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2005 (2) TMI 134

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....onferred by Sub-rule (i) of Rule 8 of the Rules read with Clause 50(4) of the Finance Bill, 1982, the Central Government granted exemption to sugar from excise duty in certain cases. For that purpose, Notification No. 132/82 was issued on April 21, 1982 as "Incentive Scheme" for excess production of sugar in order to encourage sugar manufacturers and to produce optimum quantity of sugar during "lean crushing period" from May, 1982 to September, 1982. According to the appellant, under the said notification, the appellant-society was entitled to rebate in excise duty. The appellant, therefore, submitted a rebate claim for Rs. 19,96,516.17 ps. for the excess production of 66,717.33 quintals of sugar produced during 1st May, 1982 to 30th September, 1982. According to the appellant, it had produced 33,029 quintals of sugar in the year 1978-79. There was 'nil'production for two years thereafter, i.e. 1979-80 and 1980-81. As per the notification, average production of three years had to be taken into account for claiming benefit of excess quantity of sugar. Since sugar production of the appellant-society was 33,029 quintals in three years of 1978-79, 1979-80 and 1980-81, the average produ....

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....d by the society that interpretation by the Department of Clause 3 of the notification was totally erroneous, misconceived and unwarranted. The term 'average' was defined in the notification and average of three years as per the calculation of the society was 11,009.67 quintals, on that basis the claim of refund was made and the appellant-society was entitled to rebate. 4.The Assistant Collector of Central Excise and Customs, Aurangabad vide his order dated September 9, 1983 negatived the contention of the society holding that the wordings of Clause 3 of Notification No. 132/82 were "quite clear". The said clause specified as to how average production of sugar was to be worked out. He also observed that the said clause had to be read with Explanation (a) which defined "average production". Reading both together, it was clear that the production of sugar in each of the corresponding periods was necessary. Since, there was no production during two years, they were required to be ignored and the rebate claim of Rs. 11,009.67 ps. was legal and in accordance with the notification. He, therefore, rejected the application of the appellant-society. 5.Being aggrieved by the order-in-origi....

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....uch as, according to the CEGAT, such reference could be made for determination of any question having a relation to "the rate of duty of excise" or to "the value of goods for purposes of assessment". Since neither the question related to "the rate of duty of excise" nor to "the value of goods for purposes of assessment", the reference was not maintainable. 9.In the circumstances, the appellant filed a writ petition in the High Court of Bombay (Aurangabad Bench) by invoking Articles 226 and 227 of the Constitution. The Division Bench of the High Court by an order dated April 29, 1999 dismissed the petition and refused to refer the question to High Court under Section 35G of the Act observing that "writ petition was not maintainable". The Court proceeded to observe that in any event, it was not inclined to interfere with the order on merits under Article 226 of the Constitution as no prima facie question of law had arisen. It is this order which is under challenge in the present appeal. 10.We have heard the learned Counsel for the parties. 11.The learned Counsel for the appellant-society contended that the High Court was not right in dismissing the petition summarily. He submitted....

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....nder Article 226/227 of the Constitution. The learned Counsel for the appellant, therefore, was right that the High Court could not have disposed of the petition on the ground that it was "not maintainable". But it cannot be ignored that the High Court has also observed that it was not inclined to interfere even on merits as prima facie no question of law had arisen. The High Court, hence, dismissed the petition, discharged rule and vacated interim relief. We, therefore, thought it proper to consider the claim of the appellant-society on merits. 15.The Notification No. 132/82 on which reliance has been placed is on record. The relevant part of Notification reads thus :- "TO BE PUBLISHED IN PART II, SECTION 3, SUB SECTION (i) OF THE GAZETTE OF INDIA EXTRAORDINARY, DATED THE 21st APRIL, 1982/1 VAISAKHA 1904 (SAKA). GOVERNMENT OF INDIA MINISTRY OF FINANCE (DEPARTMENT OF REVENUE) New Delhi, the 21st April, 1982 I Vaisakha, 1904 (Saka) NOTIFICATION (No. 132/82-CENTRAL EXCISE) G.S.R. (E).- In exercise of the powers conferred by sub-rule (i) of rule 8 of the Central Excise Rules 1944, read with sub-clause (4) of clause 50 of the Finance Bill, 1982, which clause has, by virtue ....

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....ree sugar years shall be ignored while arriving at the average. (4) Nothing (contained in this notification) shall apply to a sugar factory where production during the period mentioned in column (1) of the said Table, during all the preceding three sugar years was nil. Sd/- (R. Deb) Under Secretary to the Govt. of India" 16. The notification was subsequently amended by another Notification No. 193/82 of June 11, 1982 and Paragraph 4 was substituted. The substituted portion reads as under : "4. Where production during May to September in all preceding three sugar years was nil, the entire production during May to September, 1982, will be entitled to the exemption under this notification." 17. The question for our consideration is — whether the action of the authorities in ignoring 'nil' production for two years in 1979-80 and 1980-81 by the appellant-society and granting rebate claim on the basis of average production of sugar of 33,029 quintals for the year 1978-79 was legal and in accordance with Clause 3 of the Notification No. 132/82? 18. The contention of the appellant-society is that while deciding average, production of three years, i.e. 1978-79, 1979-80 and 1980-81....

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.... a factory which did not produce any sugar at all during the lean months of the previous year or years. The Court ruled that it was manifest that the average production of preceding five years had to be worked out by dividing the total production during the lean months of any of the preceding five years by five even though there was no production of sugar during the said period. The Court also noted that a similar view was taken by that court earlier. 21. The learned Counsel for the appellant also referred to a decision of this Court in Belapur Sugar & Allied Industries Ltd. v. Collector of Central Excise, Aurangabad (1999) 4 SCC 103. In that case, this Court observed that while granting the benefit of rebate, concession or exemption, the object behind issuance of such notification must be taken into consideration and purposive construction must be adopted. It was further observed that if there are two possible interpretations, it is the interpretation which subserves the object and purpose should be accepted. According to the Court, since the objective of the notification was of conferring rebate in excise duty and an incentive was given to a factory for encouraging sugar product....