1987 (7) TMI 204 - AT - Central Excise

Summary

Issues:
Interpretation of Central Excise Notification No. 36/76 regarding duty concession entitlement.
Validity of carrying over unutilized sugar quota to subsequent years.
Admissibility of duty concession under Notification No. 36/76 for past production.
Applicability of Directorate of Sugar's clarification on sugar production adjustment.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi revolves around the interpretation of Central Excise Notification No. 36/76, dated 25-2-1976. The dispute arose as the respondents were eligible for duty concession under the notification due to expanding their factory's capacity by the specified date. However, they could not avail the benefit promptly as they did not receive the Chief Director's certificate in time. Consequently, the Chief Director allowed the adjustment of additional free sale sugar for the years 1975-76 and 1976-77 from later production. The Central Excise department initially extended the duty concession provisionally but later issued a show cause notice demanding the duty concession amount availed for 1975-76 production. The Assistant Collector confirmed the demand, albeit for a reduced amount, which was challenged before the Collector (Appeals).

During the proceedings, the appellant argued that Notification No. 36/76 did not permit carrying over unutilized sugar quota to subsequent years, thus denying the respondents the benefit of duty concession. Conversely, the respondents relied on the Director of Sugar's letter, which allowed adjustment of additional free sale sugar from later production. The Tribunal noted that the certificate confirming the entitlement to duty concession was received after the 1975-76 sugar production was cleared without the benefit. The Director's clarification supported the carry over and adjustment of sugar quantities for the relevant years.

The Tribunal analyzed the provisions of Notification No. 36/76 and the Directorate of Sugar's incentive scheme, which allowed for the adjustment of shortfalls in production. In this case, the factory was entitled to the duty concession but could not utilize it due to delayed certification. The Tribunal emphasized that the duty concession was for sugar exceeding the specified production percentage, subject to certification. The Director's clarification on adjusting sugar quantities from later production further supported the respondents' position.

Ultimately, the Tribunal upheld the Collector (Appeals)'s decision, affirming the respondents' entitlement to the duty concession under Notification No. 36/76. The appeal was rejected, concluding that the adjustment of sugar quantities for the relevant years was permissible based on the Director's clarification and the absence of provisions barring such adjustments in the notification.