1980 (10) TMI 67 - HC - Central Excise

Summary

Issues Involved:
1. Construction of a proviso in a notification issued by the Central Government.
2. Determination of whether the production of sugar by different entities should be clubbed for rebate purposes.

Summary:

1. Construction of Proviso in Notification:
The primary issue in this petition u/s 226 of the Constitution of India is the interpretation of a proviso in a notification (No. 13/65 dated February 13, 1965) issued by the Central Government u/r 8(1) of the Central Excise Rules, 1944. This notification aimed to incentivize sugar production by offering a rebate on the duty for production exceeding a specified quantity. The proviso in question states: "Provided that where a manufacturer of sugar has more than one factory engaged in the production of sugar, then, for determining the excess quantity produced in his factories for the purposes of granting exemption under this notification, sugar produced in all such factories during the period or periods specified in the Table shall be taken into account as a whole."

2. Determination of Production Clubbing for Rebate:
The petitioner, a public limited company manufacturing sugar at Meerut, claimed a rebate under the said notification. The rebate was denied on the grounds that the production from both the Meerut and Bijnor mills (the latter operated in partnership with Banarsi Dass) should be clubbed. The petitioner argued that the S.B. Sugar Mills Lease Firm, a partnership firm, is a distinct entity and its production should not affect the petitioner's rebate claim for the Meerut mill.

The court examined whether the term "manufacturer" in the proviso refers to the petitioner alone for the Meerut factory or includes the petitioner as a partner in the Bijnor factory. It was noted that a partnership firm is not a legal entity but can be treated as a "person" under certain enactments like the Income-tax Act and the Code of Civil Procedure. The court referenced the General Clauses Act, which defines "person" to include any company or association or body of individuals, whether incorporated or not.

The court also considered precedents, including the Supreme Court's observations in Dulichand Laxminarayan v. Commissioner of Income-tax, Nagpur, and R.M. Chidambaram Pillai v. Commissioner of Income-tax, Madras, which highlighted that a firm is not a legal person but can be treated as an entity in certain contexts.

Conclusion:
The court concluded that the notification's intention was to increase sugar production by offering rebates and that a technical approach would defeat this purpose. The petitioner could not control the Bijnor mill's production independently but only in partnership with Banarsi Dass. Therefore, the production of the Meerut and Bijnor mills should not be clubbed. The court held that the petitioner and the partnership firm should be treated as distinct entities for rebate purposes.

Order:
The court made the rule absolute, issuing a writ of certiorari to set aside the orders rejecting the petitioner's rebate claim and directed the respondents to reconsider the petitioner's case for rebate in accordance with the law laid down by the court. Each party was ordered to bear its own costs.