ARUNA SUGARS LTD Vs. COLLECTOR OF CENTRAL EXCISE
LAWS(CE)-1986-5-4
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on May 28,1986

Appellant
VERSUS
Respondents

JUDGEMENT

P.C. Jain, Member (T) - (1.)THE brief facts of the case in so far as material to the issues involved are that the appellants availed of the benefit of Notification No. 135/83 dated 30.4.83 on the excess sugar produced during the period May 1983 to September 1983. THE appellants were initially given a provisional credit of Rs. 11,75,000/- and on final clearance of the entire excess 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 25.7.84.
(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 the basis of clearances of excess production in each month. If under levy, more than 65% out of the excess production is cleared, such quantity shall be treated as levy sugar category for incentive rebate eligibility.

The demand was confirmed by the original adjudicating authority on the basis of the aforesaid two grounds.

The lower appellate authority while dealing with the first ground has observed as follows:-

"From the points put forth by appellants at the time of personal hearing, it can be seen that appellants unhesitatingly and without any reservations conceded the correctness of the reasoning adopted by the lower authority at item No. 1 of para 3 of the impugned order. Hence, there is no need to dwell on the objection raised by appellants in their appeal on this particular point."

On the second ground the lower appellate authority has observed that "the appellants themselves adopted the ratio 65:35 and procured rebate on the excess production of sugar in May 1983 and June 1983 with reference to the average production calculated with reference to the total production during the corresponding period of the previous three sugar years. It does not, therefore, look logical on the part of the appellants to question the same ratio 65:35 adopted by the lower authority in the original order. It is true that Notification No. 135/83 dated 30.4.83 does not specifically mention anywhere the ratio 65:35. But this ratio adopted by the lower authority has a nexus to 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.

(3.)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 mentioned in Col. (1) of the Table appended to para 1 of the said notification. He stated that if the loss occurring during reprocessing of the damaged or brown sugar is not taken into account while calculating the sugar produced during the incentive period, the same should not logically be included in calculating the average production during the base period. Computation of production of sugar in terms of paragraph 2 of the said notification does not make any distinction between computation of sugar produced in the incentive period and sugar produced during the base period.


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