Full Judgment
2. Shortly put the facts of the case are that, the respondents M/s Kesar Sugar Works Ltd. filed their rebate claim for Rs. 1,22,434/- in respect of excess production of sugar during the period May 1978 to September, 1978 under Notification No. 108/78 dated 28-4-1978. On receipt of the rebate claim, the Superintendent of Central Excise concerned worked out the rebate and a credit of Rs. 83,570.78 was allowed to the respondents. The respondents protested and represented to the Assistant Collector of Central Excise, Bareilly. From the Order-in-Original passed by the Assistant Collector it appears that the appellants raised the following three contentions :- 1. Contention in their letter dated 4-3-1980 that excess sugar in respect of which the rebate had been earned was cleared in the month of July, 1978 when the incidence or duty was higher than that of rebate notified.
3. Deduction of Rs. 2108.66 in violation of Allahabad High Court 's Interim Order.
3. As regards the first contention, the Assistant Collector held that rebate can be allowed only to the tune of duty actually paid by the respondents and it cannot be given in excess of duty actually paid. As regards the second question, the Assistant Collector held that as no duty was paid on processing losses hence no rebate can be granted in respect of sugar lost during the reprocessing. As regards the last contention, the Assistant Collector held that "In case M/s. Kesar Sugar Mills, Baheri, produce the latest interim stay in regard to the recovery of duty on enhanced price charged in excess of the price fixed by the Government of India, party shall be allowed a credit of Rs. 2103/-. This credit will be subject to the compliance of different conditions, if any set out in the interim stay order." Against that Order of the Assistant Collector, the respondents filed their appeal before the Collector (Appeals) who held as follows :- 1. The Notification No. 108/78 does not state anywhere that the grant of rebate is relatable to clearance of sugar. It also does not stipulate that the quantum of rebate is restricted to duty payable.
Consequently, in the circumstances, rebate is correctly to be allowed in respect of the entire quantity of excess sugar produced at the rates prescribed in Notification. No. 108/78; 2. The deduction of certain quantity on account of re-processing loss was correctly done by the Assistant Collector; and 3. The deduction of amount by way of recovery, which was stayed was also incorrect and should not have been done.
3.1 With these aforesaid observations, the Collector (Appeals) set aside the Order of the Assistant Collector with the direction for recalculating and sanctioning the amount of rebate in the light of the observations made by him, as stated-above, vide his impugned Order-in-Appeal.
4. Against that Order of the Collector (Appeals), the Revenue has filed the present appeal.
5. Arguing on behalf of the appellants, Shri L.C. Chakraborty, learned SDR, submitted that it is settled law that rebate can never exceed the actual duty paid and, therefore, the view of the Collector (Appeals) that rebate should be allowed at the rates specified in the Notification irrespective of duty actually paid, is incorrect and liable to be quashed. To support his contention, he cited the case of Someshwar Sahakari Sakhar Karkhana Ltd. v. Union of India, 1988 (34) E.L.T. 522, wherein a Division Bench of the Bombay High Court interpreting Notification No. 108/78 (which is the subject matter of interpretation in this appeal also) held that rebate or exemption under the Notification is allowable only qua duty actually paid or payable, adding that it is not the scheme of the Act or the Notification that exemption could exceed the actual payment of duty. He submitted that this judgment of the Bombay High Court was approved by the Apex Court by a judgment dated 18-8-1989 rendered in SLP No. 3242/88. In this premises, he requested that the impugned Order-in-Appeal be set aside and that of the Assistant Collector be restored. In reply, Shri D.K.Agarwal, learned counsel for the respondents, submitted that so far as the legal position that rebate or exemption under Notification No.108/78 is allowable only qua duty actually paid or payable and to that extent the order of the Collector (Appeals) be set aside, he has no quarrel, in view of the said decision of the Bombay High Court, as approved by the Apex Court. However, he submitted that the Collector (Appeals) by his impugned Order had set aside the findings of the Assistant Collector which relate to the deduction of amount by way of recovery observing that "the deduction of amount by way of recovering, which was stayed was also incorrect and should not have been done" and, therefore, to this extent the impugned Order-in-Appeal is to be upheld.He also cited the case of Salem Cooperative Sugar Mills Ltd. v.Collector of Central Excise, Madras, 6. We have considered the submissions. On the strength of the said authorities cited at the Bar, we agree with the learned SDR that under Notification No. 108/78 no exemption could be claimed exceeding the amount of duty otherwise payable. In other words, the respondents could be entitled to rebate or exemption qua the amount of duty actually paid on clearance of the goods as held by the Assistant Collector.
Consequently, the impugned Order-in-Appeal to the extent that rebate shall be allowed at the rates prescribed in Notification No. 108/78 is set aside, as prayed for in para 6 of the grounds of appeal by the appellants.