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TMI Blog1988 (3) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... issible to the sugar factories for the period 1-10-1973 to 30-9-1974. The interpretation of this notification has given rise to conflicting judgments in other High Courts and two learned Judges of this Court have adopted the view favouring the sugar factories following the decision of the Andhra Pradesh High Court reported in Etikoppaka Co-operative Agricultural Society Ltd. v. Union of India -1979 (2) T.L.R. 2454. The terms of the notification which came up for consideration before the Andhra Pradesh High Court are identical to that of Annexure A notification in these appeals. The Andhra Pradesh High Court has taken the view that the proviso in Annexure A indicates the true scope of Items 1 to 4 in Annexure A. If that proviso is kept in view, sugar factories though they have not produced sugar during the corresponding period in the base year would be entitled to rebate at the rates mentioned in column 3 of the notification on the quantum of sugar produced during the relevant period of the sugar year. 2. Before we proceed further, we must clarify what the sugar year means and what the base year means in relation to the claim for rebate in excise duty. 3. It was the policy of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ested in vain, they filed writ petitions and were successful in challenging the validity of the notices issued in the year 1976 calling upon them to refund the rebate. Now the notification under which the respondents-owners claimed the rebate should be reproduced in full since a decision either way would depend on the proper construction of this notification. It reads as : " New Delhi , dated the 4th October, 1973 12th Ashvina, 1895 (Saka) NOTIFICATION (CENTRAL EXCISE) 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 (i) 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 Excise 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 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. Explanation. - In this notification, the expression 'base period' means the period commencing from the 1st day of October, 1972 and ending with the 30th day of September, 1973. (No. 199/73) Sd/- S.R. Narayanan Under Secy. to the Govt. of India ." 4. The first four items in Annexure A relate to admissibility of rebate for the quantities of sugar produced during the relevant period in the sugar year, i.e., 1973 in excess of the sugar produced during the corresponding period in 1972. The first item under Annexure A relates to only two months in the year 1973, i.e., October and November, 1973 and if the owners had produced sugar in excess of the quantities produced during the corresponding period, i.e., October and November, 1972, they were entitled to the rebate on the excess quantity produced at the rate of Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcess of the production during the corresponding period in the base year. To illustrate under Item 1, to claim rebate for the months of October and November 1973 the factory should have produced sugar in excess of what was produced during the months of October and November, 1972. Under Item 2 the factory should have produced sugar in excess of 110% of what was produced during the period commencing from the 1st day of December, 1972 and ending with the 30th day of April, 1973. Under Item No. 3, the factory should have produced sugar in excess of 110% of the quantity of sugar produced during May and June, 1973. Under Item 4, the factory should have produced sugar in excess of 110% of the quantity produced during the period July, August and September 1973. 6. In the cases before us, the respondent in W.A. No. 1910 of 1983 claimed rebate for the month of May; 1974 though it did not produce sugar during the corresponding month of May, 1973. It also did not produce sugar in the months of June, July, August and September, 1973. However, it claimed rebate for the sugar produced in May, 1974 on the basis of the notification Annexure A. 7. In W.A. No. 2603/85, the respondent-sugar factor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oviso again receives a restricted construction; where the section confers powers, 'it would be contrary to the ordinary operation of a proviso to give it an effect which would cut down those powers beyond what compliance with the proviso renders necessary'." To quote Maxwell again - "If a proviso cannot reasonably be construed otherwise than as contradicting the main enactment, then the proviso will prevail on the principle that 'it speaks the last intention of the makers'." In this case, the proviso, in our view, does not in any way contradict the intendment of Items 1 to 4 in Annexure A. What all the proviso says is that the rebate under Items 1 to 4 would not be applicable to a factory which had not worked during the base year. That means to say, if the factory had not worked during the base period 1-10-1973 to 30-9-1974, then the rebate of Items 1 to 4 would not be available to the factory. That is to say, if the factory had not produced any sugar at all during the entire period of the base year, then the benefit of Items 1 to 4 would not be available to the sugar factory owners. However, if the factory had produced sugar during the corresponding period in the base year, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the relevant period in 1972-73 he would be entitled to rebate, but not if he produced 'nil' sugar. The proviso to the notification, in my opinion, makes matters clear. It says that the exemption mentioned against serial Nos. 1 to 4 shall not be admissible to a factory which did not work during the base period. In other words it was only, when a factory did not work at all during ('base period' is defined in the explanation to the notification as the period from 1-10-1972 to 30-9-1973) that period the exemptions would not be admissible. The proviso did not make exemptions inadmissible if the factory did not work during the relevant periods mentioned against Sl. Nos. 1 to 4. If the object of the notification was not to grant any exemption in respect of the sugar produced during any one of the four periods mentioned against Sl. Nos. 1 to 4 if no sugar was produced during the corresponding period in the base year, the proviso to the notification would have been worded differently. In the face of the proviso, I find it difficult to accept the arguments of the learned Counsel for the Central Government." 13. A hypothetical question was put before the Andhra Pradesh High Court a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cess production, it postulates production for the base period also." After expressing so, it further observed : "That is correct with this qualification that under the present notification the base period is the year 1-10-1972 to 30-9-1973 and not the smaller periods mentioned against Serial Nos. 1 to 4 in the notification. I am not inclined to agree with the view of the Patna High Court." With great respect we cannot agree with the view of the Andhra Pradesh High Court. That view shows that the Andhra Pradesh High Court was not concerned with the smaller sub-base periods mentioned in Items 1 to 4 in the notification, but was influenced by the definition of the words "base period", i.e., 1-10-1972 to 30-12-1973. We are at a loss to understand as to how the definition of the words "base period" would be relevant to determine the production during the smaller period mentioned in Items 1 to 4 in the notification for the purpose of claiming rebate for excess production in the sugar year. 14. As noticed earlier, this reasoning of the Andhra Pradesh High Court is totally opposed to the ordinary canon of construction of the proviso and also to the plain language of Items 1 to 4 of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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