1998 (7) TMI 436 - AT - Central Excise

Sugar - Incentive rebate for higher production - Interpretation of exemption notification - Words and Phrases - Refund

Issues Involved:
1. Interpretation of Notification No. 132/82-C.E. and its amendment by Notification No. 193/82-C.E.
2. Retrospective application of the amended notification.
3. Entitlement to rebate for clearances made before the amendment.
4. Principles of interpreting exemption notifications.

Issue-wise Detailed Analysis:

1. Interpretation of Notification No. 132/82-C.E. and its amendment by Notification No. 193/82-C.E.:
Notification No. 132/82-C.E. exempted sugar produced in a factory from 1-5-1982 to 30-9-1982 in excess of the average production of the corresponding period of the preceding three years. Paragraph (iv) of the notification stated, "Any sugar obtained by reprocessing of defective or damaged sugar or brown sugar, if the same has already been included in the quantity of sugar produced, shall not be taken into account." This was replaced by Notification No. 193/82-C.E. on 11-6-1982, which substituted paragraph 4 with, "Where production during May to September in all the preceding three sugar years was nil, the entire production during May to September, 1982, will be entitled to the exemption under this notification."

2. Retrospective application of the amended notification:
The appellants, who were not previously entitled to the exemption under the original notification, claimed a rebate for clearances effected in May 1982 after the amendment. The Assistant Collector denied the refund, holding that duty had correctly been paid under Rule 9(a) of the Central Excise Rules, 1944, as the amending notification did not have retrospective effect. This view was supported by the Tribunal judgments in C.C.E. v. Belapur Sugar & Allied Industries Ltd. and C.C.E. v. Changalrayan Coop. Sugar Mills Ltd., which held that the amending notification could not have retrospective effect.

3. Entitlement to rebate for clearances made before the amendment:
The appellants argued that the rationale behind the notifications was to maximize sugar production by inducing production during lean periods. They cited judgments from the Supreme Court and various High Courts, emphasizing that an exemption notification should be given its due effect, keeping in view the underlying purpose. They contended that the benefit of the notification should be available for any sugar cleared during the specified period, regardless of the notification's date.

4. Principles of interpreting exemption notifications:
The Tribunal considered various judgments, including the Supreme Court's observation in the Neoli Sugar Factory case, which emphasized that exemption notifications should be given their due effect, keeping in view the underlying purpose. The Tribunal noted that strict interpretation of the notification would create an anomalous situation where the benefit would be denied to those who cleared sugar produced in May 1982 during that month but would be available to those who cleared it after the amendment. The Tribunal highlighted the need to interpret notifications in a manner that does not create such anomalies and aligns with the underlying purpose of encouraging production during lean periods.

Separate Judgments:

Majority Opinion:
The majority opinion, including Member (Technical) J.H. Joglekar and Member (Judicial) G.A. Brahma Deva, held that the notification should be interpreted strictly and prospectively. They emphasized that the principle of strict interpretation has been consistently followed in previous Tribunal judgments and that there is no basis for giving the amending notification retrospective effect. They concluded that the appeal should be dismissed, denying the benefit to the appellants.

Dissenting Opinion:
Member (Technical) P.C. Jain, in his separate order, disagreed with the majority opinion. He argued that the notification's purpose was to encourage production during lean periods and that giving it retrospective effect would align with this purpose. He cited various judgments supporting the view that exemption notifications should be interpreted to give effect to their underlying purpose. However, he acknowledged that the principle of strict interpretation has been consistently followed and that the notification should take effect from its date of issue, 11-6-1982.

Final Order:
In view of the majority opinion, the appeal was dismissed. The Tribunal upheld the decision that the amending notification does not have retrospective effect, and the benefit of the exemption cannot be extended to clearances made before 11-6-1982.

← Previous Next →