Salem Co-operative Sugar Mills Ltd. vs Collr. of C. Ex., Madras

Rain, J.—The above reference has been made u/s 35G of the Central Excise and Salt Act, 1944 at the instance of the assessee

Manufacturer, by referring the following for our determination and opinion :

Whether for the purpose of Notification No. 108/78-C.E., dated 28-4-1978 quantum of exemption is relatable to the quantum of sugar

produced during the prescribed period or is dependant on the rate of duty prevailing on the date of removal of such excess production;

Whether the benefit of notification is available in respect of that part of the excess production that is exported out of the country;

Whether the quantum of exemption is based on the per unit amount specified in the notification or whether the exemption is limited by the actual

quantum of duty leviable on the sugar determined in the light of the answer to Question (1) above.

The applicants Sugar Mills are manufacturers of sugar falling under item 1 of Central Excise Tariff. By Central Excise Notification No. 108,

dated 28-4-1978, as amended, the Government of India announced an incentive scheme for excess production of sugar for the period between 1-

5-1978 to 15-8-1978 and taking advantage of the same, the applicants applied for a rebate of Rs. 4,87,005.68 on the quantity of excess

production claimed at 19371.75 quintals. The Authorities found on scrutiny and verification of the records that a quantity of 12,143 quintals had

been actually exported out of India out of the excess production for which, there was no charge or duty levied under the Act and therefore, the

Authorities held that the question of applying the Notification or extending the benefit of rebate to the applicant does not arise. The Tribunal below

also rejected the claim of the applicants. Hence the reference.

Mr. Prakash, learned counsel appearing for the applicants while reiterating the stand taken before the Authorities below contended that the

quantum of exemption must be with reference to the quantum of sugar produced during the relevant period and not on the basis of the actual duty

or duty levied on the sugar so produced.

We have been taken through the Notification by learned counsel for the applicants as also by Mr. K. Jayachandran, learned Additional Central

Government Standing Counsel who invited our attention to the reasons assigned by the Tribunal below, and contended that the decision taken by

the Tribunal below does not call for interference and reflects the correct position of law.

We have considered the submissions made by learned counsel appearing on either side. In our view, the Tribunal below has taken the correct

view on the issue raised. The claim for rebate would depend very much upon the exigibility to duty of the product and inasmuch as by virtue of the

export of a major portion of the sugar produced in excess, the said sugar was not subjected to actual liability and it was not assessed to excise

duty, the question of claiming rebate does not arise at all and consequently, the Notification will have no application to the claim made. The view

taken by the Tribunal therefore, in our view, does not suffer from any infirmity, consequently, we answer question No. 1 in the affirmative holding

that the applicability of Notification No. 108 u/s 78(c) dated 28-4-1978 would depend and the question of allowing rebate would arise only if

excess sugar is produced, that would suffer assessment and levy of excise duty and not otherwise. As for question No. 2, we hold that the

quantum of exemption would be limited by the actual quantum of duty levied and paid on the excess sugar determined and not merely on the mere

excess production alone. No costs.