B.L.HANSARIA - (1.) THE short point which needs to be decided by us, on the matter being required to come before a larger Bench, is relatable to Notification No. 146/74 dated 12-10-74 issued by the Department of Revenue and Insurance, Ministry of Finance, in exercise of powers conferred by Rule 8(1) of the Central Excise Rules, 1944, whereby sugar described in column (2) of the Table to the Notification was exempted from so much of the duty of excise leviable thereon as is specified in the corresponding entry in columns (3) and (4) of the Table.
(2.) THE relevant portion of the Notification reads as below : - JUDGEMENT_200_1_1995Html1.htm It is not for the first time that this Court has been called upon to decide the purport of the aforesaid Notification inasmuch as in Collector of Central Excise v. Neoli Sugar Factory, (1993) 2 JT (SC) 587 : (1993 AIR SCW 2198), a two-judge Bench had expressed its view on the same. On the appeals at hand, however, coming before another two-Judge Bench, it was felt that what was stated in Neoli Sugar Factory's case needed fresh look and it is because of this that the appeals have been placed before this Bench of three-Judges. Let it first be seen as to what was held in Neoli Sugar Factory's case (1993 AIR SCW 2198). In that case this Notification has been dealt in paras 18 and 19 and the interpretation put by the counsel of the Union of India was accepted by the Court, Inter alia, because none of the counsel of the factory owners had disputed the same. The factory owners in these appeals have, however disputed the stand taken by the Union of India in that case, and the dispute is on the question as to whether the precentage mentioned in subclauses (a) to (e) are to be calculated on the excess production or average production of the preceding five sugar years. The earlier Bench held that the percentage would not apply to the excess production, but it would to the average production. This was illustrated in paragraph 19 by taking the hypothetical case where the average production of a factory during preceding five sugar years is 1,000 quintals and that factory produces 2,500 quintals during December 1, 197 4/09/1975. The Bench then stated that as "the basis of these percentages is the average production of the previous five years and not the excess production", what would be required to be done is that from the production of 2,500 quintals, the average (1,000 quintals) should be deducted first, which would mean that the excess production is 1,500 quintals. The next step is material and the same is that the percentage of 7.5 Per Cent of which mention has been made in sub-clause (a) would be relatable to the average, which is 1,000 quintals; and so, rebate as per sub-clause (a) will be on 75 quintals (i.e. 7.5 Per Cent of 1,000 quintals). The rebate mentioned in sub-clause (b) would then be given to 100 quintals which is 10 Per Cent of the average; and so on.
(3.) THE interpretation put on the Notification explained with the aid of the aforesaid illustration has been questioned by Shri Sanghi, appearing for the appellants, According to the learned counsel, the sub-clauses of the Notification having mentioned about "excess production", the percentage has to be calculated not on the average production, but on the excess production, which means that for the factory of the type mentioned in the illustration given above, 7.5 Per Cent rebate would become available not on 75 quintals (which is 7.5 Per Cent of 1,000 quintals) but on 102.5 quintals, which is 7.5 Per Cent of 1.500 quintals. On the next 10 Per Cent of excess production, that is 150 quintals, the rebate would be as mentioned in sub-clause (b) and so on. This may also be illustrated by stating that if the excess production be, say 100 quintals, rebate on first 7.5 quintals (7.5 Per Cent 100 quintals ) would be as mentioned in sub-clause (a); and on next 10 quintals (10 Per Cent of 100 quitals) as per sub clause (b); and so on. As against the above contention, Addl, Solicitor General Shri Tulsi submits that the concept of excess production being intimately related with average production because of what has been stated in the main part of column (2), the view taken in the aforesaid decision is correct and sound. He states that the ascending percentage of rebate was offered to the manufacturers to induce them to produce more and more;and so, the factory whose production is, say 7.5 Per Cent in excess of average production, should not gain so much as the one whose excess is, say 37.5 Per Cent . He urges that if the interpretation put by Shri Sanghi were to be accepted by us, the object behind granting rebate would not be realised; indeed, get frustrated.;