B. P. JEEVAN REDDY, J. - (1.) WITH a view to induce the Sugar Factories in the country to produce more and also to commence their operations early in the year, the Government of India have been issuing notifications, from time to time, providing for rebate in the, Excise Duty in certain circumstances. These notifications were issued by the Central Government in exercise of the power conferred by Sub-Rule (1) of R. 8 of the Central Excise Rules, 1944. We are concerned in these appeals with four such notifications namely (1) the Notification dated 28-9-72 (applicable to the Sugar Year 1972-73), (2) Notification dated 4-10-73 (applicable to the Sugar Year, 1973-74), (3) Notification dated 12-10-74 (applicable to the Sugar Year 1974-75) and (4) the Notification dated 30-9-76 (applicable to the Sugar Year 1976-77). 'Sugar Year' means the year commencing on and with 1st October and ending with the 30th of September of the following year. The interpretation of these notifications is involved in this batch of appeals.
(2.) IN so far as it is material, the notification dated 28-9-72 and the notification dated 4-10-73 are similar. So are the notifications dated 12-10-74 and 30-9-76. It would be appropriate if we set out the notification dated 28-9-72 in its entirety : "Notification No. 203/72 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. 1 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. JUDGEMENT_69_SUPP3_1993Html1.htm Provided that the exemption under this notification shall not be admissible to a factory- (a) which did not work during the base period, or (b) which had only a trial run in the base period, or (c) which commences production for the first time on or after the 1st day of October, 1972 : Provided further that in computing the production of sugar during the periods mentioned in column (2) of the said Table,- (a) the data, as furnished in Form R. G. 1 prescribed in Appendix I to the Central Excise Rules, 1944, or in such other record as the Collector may prescribe under rule 53 or rule 173G of the said rules, shall be adopted (b) any sugar obtained from reprocessing of sugar-house products left over in process at the end of the base period or earlier shall be taken into account; and (c) any sugar obtained by refining gur or Khandasari sugar, or any sugar obtained by reprocessing of defective or damaged sugar or brown sugar, if the same has already been included in the quantity of sugar produced, shall not be taken into account-. Explanation I - A factory shall be deemed to have had a trial run during the base period only if., on first going into production, the period during which actual crushing was done during the base period was less than 40 per cent of the average duration of the season in the State in which the factory is situated. Explanation II - IN this notification, the expression, 'base period', means the period commencing from the 1st day of October, 1971 and ending with the 30th day of September, 1972." Though the Sugar Year extends over a period of twelve months commencing from 1st of October, the period commencing with 1st December and ending with 30th April is said to be the peak production period. Most of the sugar 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 28-9-72 appears to be this : (1) If during the months of October and November 1972 (in the Suhe 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 1/12/1972 to 30/04/1973 was available at the rate of rupees twenty per quintal provided the production of sugar during the said period was in excess of 115 Per Cent 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 May and June 1973 rebate at the rate of rupees twenty per quintal was available provided the factory produced more sugar than it produced during the corresponding months in the previous Sugar Year. The said rebate was available again only with respect to the excess production. (4) For the period commencing from 1/07/1973 and ending with 30th of September, 1973, rebate was available at the rate of rupees twenty per quintal provided the factory produced sugar in excess of the quantity produced during the corresponding period in the previous Sugar Year. This rebate too was confined to the excess production. However, the benefit of the rebate mentioned in any of the clauses aforesaid was not available to a factory which inter alia did not work during the 'base period'. The expression 'base period' was defined in Explanation-II. It meant the period commencing from the 1st day of October 1971 and ending with the 30th day of September, 1972 (previous Sugar Year).
(3.) THE sugar factories (concerned with the sugar year 1972-73) did not produce any sugar in one or the other of the four blocks (mentioned in the table contained in the Notification) in the base year (previous sugar year). During the current year, however, they produced certain quantity of sugar during that block-period. To be more precise, take factory A. It produced 1000 quintals of sugar in the months of October-November, 1972 (Block-period (1)) but had not produced any sugar whatever in the corresponding period (October-November, 1971) in the base year. The question arose whether in such a situation, Factory A was entitled to the benefit of rebate provided in Clause (1) of the Table contained in the aforesaid notification with respect to the said 1,000 quintals? The contention of the factory was that it was so entitled, whereas according to the Revenue, it was not. It is brought to our notice that even before the controversy actually arose between the parties, the Committee of the Sugar Mill Owners' Association addressed a letter to the Ministry of Finance, Government of India seeking a clarification as to the meaning and purport of the aforesaid notification. The letter written by the Committee read as follows: "I am to refer to the Notification No. G.S.R. dated 28/09/1972, issued by the Union Ministry of Finance (Department of Revenue & Insurance), New Delhi, 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 26/11/1971, 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 1/10/1970 to 30/11/1970, 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 months 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 ( 1/10/1971 to 30/09/1972) it will be entitled to the full rebate on its entire production during the various periods mentioned in the Notification, although during the corresponding periods in the last season, the production may be nil. The Committee shall be glad if you kindly confirm whether their above presumption is correct. Thanking you for a line in reply". ;