1995 (3) TMI 192 - AT - Central Excise

Summary

Issues:
Calculation of average production for Central Excise duty concession under Notification No.135/83-CE.

Analysis:
The dispute in this case revolves around the method of calculating the average production of sugar for the purpose of granting Central Excise duty concession under Notification No.135/83-CE. The Department filed an appeal against the order of the Collector of Central Excise (Appeals), Bombay, which allowed the respondents' refund claim for excess sugar production. The Assistant Collector had restricted the rebate claim based on the average production calculation method. The respondents argued that the average should be based on all three base years, while the Department contended that only one year should be considered. The Collector (Appeals) relied on a Tribunal decision in a similar case to support the respondents' method of computation.

The Department's representative argued that the Notification specifies that years with 'Nil' production should be ignored while calculating the average production. He highlighted the importance of clause 3 of the Notification and distinguished it from other notifications dealt with by the Courts and Tribunal. Referring to relevant case laws, including a Supreme Court decision, the representative emphasized that the rebate should be granted based on excess production rather than average production to incentivize manufacturers to produce more.

On the other hand, the respondents' advocate contended that the average should be calculated based on all three base years, regardless of the production status in each year. He cited a Bombay High Court decision interpreting a similar notification to support this argument.

After considering the submissions from both parties and examining the records, the Tribunal found that the method of calculating average production was a unique feature in this case. The Tribunal rejected the argument that average production cannot be determined when there is 'Nil' production in certain years. It emphasized that zero is a valid figure and can be included in the average calculation. The Tribunal specifically analyzed clause 3 of the Notification, which directs the exclusion of years with no sugar production while determining the average production. It also referred to a Supreme Court decision that clarified the calculation of rebate based on excess production rather than average production.

Ultimately, the Tribunal set aside the Collector (Appeals)'s order and allowed the Department's appeal by restoring the Assistant Collector's original order. The Tribunal held that the Assistant Collector was correct in considering the production of one sugar year alone as the average production of the preceding three years.