A.N.Verma, J. - (1.) The petitioners were manufacturers of sugar by vacuum pan process. By means of this petition the petitioners challenged the legality of the demand notice issued by the Assistant Collector, Central Excise, Gorakhpur against the petitioners for recovery of Rs. 7,21,827/-. The demand has been raised on the ground that the petitioner was wrongly allowed excise rebate in the like amount under the relevant notification dated 28th September, 1972.
(2.) In the exercise of power conferred under sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government granted exemptions to sugar factories manufacturing sugar from certain amounts of excise duties leviable thereon to be calculated in terms of the table appended to the notification, a true copy whereof is annexure 1 to the petition. According to this table factories producing sugar during the period commencing 1st of October, 1972 and ending with the 30th day of November, 1972 which was in excess of the quantity of sugar produced during the corresponding period, in 1971 the rebate allowable was fixed at Rs. 40/- per quintal. In regard to sugar produced in a factory the period commencing from 1st day of December, 1972 and ending with the 30th day of April, 1973 which is in excess of 115 per cent quantity of sugar produced during the period commencing from the 1st day of December> 1971 and ending with the 30th day of April, 1972 exemption was fixed at Rs. 20/- per quintal.
(3.) There was, however, a proviso added to the table which stated that exemption under the said notification shall not be admissible to a factory which did not work during the base year. The base year was defined in the notification as meaning the period commencing from 1st day of October, 1971 and ending 30th day of September, 1972. The petitioner did produce sugar during the 1st day of October, 1972 to 30th day of April, 1973 and if the proviso mentioned above is held not to be applicable to the petitioners, they would undeniably be entitled to claim excise rebate under the said notification.;