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TMI Blog1985 (6) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... Notification Central Excises G.S.R. In exercise of the powers conferred by sub-rule (1) of rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts sugar, described in column (2) of the Table below and falling under sub-item (1) of item No. 1 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), from so much of the duty of excise leviable thereon as is specified in the corresponding entry in column (3) of the said Table. TABLE Sl. No. Description of Sugar Duty of Excised 1 2 3 1. Sugar produced in a factory during the period commencing from the 1st day of October, 1972 and ending with the 30th day of November, 1972 which is in excess of the quantity of sugar produced during the corresponding period in 1971. Rupees Forty per quintal 2. Sugar produced in a factory during the period commencing with the 30th day of April, 1973 which is excess of 115% of the quantity of sugar produced during the period commencing from the 1st day of December, 1971 and ending with the 30th day of April, 1972. Rupees twenty per quintal 3. Sugar pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntral Government hereby exempts sugar, described in Column (2) of the Table below and falling under sub-item (1) of item No. 1 of the First Schedule to the Central Excises and Salt Act, 1944 (1 of 1944), from so much of the duty of excise leviable thereon as is specified in the corresponding entry in Column (3) of the said Table. TABLE Sl. No. Description of Sugar Rate of Excise 1 2 3 1. Sugar, produced in a factory during the period commencing from the 1st day of October, 1973 and ending with the 30th day of November, 1973 which is in excess of the quantity of sugar produced during the corresponding period in 1972. Forty Rupees per quintal 2. Sugar produced in a factory during the period commencing from the 1st day of December, 1973 and ending with the 31st day of March, 1974 which is in excess of 110% of the quantity of sugar produced during the period commencing from the 1st day of December, 1972 and ending with the 31st day of March, 1973. Twenty Rupees per quintal 2A. Sugar produced in a factory during the month April, 1974 which is in excess of 110% and not in excess of 18 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en into account; (b) in respect of a factory mentioned in serial numbers 1 to 4 of the said table - (i) any sugar obtained by reprocessing of sugar house products left over in process at the end of the base period or earlier shall be taken into account; and (ii) any sugar obtained by or processing 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. Explanation : In this connection, the 'base period' means the period commencing from the 1st day of October, 1972 and ending with the 30th day of September, 1973. (Notification No. 189/73-CE dated 4th October, 1973 as amended by Notification No. 78/74-CE dated 20th April, 1974 and No. 107/74-CE dated 20th June, 1974)." 3. In accordance with and in pursuance of the said notifications the petitioners filed their claims for rebate in excise duty which were duly granted to them in the shape of credit. However, after a lapse of about 3 years or so, the excise authorities issued show cause notices to the petitioners calling upon them to refund the amount alleged to have been erroneously refunded or adjusted. These notices were issue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding period of the previous year is wholly incorrect and also run counter to the very object of the notifications. It is then contended by the learned counsel that the demands made are also beyond time since the demands are clearly covered by rule 10 and not under rule 10A of the Rules. In the demand notices a claim is made only on the ground that the relevant notifications were misconstrued when the rebate amounts were sanctioned and allowed to be credited in the personal ledger accounts of the petitioners. Therefore, these demand notices squarely fall within the ambit of rule 10 and not under rule 10A of the said Rules which rule relates to the residuary powers for the recovery of the sums due to the Government. Therefore, this is either a case of short levy or refund of levy which is not covered by the residuary provisions. In Writ Petition No. 4127 of 1981 an additional contention was raised that the notice of demand issued after the repeal of rule 10A of the Rules, was wholly without jurisdiction. Rule 10A came to be repealed without any saving clause and it being piece of subordinate legislation and the provisions of the General Clauses Act, were not applicable, and therefore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id credit has no connection with the assessment and/or refund of tax or duty and, therefore, it is not correct to say that the said demand notices are clearly covered by rule 10. In support of these contentions, the learned counsel for the respondents have placed strong reliance upon the decisions of the Supreme Court in AIR 1972 S.C. 2563 = 1978 E.L.T. (J416) S.C. - Assistant Collector of Central Excise, Calcutta v. National, Tobacco Co. of India Ltd., AIR 1980 S.C. 485-Commissioner of Income-tax, Central Calcutta v. National Taj Traders, and [1985] 6 ECC 113 (S.C.) : AIR 1985 S.C. 537 = 1985 (20) E.L.T. 212 (S.C.) - D.R. Kohli and Others v. Atul Products Ltd. A preliminary objection was also raised by the respondents that the petitioners had an alternate and efficacious remedy of filing an appeal or revision under the provisions of the Act and the Rules and since they have not availed of the said remedy, these writ petitions under articles 226 and 227 of the Constitution are not maintainable. In support of this preliminary point the respondents have placed strong reliance upon the decision of the Supreme Court in AIR 1983 SC 603 - Titaghur Paper Mills Co. Ltd. and Another v. Stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urers of sugar so as to induce them to produce greater quantities of sugar, particularly during certain lean periods every year. Therefore, it was said if the sugar produced during the certain period in the 'sugar year' 1-10-1973 to 30-9-1974 was in excess of the sugar produced during the corresponding periods in the previous year called the base period, that is, 1-10-1972 to 30-9-1973, the manufacturer was to be entitled to, certain rebate of excise duty on the excess sugar produced. Therefore if the manufacturer had not produced any sugar during the relevant period in the base year 1-10-1972 to 30-9-1973, he would be entitled to rebate of excise duty on the whole of the sugar produced during the relevant period in the year 1-10-1973 to 30-9-1974. The argument of the counsel for the Central Government was that in order to entitle the manufacturer to the rebate of excise duty he must have produced, 'some' sugar during the relevant period in the base year. According to him, it was only when some sugar was produced during the relevant period in the year 1972-73, sugar produced during the relevant period in the 1973-74 could be said to have exceeded the sugar produced during the corre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne, 1965, the factory will not be entitled to any rebate under the general provisions and a factory which has no production during the period 1st January, 1964 to 30th June, 1964, but produces only 900 quintals of sugar during the relevant period, that is, 1st January, 1965 to 30th June, 1965 will be entitled to rebate over the entire quantity at the scale as indicated above. Such a result would be against the terms and spirit of the notification.' I am unable to see how such a result would be against the terms and spirit of the notification. The object of the notification was to give an incentive to manufacturers to increase their production. If a manufacturer who was unable to produce any sugar during a certain period is induced to produce a large quantity of sugar during the corresponding period next year, it, certainly, is a notable achievement, which will deserve the incentive. On the other hand, if a manufacturer producing 1,000 quintals during a certain period in one year produces less during the corresponding period next year, he cannot claim to be entitled to any incentive as he has actually produced less than what he used to produce before. The learned Judges of the Pat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll not be fair to deny the petitioners the benefit of the incentive rebate if they had improved their production in the next year and had started production in lean period, which is the object of these notifications. In this view of the matter, we entirely agree with the view taken by the Andhra Pradesh High Court, the Punjab and Haryana High Court, the Allahabad High Court, the Madras and the Karnataka High Courts and hold that the petitioners are entitled to the benefits of these notifications. So far as the other contentions based on the interpretation of rules 10 and 10-A of the Rules are concerned, once it is held that the interpretation put forward by the adjudicating authority is wholly wrong, then it is not necessary to decide any other contentions raised and argued before us. However, it is pertinent to note that the Andhra Pradesh and the Madras High Courts have in terms taken a view that the demands made in this behalf clearly fall under rule 10(1) of the Rules, and therefore, rule 10-A was not applicable. 9. Before parting with this judgment note will have to be taken of the preliminary objection raised by the respondents though at a very late stage, that is, after th ..... 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