1982 (9) TMI 54 - HC - Central Excise

Sugar - Excess production rebate - Admissibility of - Writ petition - Criteria for laches-Art. 226

Summary

Issues:
Challenge to the legality of an order passed by the Government of India regarding excise duty rebate for excess sugar production in a co-operative sugar factory.

Analysis:
The petitioners, a co-operative sugar factory, challenged the legality of an order passed by the Government of India confirming the denial of excise duty rebate for excess sugar production. The dispute revolved around Notification No. 257/76-CE, which provided for a rebate on excess sugar production during the 1976-77 season. The notification outlined conditions for claiming the rebate based on the average production of the preceding years. The petitioners claimed the rebate but were denied by the Superintendent of Central Excise and the Appellate Collector, Customs and Excise, on the grounds that the factory had not produced sugar in the preceding five years. The Government of India upheld this decision, leading to the petition challenging the orders.

The crux of the issue was the interpretation of the notification's requirement regarding the factory's production history. The petitioners argued that the authorities misinterpreted the notification and wrongly denied the rebate. They contended that the factory's eligibility for the rebate should be based on the average production during the corresponding period of the preceding five sugar years, regardless of whether the factory operated in all those years. The court agreed with this interpretation, emphasizing that the notification did not mandate production in each of the preceding five years for eligibility. The court held that the factory was entitled to the rebate despite not producing sugar in all preceding years.

Moreover, the court noted a subsequent letter by the Department accepting that a factory producing sugar during any of the preceding three years would be eligible for the rebate. This acknowledgment further supported the petitioners' claim that production in all preceding years was not a prerequisite for availing the rebate. The court deemed this subsequent interpretation by the Department as correct, undermining the initial denial of the rebate by the lower authorities.

Lastly, the court dismissed the Department's argument of delay in filing the petition, stating that the timeline for lodging the petition was not unreasonable. The court directed the Superintendent of Central Excise to assess the rebate claim and issue appropriate orders within three months. The petition was allowed, granting the petitioners relief and emphasizing that costs would not be awarded in the case.