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TMI Blog1991 (4) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... above. The appellants denied liability. The Assistant Collector under his order dated 19-12-1980 confirmed the demand. The appeal against the same was dismissed by the Collector (Appeals) under his order dated 22-9-1983. This appeal is against the said order. 2. We have heard Shri Y.N. Chopra, consultant for the appellants and Shri K.C. Sachar, JDR, for the department. 3. Shri Chopra submits that the question whether the rebate granted as earlier noted could be required to be repaid (on the ground that part of the sugar had been lost in reprocessing subsequently) was the subject matter of decision by this Tribunal in (i) Collector of Central Excise, Allahabad v. M/s. Tulsipur Sugar Company Limited (1987 Vol. 13 ECR 265), (ii) Collector of Central Excise, Allahabad v. M/s. Tulsipur, Sugar Company Limited (1987 Vol. 12 ECR 1210) and (iii) M/s. South India Sugar Limited v. Collector of Central Excise, Madras [1987 (30) E.L.T. 509 (Tri.) = 1987 Vol. 12 ECR 868]. It has been held by the Tribunal in the said decisions that the department was not entitled in such circumstances to call upon the assessee to repay the rebate already granted, fallowing the said decisions we hold that the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts appealed in vain to the Collector of Central Excise (Appeals) whose order is impugned now before the Tribunal. 8. The learned consultant for the appellants now submits that this issue has been decided by the following decisions of the Tribunal :- (1) Collector of Central Excise, Allahabad v. M/s. Tulsipur Sugar Co. Ltd. [1987 (13) ECR 265]. (2) Collector of Central Excise, Allahabad v. M/s. Tulsipur Sugar Co. Ltd. [1987 (12) ECR 1210]. (3) M/s. South India Sugar Ltd. v. Collector of Central Excise, Madras.[1987 (30) E.L.T. 509 (Tri.) = 1987 (12) ECR 868]. It has been held by the Tribunal in the said decisions that the department was not entitled in such circumstances to call upon the assessee to repay the rebate already granted. 9. It is observed that the decision in the case of M/s. South India Sugar Ltd. is the leading decision and the remaining two decisions have been based on the said decision. The reasoning which has favoured with the Tribunal in the case of South India Sugar Ltd. is given in para 18 of the said report and is as follows :- "18. Shri Lakshmikumara on the other hand relies on the words in sub-clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtracted above, appears to have been based on a wrong reading of Clause (c) of 2nd proviso to Notification 203/72 dated 28-9-1972 and the corresponding clause in Para 2 of Notification 189/73 dated. 4-10-1973 [clause (b) (ii) of para 2 of this notification]. The learned advocate therein has added certain words to the proviso of the said notification. This point is better appreciated if the arguments of the learned advocate and the exact wording of the clause of the proviso to Notification 203/72 are placed side by side as below: - Contention of the learned advocate Actual words in the notfn. It has been specifically stipulated that any sugar obtained by reprocessing of defective, damaged or brown sugar should not be again taken into account for claiming rebate if the said defective, damaged or brown sugar has already been included in the quantity of sugar produced for deciding the quantum of exces production Provided further that in computing the production of sugar during the periods mentioned in col. 2 of the said table. (c) any sugar obtained by refining gur or khandsari sugar or any sugar obtained by reprocessing of defective, damaged sugar or brown suga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tification with the Government under the said rule cannot exceed the levy which is otherwise leviable under the First Schedule. On a quantity of sugar which is not produced at all and therefore could not have been cleared, there is no question of collecting duty of excise at all. Therefore, giving of any advance credit before clearance of sugar in terms of a procedure followed by the trade has to be applied subject to the conditions to which that procedure had been made applicable. The foremost condition in the procedure is that 'excess production sugar' on which rebate is given in advance in terms of the procedure is to be cleared from the factory. This condition is in consonance with the provisions of Rules 9 and 49 of the Central Excise Rules because duty is chargeable on the excisable goods at the time of their clearance from the factory. After having availed of advance credit in terms of the procedure prescribed by the Government in consultation with the industry the sugar factories cannot turn around and say that the credit given to them in terms of that special procedure is final and cannot be taken back even if they do not observe the condition laid down in the said procedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is available in para 4 of a trade notice based on Board's letter at page 327-A of CENCUS Vol. Ill 1975 which is reproduced below;- 'Regarding the operation of the rebate scheme is concerned, the benefit of the exemption is being given not as usual in the case of such notifications at the time of clearance of the goods, but an advance credit to the extent of the concession admissible under the notification is given as soon as excess production is determinable, in anticipation of the clearance of such sugar. It is an essential part of the scheme of grant of advance credit that all sugar in respect of which such advance credit is allowed should be cleared on payment of duty at the full rates. This ensures that the benefit that accrues to the Sugar Mills is limited to the extent provided under the notification.' This procedure can be deemed to be a supplemental instruction issued by the Board under Rule 233 of the Central Excise Rules, 1944. Having taken advantage of a part of these supplemental instruction, sugar factories cannot turn around and say that the other part of the said instruction or the whole of the instruction is illegal. Nature of the credit i.e. that it is advance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In view of the difference of opinion arising out of the orders of the two members constituting the Bench the following questions are referred to the President for his decision: (1) Whether the Department is competent to retrench the credit in respect of excess production sugar lost in reprocessing of sugar in subsequent years (Seasons) in terms of Notifications No. 257/76-C.E., dated 30-9-1976 and 108/78-C.E., dated 28-4-1978. (2) Whether the period of six months for demand or recovery of such credit on such sugar lost in reprocessing is to be counted from - (i) the date of such credit, or (ii) the date of such credit or the date of reprocessing made known to the Department whichever is later. 17. [Per: G. Sankaran, President]. - I have heard Shri Y.N. Chopra, Consultant, for the appellants and Shri L.C. Chakraborty, DR, for the respondent. The matter was taken up on 27-7-1990 and adjourned to 4-10-1990 to enable both sides to study the final order in a similar appeal No. E/1424/83-D - M/s. Cawnpore Sugar Works Ltd. v. Collector of Central Excise, New Delhi and make further submissions. That case re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed out of reprocessing of defective, damaged or brown sugar should not be taken into consideration if such defective, damaged or brown sugar had already been included in quantifying sugar produced for the purpose of granting rebate. (The words used in Notification Nos. 257/76-C.E., dated 30-9-1976 and 108/78-C.E., dated 28-4-1978 under consideration in the present disputes are similar). It was held that this would clearly establish that damaged or brown sugar would be sugar eligible for rebate. It is nobody's case in the present dispute that the subject quantity of brown sugar was not eligible for the duty rebate when the rebate was sanctioned. If, as a result of reprocessing, a quantity of the brown sugar was lost and was, therefore, not available for clearance on payment of duty and the quantum of rebate initially allowed on the said quantity is sought to be recovered, then, it has, in any view, to be shown by the Department that the initial assessments were provisional or that the sanction of rebate was subject to the explicit condition that it was liable to be altered in the event of any part of the sugar in respect of which the rebate was sanctioned being not actually cleared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 28-4-1978 provided the requirements of the law inter alia in respect of provisionality of assessments/limitation are complied with. (ii) The period of 6 months for demand or recovery of such credit on such sugar lost in reprocessing is to be counted from the date of such credit. This is subject to what is stated in respect of point (i). 24. The case will now go back to Special Bench 'D' for final disposal of the appeal. 25. [Final Order per: P.C. Jain, Member (T)]. - As a preliminary point Shri L.C. Chakraborty, learned DR for the Revenue has urged that the earlier appellants namely M/s. Laxmi Sugar & Oils Mills Ltd, do not exist any longer and the unit has since been taken over by the U.P. State Sugar Corpn; therefore he urges that while passing the order the cause title may be changed. 26. The learned consultant, Shri Y.N. Chopra does not object to it. 27. We have taken on record a copy of the Ordinance 1984 dated 29-9-1984 which shows the position regarding the taking over by the U.P. State Sugar Corporation. In view of the aforesaid position we have changed the cause title as shown above,. 28. After hearing of the matter by the two-Member Bench a diffe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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