Sahyadri
Sahakari Sakhar Karkhana Limited Vs. Collector of Central Excise, Pune [2003] Insc
114 (25 February 2003)
Syed
Shah Mohammed Quadri & Ashok Bhan
With
CA No. 5495/1995, CA No. 9052/1996, CA No. 7451/1995, CA No. 12666/1996 and CA
No. 5870 of 1997 BHAN, J.
In
these appeals the dispute relates to the method of calculation of average
production of sugar for the purpose of grant of central excise concession in
terms of the exemption Notification No. 135/83- CE dated 30th April, 1983.
In
these appeals the point of law is common and the facts are similar. Facts are
narrated from Civil Appeal No. 6634 of 1995 being illustrative.
Sahyadri
Sahakari Sakhar Karkhana Limited, District Satara (hereinafter referred to as
'the appellant') is a registered co-operative Society, registered under the Maharashtra
Co-operative Societies Act, 1960. It is carrying on the business of
manufacturing sugar under tariff item No. 17.01 under the Central Excise Tariff
Act, 1985. It is holding a registration in terms of Rule 174 of the Central
Excise Act, 1944 and Central Excise Rules, 1944 (hereinafter referred to as
'the Act & Rules, respectively').
Government
of India issued a rebate notification No.
135/83 dated 30th
April, 1983 with the
intention to take more production of sugar in the lean period of the sugar year
1982-83. The sugar year starts on 1st October and ends on 30th September each
year. Normally sugar production season commences in November of each year and
continues for six months, i.e., up to April next year. The incentive period
from 1.5.1983 to 30.9.1983 in terms of the relevant notification No. 135/83
comes during the lean period (off season of the sugar year). In order to induce
a sugar factory to produce more sugar, during the off season period, this incentive
was given by way of rebate (refund) of central excise duties. The rebate was
given on excess production of sugar produced during the incentive period as per
notification on the basis of average production during the lean period of three
preceding Sugar years 1979-80, 1980-81 and 1981-82.
The
excess production in this incentive period had to be worked out in terms of the
notification. Relevant portion of the notification reads as under:
"Exemption
to excess production during 1.5.1983 to 30.9.1983 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 (1) of the Table
and falling under sub-item of the First Schedule to the Central Excise & Salt
Act, 1944 (I of 44), from so much of the duty of excise leviable thereon under
the said Act at the rate specified in the said First Schedule in the
corresponding entry in columns (2) and (3) of the said Table:
Table
----------------------------------------------------- Description Duty of
Excise Levy Of sugar Free sale Sugar Sugar
----------------------------------------------------- (1) (2) (3) (Rs. per
quintal) ----------------------------------------------------- Sugar produced
31.80 19.00 in a factory during the period commencing on the 1st day of May,
1983, and ending with the 30th day of September, 1983, which is in excess of
the average production of the corresponding period of 1979-80, 1980-81 and
1981-82 sugar years.
Provided
that the amount of exemption calculated at the rate of specified in column (2)
or column (3) of the said Table shall not exceed the amount of duty of excise
payable on free sale sugar or levy sugar, as the case may be. xxx xxx xxx
3.
Where during the period commencing on the 1st day of May and ending with the
30th day of September in any of the three sugar years 1979-80, 1980-81 and
1981-82, production of sugar in a factory was nil, the average production of
sugar of the corresponding period of 1979-80, 1980-81 and 1981-82 shall, for
the purposes of this notification be determined by taking into account only
such of the period of which sugar was produced in such factory and the period
in which sugar was not produced therein, shall be ignored.
4.
Where during the period commencing on the 1st day of May and ending with the
30th day of September, in all the three years 1979-80, 1980-81 and 1981-82, the
production of sugar in factory was nil, the entire production of sugar of such
factory during the period commencing on the 1st May, 1983, shall be entitled to
exemption under this notification." Appellant had manufactured sugar
between 18th of May to 30th of September of the sugar year 1978-79 to the
extent of 43,434.400 quintals. Although the appellant had produced sugar in the
years 1979-80 and 1980-81, there was no production during the relevant period
from 1st May to 30th September which is rebatable period under the
notification. Appellant produced 69,784.00 quintals of sugar for the rebatable
period May 1983 to September 1983 for the sugar year 1982-83. For reference the
sugar produced for the rebatable period for the preceding three years is
tabulated as below:
Base
year Periods Production 1 2 3 1978-79 1.5.1978 30.9. 1978 43434.400 quintals
1979-80 1.5.1979 30.9.1980 Nil 1980-81 1.5.1980 30.9.1981 Nil Total 3 years
Total 3 periods Total 43434.400 qtls.
