1984 (6) TMI 260 - AT - Central Excise

Issues Involved:
1. Entitlement to incentive rebate under Notification Nos. 108/78-C.E. and 151/78-C.E.
2. Interpretation of "duty leviable" in the context of the notifications.
3. Applicability of principles of equity in interpreting taxing statutes.
4. Classification and differential treatment of manufacturers under Article 14 of the Constitution.
5. Determination of duty rate based on the date of clearance versus the date of production.

Issue-wise Detailed Analysis:

1. Entitlement to Incentive Rebate:
The appellants claimed a refund of Rs. 11,71,322.88 under Notification Nos. 108/78-C.E. and 151/78-C.E. for sugar manufactured between 1-5-78 and 30-9-78. The Assistant Collector determined the excess production and calculated the admissible concession as Rs. 9,17,180.46, rejecting the claim for an additional Rs. 2,54,142.42. The appellants argued for a fixed rebate of Rs. 54 per quintal for free sale sugar as per the notifications, contending that the rebate should not depend on the date of clearance but on the excess production.

2. Interpretation of "Duty Leviable":
The appellants argued that "duty leviable" should refer to the rate specified in the Schedule to the Central Excises and Salt Act, 1944, without modifications by exemption notifications. The Tribunal disagreed, stating that interpreting "duty leviable" as the rate in the Schedule without considering exemptions would lead to an anomalous situation where the duty would have to be paid at the scheduled rate every time goods are removed, regardless of existing exemptions.

3. Applicability of Principles of Equity:
The Departmental Representative contended that exemption notifications must be interpreted strictly, and principles of equity are not applicable in taxing statutes. The Tribunal agreed, citing the Supreme Court's observation that a taxing statute must be construed strictly, regardless of the hardship it may cause to the treasury or taxpayer.

4. Classification and Differential Treatment:
The appellants argued that all manufacturers who produced excess sugar at the same time should be treated equally, invoking Article 14 of the Constitution. The Tribunal noted that principles of equity do not apply to a clear taxing statute and that excise duty is related to the first sale of goods by the manufacturer, which is near the point of consumption. Therefore, there is no irrational differentiation in treating manufacturers differently based on the time of clearance.

5. Determination of Duty Rate:
The Tribunal referenced decisions from the Bombay and Gujarat High Courts, which held that the duty rate applicable is the one prevalent at the time of removal of goods from the factory, not the date of production. This interpretation supports the view that the rebate should be calculated based on the duty rate at the time of clearance.

Conclusion:
The Tribunal upheld the order of the Appellate Collector of Central Excise, affirming that the rebate should be based on the duty rate at the time of clearance and not at a fixed rate per quintal. The appeal was dismissed, maintaining the legality and factual correctness of the Appellate Collector's decision.

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