TMI Blog1993 (3) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... produce sugar during the same period in the next sugar year and earn rebate in the next year. More particularly, it can not reasonably be expected that a factory-owner would deliberately keep his factory idle during the peak production period (December to April) only with a view to produce sugar during that period next year and earn rebate in such next year. It would be unrealistic to say so. Keeping in mind that the basis for these percentages is the average production of the previous five years and not the excess production. Out of 2,500 quintals produced during the said period in the current sugar year (December 1, 1974 to September 30, 1975), the average of the five previous sugar years i.e., 1000 quintals should be deducted first, which means the excess production during the current year is 1500 quintals. 7.5% of 1000 quintals is 75 quintals. On this quantity of 75 quintals, the rate of rebate as per sub-clause (a) will be ₹ 20 per quintal in the case of free sale sugar and ₹ 5 per quintal in the case of levy sugar. Next 10% of excess production means 100 quintals which would be eligible for rebate under sub-clause (b) at the rate of ₹ 40 per quintal in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 28-9-1972 In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts sugar, described in column (2) of the Table below and falling under sub-item (1) of Item No. l of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), from so much of the duty of excise leviable thereon as is specified in the corresponding entry in column (3) of the said Table. TABLE S. No. Description of sugar Duty of Excise (1) (2) (3) 1. Sugar produced in a factory during the period commencing from the 1st day of October, 1972 forty per and ending with the 30th day of November, quintal 1972 which is in excess of the quantity of sugar produced during the corresponding period in 1971. Rupees Forty per quintal 2. Sugar produced in a factory during the period commencing from the 1st day of December, 1972 and ending with the 30th day of April, - 1973 which is in excess of 115% of the quantity of sugar produced during the period commencing from the 1st day of December, 1971 and ending with the 30th day of April, 1972. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gar factories were commencing their operations only in the month of December. Either with a view to induce these sugar factories to produce more or with a view to induce them to commence their operations early in the sugar year, the rebate provided for producing sugar in the months of October and November in excess of the corresponding period in the previous sugar year was kept relatively high. The scheme of the notification dated 28-9-1972 appears to be this: (1) if during the months of October and November 1972 (in the Sugar Year 1972-73), a factory produced sugar in excess of the quantity of sugar produced by it during the months of October-November 1971, such factory was granted rebate in the Excise Duty at the rate of rupees forty per quintal in so far as the excess production is concerned. (2) Rebate for the period 1st December 1972 to 30th April, 1973 was available at the rate of Rupees twenty per quintal provided the production of sugar during the said period was in excess of 115% of the quantity of sugar produced by the said factory during the corresponding period in the previous Sugar. Year, in so far as the excess production is concerned. (3) For the months of Ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the above subject (copy enclosed for ready reference). In this connection, the Government had issued a similar Notification on 13th Oct. 1971, on the same subject. On this Notification, in response to an enquiry made by the Committee of the Association, the Board had clarified as per their letter No. F. No. 14/33-71/CX. 1 dated 26th November, 1971, that a factory which had worked during the base period i.e. during the period commencing from 1st day of October, 1970 and ending with 30th day of September, 1971, though it had not worked during the period from 1st October, 1970 to 30th November, 1970, and the production during this period was nil, would be entitled to the excise rebate at the notified rate on its entire production achieved during the month of October and November, 1971. As the Notification issued this year is also on similar lines, the Committee presume that the clarification given by the Board last year will apply to the Notification issued this year also, i.e. where a factory has worked in the base period (1st October, 1971 to 30th September, 1972) it will be entitled to the full rebate on its entire production during the various periods mentioned in the Notificat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said Notification? Since the Notifications for 1972-73 and 1973-74 are more or less similar, disputes raised before High Courts pertained to both these years. (Indeed, the said issue is common to the other two notifications concerned herein as well, with some difference, as we shall indicate at the proper stage). It appears that almost all the High Courts except Karnataka have held in favour of the factories. In Patna high Court, there appears to be a conflict of opinion. Karnataka High Court has, however, held in favour of the Union of India. 10. The first of the reported decisions is of the Andhra Pradesh High Court (Chinnappa Reddy, J., as he then was) in Etikoppaka Co-operative Agricultural Society v. Union of India [2][1982 (10) E.L.T. 19]. The reasoning in the said Judgment has been followed by most of the other High Courts. See 1986 (26) E.L.T. 904 (Bombay); [3][1982 (59) E.L.T. 409 (Allahabad)]; 1982 (10) E.L.T. 19 (Punjab Haryana); 1986 (24) E.L.T. 259 (Madras) and 1987 (30) E.L.T, 260 (Orissa). 11. Shri Ganguli, learned counsel for the Union of India contends as follows: Language of the Notifications (pertaining to the year 1972-73 and 1973-74) is quite cle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the inefficient and indolent and punishing the efficient. The learned counsel seeks to reinforce his argument by referring to clause (2). It relates to the period 1st December 1972 to 30th April, 1973. Rebate in the sugar produced during this period is available only if it is in excess of 115 per cent of the quantity of sugar produced during the period December 1, 1971 to April 30, 1972. If the production is nil during the corresponding period in the previous sugar year, asks the counsel, how is one to work out 115% of it. What is 115% of zero? asks he. For all these reasons counsel says, nil production cannot be equated to "the quantity of sugar produced....." in clause (1). Counsel also says that Clause (1) of the first Proviso in the said notification should be harmonized with the several clauses mentioned in the Table and that no interpretation should be adopted which renders any part of the said notification superfluous. 12. We find ourselves unable to agree with the learned counsel for the Union of India. While we agree that the several clauses in the Notification must be read together, harmonised and reasonably understood, we cannot also ignore the underlying object an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iod in the previous sugar year but produces a larger quantity during the said period in the current sugar year, it must be rewarded. It may be remembered that no manufacturer produces sugar merely for the sake of rebate. Rebate is an inducement, an additional attraction. It is not as if without rebate provided by these notifications, no one would have produced sugar. We are also unable to see any difficulty in operating clause (2) of the said notification. There is no arithmetical difficulty in working out 115% of zero; it is zero. What applies to clause (1) applies equally to clauses (2), (3) and (4). Our understanding is reinforced and supported by clause (a) of the first proviso. It says that the benefit of the said rebate would not be available to a factory "which did not work during the base period." Why does it say so? What is its meaning and implication? It is only that the factory need not necessarily have worked during each of the corresponding periods in the base year; it is enough if it has worked in the base year. 14. We may point out that a majority of the High Courts in the country have adopted the very same interpretation as has been placed by us. 15. It is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting to 1972-73 and 1973-74. In the notification dated 12-10-1974 (relating to the sugar year 1974-75) the sugar year is divided into two blocks/periods. The first block comprises October and November 1974 whereas the second block takes in December 1974 to September 1975. Here too, the question is identical to that arising in the years 1972-73 and 1973-74. The answer too will naturally be the same. 18. In view of the aforesaid conclusion, it is not necessary for us to go into the other questions raised by the factory-owners except the following : 19. There is a minor controversy with respect to the working of Clause (2) in Notification No. 146/74 dated 12-10-1974 relating to the sugar year 1974-75. Clause (2) of the Table contained in the notification reads as follows : TABLE Duty of excise No. Description of sugar Free Sale Sugar Levy Sugar (1) (2) (3) (4) 1. ........ 2. Sugar produced in a 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 cor- res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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