________________________________________________________ The dispute between
the department and the appellant is restricted to the short point. In the above
table three years, three periods and productions are shown. According to the
department, out of three years, two years are to be ignored for determining the
average production of the base years. According to the appellant the average is
to be calculated on the basis of three years and the periods of which there is
no production are to be ignored and as such there will be an average of three
years by dividing the total production of 44,434.400 quintals by three years as
shown in the above table and that figure will be the average for rebate in
terms of notification No. 135/83. By dividing the figure of 43,434.400 by three
it comes to 14644.80 quintals. According to the appellant on the basis of the
said above average quantity the said rebatable quantity comes to 55333.00
quintals. Appellant claimed rebate to the tune of Rs.12,99,218.84 thereon.
The
Assistant Collector of Central Excise, Satara issued and served a show cause
notice on the appellant dated 28th February, 1984 and called upon the appellant
to show as to why the rebate claimed in excess of Rs. 6,66,948.60 under the
notification be not rejected as not admissible. Appellant filed its reply to
the show cause notice.
Assistant
Collector of Central Excise did not accept the reply filed by the appellant and
by his order dated 26th June, 1984 restricted the rebate claimed to
Rs.6,66,948.60 as admissible and rejected the claim in excess of above amount
as not admissible. Appellant preferred an appeal to the Collector of Central
Excise (Appeals), Bombay.
Collector
by his order dated 10th
October, 1986 set
aside the Assistant Collector's orders and allowed the appeal with
consequential relief.
The
department preferred an appeal against the order of Collector (Appeals) before
the Central Excise & Gold (Control) Appellate Tribunal, Special Bench, New Delhi (for short 'the Tribunal'). The
Tribunal by the impugned order allowed the appeal and set aside the order of
Collector (Appeals) and restored that of the Assistant Collector. According to
the Tribunal the two years in which there was no production had to be ignored
and the average could be worked out on the basis of the production of one year
only during the relevant period. The Tribunal relied upon clause (3) of the
notification which according to it clearly explained that the year in which
there was no production of sugar was to be ignored and average production was
to be determined by taking into account only such of the period of which sugar
was produced in the factory. The sugar years in which there was no production
were to be ignored while working out the average production.
Exemption
notification in question was issued to provide an incentive to the sugar
factories to produce sugar during the lean period, i.e., 1st May, 1983 to 30th September, 1983. Entitlement for exemption from paying the excise
duty is to be calculated on the average production of sugar commencing on 1st
day of May and ending with 30th day of September in the three sugar years
1979-80, 1980-81 and 1981-82. The method of arriving at the average production
of sugar in the three sugar years is provided in clauses 3 and 4. Clause 4
provides that if production of sugar in the lean period in the preceding three
Sugar years 1979-80, 1980-81 and 1981- 82 is 'nil' then the entire production
of sugar of such factory during the lean period between 1st May, 1983 to 30th
September, 1983 shall be entitled to exemption under the notification. This
clause is not applicable in the present case as there was production in one of
the sugar years, i.e., 1979-80. Clause 3 provides that if the production of
sugar in any of the three preceding Sugar years 1979-80, 1980-81 and 1981-82 in
a factory was 'nil' then the average production of sugar of the corresponding
period of 1979-80, 1980-81 and 1981-82 for the purposes of the notification
would be determined by taking into account only such of the period of which
sugar was produced in such factory and the period in which sugar was not
produced therein shall be ignored.
The
contention of the counsel for the appellant is that average has to be worked
out on the basis of all the three base years and not only on the basis of
production of one year during the corresponding period of which factory has
produced sugar. It is his contention that clause 3 of the notification states
that sugar production of more than one year has to be taken into consideration
while determining the average and it does not expressly exclude the number of
years in which there was no production. That average refers to more than one
figure and since in this case production was only in one year; the question of
taking average production did not arise as there was no production in other two
years. He laid lot of emphasis on the word 'any' occurring in clause 3.
