1991 (11) TMI 81 - HC - Central Excise

Summary

Issues Involved:
1. Calculation of average production for rebate eligibility.
2. Discrimination and violation of Article 14.
3. Nexus between the notification and the objective of increasing sugar production.

Issue-Wise Detailed Analysis:

1. Calculation of Average Production for Rebate Eligibility:
The petitioner, a Co-operative Sugar Mill, argued that the average production for rebate should be calculated by dividing the total production of the corresponding lean period of the preceding three years by three, even if there was no production in some years. The government notification specified that the average production should be calculated by dividing the total production by the number of years in which production actually occurred, ignoring the years of nil production. The court upheld the government's method, stating that it applies equally to all manufacturers and does not constitute discrimination.

2. Discrimination and Violation of Article 14:
The petitioner contended that the notification was discriminatory and violated Article 14 of the Constitution of India, as it provided different treatment to manufacturers based on their production history. The court found that the notification did not discriminate among equals, as it applied the same formula for calculating average production to all manufacturers. The court emphasized that unequals cannot be compared with equals and that the notification did not suffer from the vice of discrimination.

3. Nexus Between the Notification and the Objective of Increasing Sugar Production:
The petitioner argued that the notification did not serve as an effective incentive to increase sugar production during the lean period. The court disagreed, stating that the notification aimed to encourage production during the lean period by offering concessional rates of duty as an incentive. The court noted that the government's intention was to maximize sugar production during the lean period, which is typically less economical. The court found that the notification had a clear nexus to the objective of increasing production and that the grant of exemption was justified.

Conclusion:
The court dismissed the writ petition, concluding that the notification did not suffer from discrimination or lack of nexus to the objective of increasing sugar production. The court suggested that the government should inform manufacturers in advance about incentives to allow for better planning and increase in production. The petition was dismissed with no costs.