1985 (8) TMI 187 - HC - Central Excise

Summary

Issues Involved:
1. Interpretation of the notification dated 12-10-1974 concerning the computation of excise duty rebate on excess sugar production.
2. Determination of whether the percentage for rebate should be calculated based on excess production or average production.
3. Validity of the Trade Notices and Press Communique issued by the Central Government.
4. The correctness of the figures of average production and excess production for the rebate claims.

Detailed Analysis:

1. Interpretation of the Notification:
The appeals concern the interpretation of a notification issued by the Central Government under Rule 8(1) of the Central Excise Rules, 1944, which exempts certain quantities of sugar from excise duty. The notification specifies rebate rates for different slabs of excess production over the average production of the preceding five sugar years. The core issue is whether the percentages mentioned in the notification (7.5%, 10%, 10%, 10%, and 37.5%) should be applied to the excess production or the average production.

2. Calculation Basis for Rebate:
The petitioners argued that the percentages should be applied to the excess production, meaning the total excess production should be equated to 100%. For example, if the total production is 7000 quintals and the average production is 3000 quintals, the excess production is 4000 quintals. The rebate should be calculated based on this excess production. The Department, however, contended that the percentages should be applied to the average production, meaning the average production should be equated to 100%. This would result in a different and lower rebate amount.

The court held that the percentage for rebate should be calculated based on the excess production, not the average production. The notification's language indicates that the entire excess production is to be considered for rebate at different rates. The court emphasized that the notification aims to incentivize increased sugar production, and interpreting it in a manner that maximizes the rebate aligns with this objective.

3. Validity of Trade Notices and Press Communique:
The Department initially issued a Trade Notice on 3-9-1975, interpreting the notification to mean that the percentages should be applied to the average production. However, this was superseded by a Trade Notice on 4-3-1976, which clarified that the percentages should be applied to the excess production. The court found the latter interpretation to be correct and consistent with the notification's language and purpose. The Press Communique issued contemporaneously with the notification does not alter this interpretation.

4. Correctness of Figures for Rebate Claims:
The court acknowledged the Department's argument that they had no opportunity to verify the correctness of the figures of average production and excess production provided by the petitioners. The court directed the Department to determine the accuracy of these figures within three months, giving the petitioners a full opportunity to justify their claims.

Conclusion:
The court dismissed the appeals, affirming that the rebate should be calculated based on the excess production. The Department was instructed to verify the figures provided by the petitioners. The request for leave to appeal to the Supreme Court was rejected as the court found no ambiguity in the notification's interpretation. The respondents were awarded costs in one set, with counsel's fee fixed at Rs. 1000/-.