- (1.) The present appeal is filed against the action of the respondents of not granting rebate in excise duty in accordance with the Notification No 132/82 issued by the government of India on April 21, 1982. The case of the appellant is that it is a co-operative society registered under the Maharashtra Cooperative Societies Act, 1960. It is situated at raghunath Nagar, Taluka Gangapur, District aurangabad. The appellant is carrying on business of manufacturing sugar falling under Tariff item No. 1 (1) of the First Schedule (then stood) to the Central Excise and Salt Act, 1944, (hereinafter referred to as "the Act"). It is having a valid licence under the Act and the Central Excise Rules, 1944 (hereinafter referred to as "the Rules"). The. Directors of the appellant are Indian nationals and citizens. According to the appellant-society, in exercise of the power conferred 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 production was 11,009.67 quintals per year. Sugar production of the appellant-society for the year 1981-82 (from 1st May 1982 to 30th September, 1982) was 77,727 quintals. Hence, there was excess production of 66,717.33 quintals and on that basis, the appellant-society was entitled to rebate in excise duty.
(2.) The respondent-authority, however, considering the average production of the appellant-society as 33,029 quintals of sugar, allowed rebate claim on the remaining production, namely, 44,698. 00 quintals and granted provisional rebate of Rs. 11, 10,820. 62 ps. The said action was illegal, contrary to law and not in consonance with notification. The appellant, therefore, submitted a claim on July 28, 1982 vide a communication to the Superintendent, central Excise, Range II (Rural) , Aurangabad with necessary details claiming for Rs. 19,96,516.17 ps. The Office of the Assistant collector of Central Excise and Customs, aurangabad, on the other hand, issued a notice dated June 30, 1983 to the appellant-society to show cause why the claim put forward by the appellant-society for Rs. 19,96,516.17 ps. should not be restricted to the extent of Rs. 11, 10,820. 62 ps. by treating the provisional rebate as final. In the show cause notice, it was stated that the production of sugar by the appellant-society was 66,717.33 quintals for the year 1981-82. There was 'nil' production during 1979-80 and 1980-81. The appellant- society had actually produced 33,029 quintals sugar during May, 1979 to July, 1979. As per para 3 of Notification No. 132/82, the period or periods during which the factory had not produced sugar during the corresponding period of last three sugar years was required to be ignored while arriving at the average. Accordingly, the sugar quantity of 33,029 quintals could not be divided by three and considering the production of sugar during May, 1982 to september, 1982 as 77,727 quintals and deducting 33,029 quintals therefrom, the appellant was entitled to rebate on sugar production of 44,698 quintals. Provisional rebate of Rs. 11,10,820. 62 ps. was, therefore, required to be made final.
(3.) The appellant-society, submitted its reply on July, 26, 1983 inter alia stating therein that the refund claim made by the society for Rs. 19,96,516.17 ps. was proper and in consonance with the policy decision of the government reflected in notification No. 132/ 82. It was stated 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.;