1999 (4) TMI 79 - SC - Central Excise

Whether the excess production of sugar by the appellant during the designated period commencing on 1st May, 1982 but before the date of issue of the amending Notification 193 of 1982, dated 11th June, 1982 was entitled to duty reduction in terms of the Notification 132 of 1982, dated 21st April, 1982 as substituted by Notification 193? Held that - When Notification granted exemption to such factories which produced in excess of average production and such assessee if otherwise is entitled for such exemption, it cannot be defeated merely on the ground that such factory has already paid the duty for the period in question. Even if duty is paid under ignorance of law or otherwise, if by subsequent legislation or valid Notifications the obligation to pay the duty is withdrawn, it cannot be refused since he has already paid the duty. The present appeal has merit which is accordingly allowed. The impugned orders of the Tribunal dated 29th October, 1985 is hereby quashed and we hold that the appellant is entitled for the rebate under the substituted Notification No. 193/82, dated 11th June, 1982 even for a period of 1st May till 11th June, 1982.

Summary

Issues:
Whether excess sugar production before the amending Notification is entitled to duty reduction.

Analysis:
The appeal questioned whether excess sugar production by the appellant before the amending Notification was eligible for duty reduction. The original Notification 132 of 1982 only granted exemption to factories producing sugar in excess over the average of the preceding three years. However, Notification 193 of 1982 amended this by allowing even those with nil production in the preceding three years to qualify for exemption. The dispute arose as to whether this amendment applied retrospectively. The appellant contended that the substitution in Notification 193 should entitle them to exemption for the entire excess production period from 1st May, 1982. The Tribunal, relying on Rule 9A, denied relief for the period before 11th June, 1982, when Notification 192 came into force.

The Tribunal's interpretation emphasized the duty payable on the date of clearance, while the appellant argued that the focus should be on production as per the exemption Notification. The appellant cited relevant case laws to support a liberal construction of exemption Notifications. The objective of the Notification was to incentivize increased sugar production during a lean period. The Court highlighted the principle that interpretations serving the object and purpose of a Notification should be accepted.

The Court analyzed the language of the substituted paragraph in Notification 193 and concluded that it intended to confer benefits for the period preceding its issuance. It rejected the Revenue's argument to exclude the preceding period, as it would defeat the Notification's purpose. The Court also dismissed the Revenue's contention that assessees who had already paid duty could not claim benefits under the amended Notification. It held that if a duty paid is later shown to be not leviable, the revenue must refund or credit the amount to the assessee. Consequently, the Court allowed the appeal, quashed the Tribunal's orders, and held the appellant entitled to rebate under Notification 193 even for the period before its issuance.

In conclusion, the Court ruled in favor of the appellant, emphasizing the objective of the Notification to encourage sugar production during a lean period. The judgment clarified that duty reduction benefits should not be denied based on the date of duty payment and upheld the entitlement to rebate for the appellant, even for the period before the amending Notification.