Judgment:
1. The Etikoppaka Co-operative Agricultural & Industrial Society ltd., made their claim for the sugar incentive rebate under notification No.108/78-CE, dated 28-4-78 in respect of their production of sugar during the period 1-5-78 to 15-8-78. The claim was made under latter dated 31-8-78 but was returned by the Super intendent on 28-2-79 and later re-submitted, the date of final re-submission, according to the order under appeal, being 21-1-1981, the claim was rejected by the Collector of Central Excise, Guntur under order dated 8-2-82 on the basis that since notification No. 36/76-CE, dated 25-2-76 applied in the case of the appellants they were not entitled to the benefit claimed under notification no. 108/78. It is the revision petition preferred against the said order to the Central Government that, on transfer, is the present deemed appeal before us.
2. We have heared Shri G. Prabhakar Sastry, Advocate for the appellants Shri K.C. Sachar for the Department.
3. As earlier noted, the rejection of the claim by the collector was solely on the basis that notification No. 36/76 applied to the appellants and they were, therefore, disentitled to claim benefit under notification No. 108/78. This is for the reason that para 6 of notification No. 108/78 read as follows: "Nothing contained in this notification shall apply to a factory to which the notification of the Govt. of India in the Ministry of Finance (department of Revenue & Insurance) No. 35/76-CE, dated the 25th February, 1976 or No. 36/76-CE, dated the 25th of February, 1976 applies.
4. The contention for the appellants is that notification No. 36/76 did not apply to the appellants since benefit under notification No. 36/76 could be claimed only when certain conditions recited in the said notification are fulfilled as conditions precedent for claiming the said benefit and that the said conditions precedent for claiming the said benefit and that the said conditions precendent were not satisfied so far as the appellants are concerned. Notification No. 36/76 read that benefit of partial exemption in respect of payment of duty would be available subject to the condition that a certificate is produced from the Chief director, directorate of Sugar and Vanaspati, regarding the expansion of the installed capacity of the sugar factory on or after the first day of November, 1975 and entitling the factory to avail of the exemption under the notification. The contention of Shri Sastry is that the appellant did apply to the Chief Director for issue of a certificate (under their letter dated the 13th March, 1978) and pursued the request by another letter dated 23rd March, 1978 and that further correspondence also ensured but that the required certificate was not issued by the Chief director even till 16-8-78 when notification No. 36/76 was itself rescinded and in the circumstances the appellants were in no position to claim benefit under notification No. 36/76 for the absence of the said certificate. Shri Sastry contends that the appellants would in fact have been entitled to larger benefits under notification No. 36/76 but that since they were prevented from claiming the said benefit due to the failure of the concerned authority to issue the certificate required under that notification they were compelled to take resort to the smaller benefit under notification No.108/78 and in the circumstances it would not be proper to refuse benefit under notification No. 108/78 for the reason stated by the collector. Shri Sachar, for the Department, contests this contention and states that since even according to the appellants themselves they were entitled to claim benefit under notification No. 36/76 provided they produced the necessary certificate (for which they had in fact applied) this would be a case where it should be held that notification No. 36/76 applied to the appellants and hence they were not entitled to claim benefit under notification No. 108/78.
5. Paragraph 6 of the notification No. 108/78 which is the relevant portion for consideration in this appeal, has been extracted earlier.
The stipulation therein is that in order to obtain the benefit of partial exemption thereunder the assessee will have to produce a certificate from the designated authority certifying to the facts mentioned in the notification. Admittedly the appellants had not received any such certificate though they appear to have applied for the same. According to them there was correspondence on their application and before the said correspondence could result in the issue of the certificate the notification itself was rescinded and therefore there was no occasion from them to avail any such benefit. In the circumstances, they contend that notification 36/76 could not be said to have applied to them as they were not competent to obtain benefit thereunder for want of the stipulated certificate. In this connection, we may note that the govt. also addressed itself to this problem, evidently on references from the Officers as well as Sugar Mills Association, and in that connection issued a letter dated 14th August, 1980 addressed to all Collectors of Central Excise, copy of which letter has been produced by the appellants. Paragraph 2(c) of that letter reads as follows: "2(c) - On the question of implications of notification No. 108/78 vis-is notification Nos. 35/76 and 36/76 it may be stated that as per Clause (6) of notification No. 108/78, this notification was (sic) not apply to sugar factories to which notification Nos. 35/76 and 36/76 applicable. Since a condition precendent for the application of notification rate of sugar and if such a certificate has not been issued in favour of a sugar factory, these two notification will not be applicable to such a sugar factory. If these two notifications are not applicable, notification No. 108/78 will be available to such a sugar factory, subject to the conditions provided thereunder.
Thus the Govt. had also held that when no certificate had been issued by the Directorate of Sugar as required under notification 36/76 the said notification would not be applicable to the sugar factory concerned and hence the benefit under notification 108/78 would be available to that factory subject of course to fulfillment of other conditions under notification No. 108/78. We are satisfied that this view of the govt. was the proper view to be taken on the interpretation of the words of notification 108/78 and para 6 thereof. We accordingly hold that the collector in the present instance was not right in rejecting the claim of the appellants for benefit under notification 108/78 for the reason that notification 36/76 applied to them.
6. Accordingly, the appeal is allowed and the order of the Collector is set aside and the matter is remitted to him for consideration afresh in the light of the above observations and then dispose of the claim of the appellants in accordance with law.