Collector of Central Excise Vs. Shetkari Sahakari Sakhar - Court Judgment

Excerpt:
1. the dispute in the present appeal turns on interpretation of central excise notification no. 36/76, dated 25-2-1976. though the respondents were eligible for the benefit of the notification inasmuch as they had completed expansion of the installed capacity of their factory on 28-2-1976 (i.e., on or after 1-11-1975 as laid down in the notification), in reality, they could not avail themselves of the benefit because of the fact that they did not receive in time the chief director's (directorate of sugar and vanaspati) certificate entitling them to avail themselves of the duty concession under the said notification. by the time they received the certificate in or about october, 1977, the entire sugar production of the sugar year 1975-76 had been cleared as free sale/levy sugar in the normal ratio of 35 : 65. on this position being brought to the notice of the chief director, he informed the respondents by his letter dated 24-12-1977 that as the factory was entitled to the benefit for the sugar year 1975-76, and as the benefit was not availed by them, he would release the additional quantity of free sale sugar for both the sugar years 1975-76 and 1976-77 out of the production of 1976-77 and 1977-78 which he did. the central excise department had, however, a doubt whether the rate of duty under notification no. 36/76, would be admissible in respect of the 1975-76 entitlement from out of the sugar production of later years 1976-77 and 1977-78. the duty concession, was therefore, allowed to be extended on a provisional basis under central excise rule, 9b. later on, however, the assistant collector issued a show cause notice, dated 8-7-1980 calling back the amount of rs. 42,66,341.68, the duty concession availed of in respect of the 1975-76 production by adjustment from the later years production. in due course, after holding adjudication proceedings, the assistant collector confirmed the demand but for a lower amount of rs. 34,17,642.45. in appeal, the collector (appeals) set aside the assistant collector's order following his predecessor's order-in-appeal no. 975/pn-69/81, in a similar matter. it is this order of the collector (appeals) that is now under challenge before us.2. we have heard smt. d. saxena, sr d.r. for the appellant collector and shri b.g. kulkarni, consultant with shri m.s. kaveri, consultant, for the respondents.3. smt. saxena's contention was that notification no. 36/76, did not have any provision for the carry over of the unutilised quota of a sugar year to the following sugar year. therefore, the respondents were not entitled to the benefit of duty concession in respect of the excess levy from sugar quota for the year 1975-76 (which they could not utilise owing to late receipt of the chief sugar director's certificate) by adjustment from out of the production of sugar years 1976-77 and 1977-78. on the other hand, shri kulkarni drew our attention to the sugar directorate's letter dated 24-12-1977 to the respondent. in this letter, the director noted that the total sugar stocks for the year 1975-76 which had already been released in the usual ratio of 65 : 35 had been sold by the respondents prior to the receipt of the extra free sale sugar release. the letter clarified that the quantity of additional free sale sugar under the incentive scheme for the both the years 1975-76 and 1976-77 would, therefore, be released to the respondents out of the production of 1976-77 and 1977-78. the notification as such did not bar such adjustment and there was no justification to deny the respondents the benefit of the notification as correctly held the collector (appeals).4. we have carefully considered the submissions of both sides. there is no dispute as regards the eligibility of the respondents to the duty concession incentive contained in notification no. 36/76. this is evidenced by the certificate issued by the chief director (sugar). the present dispute has, however, arisen because of the fact that by the time the certificate was received by the respondents, the production of the sugar year 1975-76 had already been cleared in the usual ratio of 65 : 35 evidently without availment of the benefit of notification no.36/76, no part of the production of 1975-76 was left in stock to be cleared under the said notification. the respondents, therefore, approached the director of sugar who, having regard to the circumstances, wrote on 24-12-1977 to the respondents as follows :- i am to refer to your teleegram dated 16-12-1977 on the above subject and observe that the total stocks of sugar for the year 1975-76 which was already released in the usual ratio of 65 : 35 has been sold by you prior to the receipt of extra free sale sugar release accruing due to incentives. it is, however, clarified that the quantity of additional free sale sugar under the incentive scheme for both the years i.e. 1975-76 and 1976-77 will therefore be released to you out of the production of 1976-77 and 1977-78.the appellants contention is that the above assurance is not binding on the central excise authorities and that there is no provision in notification no. 36/76 for such carry over of unutilised quantity of additional levy -free sale sugar to later years to be adjusted against the later years quota of additional levy free sugar.5. we do not find anything in notification no. 36/76, to warrant that appellant's contention that the benefit thereof must be availed of in the very years of production itself or that if it is not so availed of, the assessee forfeits the entitlement to the same in respect of that quantity of sugar. the duty concession is in respect of sugar which exceeds 35% of the production which is in excess of the average production as defined in the notification and subject to the factory being certified to be entitled to the duty concession by the director, sugar. in the present case, the certificate was available after the production of sugar year 1975-76 had duly been cleared in the normal manner evidently without the benefit of the duty concession. realising this situation, the director, sugar, clarified on 24-12-1977 that the quantity of additional free sale sugar for 1975-76 and 1976-77 would be released to the respondent's factory out of the production of 1976-77 and 1977-78. para 4(iv)(b) of the incentive scheme detailed by the directorate of sugar, government of india, in circular no, f.27(6)/75-st, dated 6-12-1975 to all sugar factories reads as follows :- "(b) any shortfall in production during the 5 years period in which the incentives are available as compared to average for the base period would be carried over the subsequent season for adjustment." 6. the para talks of shortfall in production, which is not the case here. if anything, the present case stands on a better footing. the production was available, the factory was entitled, but could not avail itself of the concession on account of non-availability of the required certificate. had the certificate been available in time, there would have been no problem. since, it was not available in time, the director, sugar allowed the carry over and adjustment as stated in the letter of 24-12-1977.7. in the above view of the matter, we are of the opinion that the collector (appeals)'s order is correct,, we uphold the same and reject this appeal.

