is to be read in the manner desired by the Department then we shall have to add the words 'of average production' after the percentage of 7.5%, 10%, 10% and 10% in Clauses a, b, c and d of the second paragraph of the Table. The further argument is that if in Clause (e) we read the words' of average production' after 37.5% and if this 37 5% is with reference to average production, then this clause will only cover the balance of 62.5% of the average production with the result that any excess production beyond 62.5% of the average production will not be entitled to rebate at all. Therefore, according to the learned Counsel since the notification must be read having regard to the express words used in the notification and there is no justification for the Court to add any additional words in the notification, and further, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 'on excess production upto 7.5%' it is just another way of saying 'on 7.5% of excess production.' When it is construed this way, we need not add any additional words. There is another difficulty in accepting the argument advanced on behalf of the Department. If the percentage is to be worked on the basis of average production then the total average production has to be equated with 100%. Let us take a case where the excess production is more than the average production. In such a case if the different percentages are calculated with reference to the average production, then a part of the excess production beyond the average production will not get the benefit of the rebate from excise duty. Supposing the total production is 7000 quintals, the average production is 300 quintals and, therefore, the excess is 4000 quintals. If we adopt the construction canvassed on behalf of the Department, then the maximum excess production in respect of which rebate can be claimable cannot exceed 3000 quintals. The learned Counsel appearing on behalf of the Department, however, contended that the remaining 1000 quintals of sugar which is a part of the excess production will be covered by Clause (e) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y adversely affect the petitioners inasmuch as while the notification says that the entire excess production will be subjected to rebate but at different rates, according to the construction canvassed on behalf of the Department, a part of the excess production will not be taken into account for the purpose of rebate. We may illustrate this by giving one illustration. We are taking a case where the total production is 7000 quintals, the average production is 3000 quintals and, therefore, the excess production is 4000 quintals. According to the computation made as canvassed by the Department, the computation both for the purpose of free sugar and levy sugar at the rates specified in the notification will be as follows - Rebate Rs. 2,306.25 Clause (a) 7.5% of 3000 Rs. 6,150.00 (b) 10% of 3000 Rs. 8,080.00 (c) 10% of 3000 Rs. 9,810.00 (d) 10% of 3000 The total number of bags c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the construction would not be proper. 8. We are, therefore, inclined to take the view that the quantity of excess sugar is to be calculated under the said clauses of the second paragraph of the Table with reference to the production in excess of average production and not with reference to the average production. 9. Undoubtedly, the learned Single Judge of the Andhra Pradesh High Court has accepted the construction which was placed on behalf of the Department. The learned Judge himself has observed in the judgment that the question is probably one of first impression. My first impression was that on a fair reading of the notification, it should be interpreted as first stated by me. The learned Judge, therefore, on his first impression has taken the view which was canvassed by the Department. One of the reasons which the learned Judge has given while rejecting the view which was canvassed on behalf of the Sugar factories was that even if a manufacturer produces one quintal of sugar in excess of the average production of sugar for the previous five years, rebate will have to be given at the lowest rate of Rs. 20 per quintal for .075 quintal and at the highest rate o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court and this Court, the learned Judge in paragraph 8 of the judgment has observed as follows - "The learned Judge of the High Court of Madras who decided the matter took a different view and did not agree with the view taken by the High Court of Andhra Pradesh. With great respect, I am unable to agree with the interpretation sought to be made on the working of the notification by the High Court of Andhra Pradesh. There is no warrant for reading the words average production of previous years into the notification which is otherwise plain and conveys full meaning and which also subserves the purpose and objects for which the relief was being given". 13. We are, therefore, satisfied that the learned Judge was right when he took the view that the percentage of excess production which is entitled to rebate under the third and fourth columns has to be computed on the basis of excess production and not on the basis of average production. There is thus no infirmity in the view taken by the learned Judge and the appeals therefore have to be dismissed. 14. It appears to us that the argument of the learned Counsel for the department that they had no opportunity to ascertain ..... X X X X Extracts X X X X X X X X Extracts X X X X
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