TMI Blog1986 (5) TMI 136X X X X Extracts X X X X X X X X Extracts X X X X ..... production, an additional amount of Rs. 6,34,177.19 was also sanctioned in full and final settlement of the benefit. Final credit was given on 25-7-1984. 2. A show cause notice dated 23.1.85 was, however, issued to the appellants demanding Rs. 69,560.40 on the following two grounds:- (i) In calculating the base average production, the loss occurring in processing of brown sugar during the corresponding period of base years 1978-79, 1979-80 and 1980-81 was deducted which ought not to have been done. This resulted in lowering the base production and thereby increased the excess production in the incentive period referred to above namely, May 1983 to September, 1983. (ii) The ratio of 65:35 for levy and free sale sugar must be applied on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the proviso in para 1 of the notification read with clauses (a) and (b) of the Explanation in the said para. Accordingly the lower appellate authority has held that the application of ratio 65:35 as adopted by the lower original authority is correct in law. 4. The learned representative for the appellants has strongly contested the observation on the first ground mentioned in the show cause notice. He vehemently stated that at no point of time the representatives accepted the methodology adopted by the Supdt. of Central Excise regarding addition of reprocessing loss for computing the average production. He drew our attention to para 2 of the notification which sets out the method for computing the production of sugar during the period me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stent in the application of ratio on the monthly basis. Where the free sale sugar has been cleared in excess of 35% in a particular month, the Department has restricted it to 35% of clearance while calculating the rebate. But where it has fallen short of 35% it has limited the claim to the actual quantity of free sale sugar. This is not logical on the basis of the Department s own understanding. 6. Shri Vadivelu, the learned Departmental Representative submitted that for calculating average production in terms of the said notification, actual production of sugar including brown sugar, has to be taken into account because that brown sugar has been duly accounted for in the R.G.1 account. Any processing loss occurring on reprocessing of suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be applied to the excess production of sugar as well as to the average production of sugar. We, therefore, do not find any reason in applying one criterion for determining excess production and another for average production. While making a case for inclusion of entire brown sugar (without deduction of processing loss), the adjudicating authority has taken the support of the sucrose content and while denying the inclusion of the loss in brown sugar in the incentive period, he takes the ground that the sugar pertaining to the processing loss cannot be said to have been cleared on payment of duty. Strictly going by the method of computation referred to in para 2 of the notification brown sugar if taken into account in the R.G.1 as sugar prod ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugar in each month. Proviso to Para (1) of the notification does not provide any nexus, as observed by the lower appellate authority, for calculation of the aforesaid ratio for each month. Proviso to para (1) says that if any excess production sugar is cleared as levy sugar then the amount of exemption calculated at the rate applicable to levy sugar shall not exceed the amount of duty of excise payable on such quantity of levy sugar (in a particular consignment). Similarly, if any excess production sugar is cleared as free sale sugar, then the amount of exemption calculated at the rate applicable to free sale sugar shall not exceed the amount of duty of excise payable on such quantity of free sale sugar (in that particular consignment). Acc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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