According to him, the use of the word 'any' in clause 3 is of significance and
indicative of the fact that clause 3 would apply in a case where there was
production in at least two years out of three and not where the production was
there only in one sugar year. Otherwise, according to him, the words used in
the clause 3 of the notification would have been, in any one or more of the
three preceding sugar years. As against this the stand of the Union of India is
that if there was no production in any of the three years in the base period
then the same is to be ignored while calculating the average production of the
said three sugar years. According to it, clause 3 of the notification required
that year or years of 'nil production' have to be ignored while arriving at
average production.
Since
'nil production' was there in two years, the period of two years shall be
ignored for the purposes of calculation of average production.
The
interpretation of the word 'any' came up for consideration SCC 707, and
referring to the meaning ascribed to the word in Black's Law Dictionary, 5th Edn.,
it was held that the word 'any' has a diversity of meaning and may be employed
to indicate 'all' or 'every' as well as 'some' or 'one' and its meaning in a
given statute depends upon the context and the subject matter of the statute.
The same interpretation of the word 'any' was reiterated by this Court in 243
and it was held:
"The
word 'any' dictionarily means 'one or some or all'. The use of the word 'any'
in the context it has been used in clause (o) indicates that it has been used
in wider sense extending from one to all." Clause 3 provides that period
in which there is 'nil production' has to be ignored while arriving at average
production of the three sugar years. As there was no production in the two
years, the period of two years has to be ignored for the purposes of
calculating average production. Average production is to be arrived at
notwithstanding that only one year out of three preceding years is left for
working out average. The use of the word 'any' in clause 3 in the context of
the notification has to be interpreted to mean in one or two years. Average
production of the three preceding years where there was no production in two of
the three preceding years cannot be arrived at by dividing the production of
one year by three. Had that been the intention then it would not have been
provided in clause 3 that the period in which there was no production is to be
ignored. The use of the words 'any of the three sugar years' and then the words
'the average production of Sugar' years of 1979-80, 1980-81 and 1981-82 for the
purpose of the notification be determined by taking into account 'only such of
the period of which sugar was produced' coupled with the words 'the period in
which sugar was not produced therein shall be ignored' clearly indicates the
intention that average production has to be arrived at by ignoring the period
in which there was no production irrespective of the fact whether the period to
be ignored is of one or two years. Clause 4 operates where there was 'nil production'
in all the three preceding sugar years. We can not assume that the Central
Government was not conscious of the fact that production could have been only
in one of the three preceding sugar years and did not provide to meet such a
situation. Clause 3 governs the situation where there is a production in one or
more than one year and average production of three preceding sugar years
arrived at by ignoring the period in which there was no production while
calculating the average production.
In our
view, the Tribunal has correctly considered the rebate claim arising out of the
three base years. Appellant had manufactured sugar between 1st May, 1979 to
30th September, 1979 only and since there was no production in the two periods,
i.e., 1980-81 and 1981-82 the same are to be ignored and the sugar produced in
the year 1979-80 would be taken to be the average for all the three years for
determining the average production. In a case of factory where there was no
production in any of the three years during the lean period then the sugar
produced between 1st May, 1983 to 30th September, 1983 was to be taken as the
average production for exemption from the payment of excise duty. In cases
where there was a production in any of the three preceding years then the average
had to be calculated by ignoring the periods in which there was no production.
Since in this case there is no production in two out of the three years the
average has to be the production in one year only.
Counsel
for the appellant placed reliance on two judgments of the Tribunal, namely, M/s
Kalambar Vibhas Sahakari Sakhar Karkhana Ltd. and Collector of Central Excise, Aurangabad
VS. Niphad Sahakari Sakhar Karkhana Ltd. Pimplas, 1986 (24) ELT 53 (Tribunal)
and the judgment of India, 1995 (1) SCC 200. Neither of these
judgments are applicable in the present cases as the question of method of
calculation of average production was not an issue in those cases. Moreover,
the notifications involved in those cases were differently worded. A clause
similar to clause 3 of present notification had not come up for consideration
in those cases. The judgment of this Court is totally on a different point and
has no application to the facts of the present cases or the point involved in
these cases.
For
the reasons stated above, we do not find any merit in these appeals and dismiss
the same with no order as to costs.
Back