Judgment:
1. The dispute in the present appeal turns on interpretation of Central Excise Notification No. 36/76, dated 25-2-1976. Though the respondents were eligible for the benefit of the notification inasmuch as they had completed expansion of the installed capacity of their factory on 28-2-1976 (i.e., on or after 1-11-1975 as laid down in the notification), in reality, they could not avail themselves of the benefit because of the fact that they did not receive in time the Chief Director's (Directorate of Sugar and Vanaspati) certificate entitling them to avail themselves of the duty concession under the said notification. By the time they received the certificate in or about October, 1977, the entire sugar production of the sugar year 1975-76 had been cleared as free sale/levy sugar in the normal ratio of 35 : 65. On this position being brought to the notice of the Chief Director, he informed the respondents by his letter dated 24-12-1977 that as the factory was entitled to the benefit for the sugar year 1975-76, and as the benefit was not availed by them, he would release the additional quantity of free sale sugar for both the sugar years 1975-76 and 1976-77 out of the production of 1976-77 and 1977-78 which he did. The Central Excise department had, however, a doubt whether the rate of duty under Notification No. 36/76, would be admissible in respect of the 1975-76 entitlement from out of the sugar production of later years 1976-77 and 1977-78. The duty concession, was therefore, allowed to be extended on a provisional basis under Central Excise Rule, 9B. Later on, however, the Assistant Collector issued a show cause notice, dated 8-7-1980 calling back the amount of Rs. 42,66,341.68, the duty concession availed of in respect of the 1975-76 production by adjustment from the later years production. In due course, after holding adjudication proceedings, the Assistant Collector confirmed the demand but for a lower amount of Rs. 34,17,642.45. In appeal, the Collector (Appeals) set aside the Assistant Collector's order following his predecessor's order-in-appeal No. 975/PN-69/81, in a similar matter. It is this order of the Collector (Appeals) that is now under challenge before us.

2. We have heard Smt. D. Saxena, Sr D.R. for the appellant Collector and Shri B.G. Kulkarni, Consultant with Shri M.S. Kaveri, Consultant, for the respondents.

3. Smt. Saxena's contention was that Notification No. 36/76, did not have any provision for the carry over of the unutilised quota of a sugar year to the following sugar year. Therefore, the respondents were not entitled to the benefit of duty concession in respect of the excess levy from sugar quota for the year 1975-76 (which they could not utilise owing to late receipt of the Chief Sugar Director's certificate) by adjustment from out of the production of sugar years 1976-77 and 1977-78. On the other hand, Shri Kulkarni drew our attention to the Sugar Directorate's letter dated 24-12-1977 to the respondent. In this letter, the Director noted that the total sugar stocks for the year 1975-76 which had already been released in the usual ratio of 65 : 35 had been sold by the respondents prior to the receipt of the extra free sale sugar release. The letter clarified that the quantity of additional free sale sugar under the incentive scheme for the both the years 1975-76 and 1976-77 would, therefore, be released to the respondents out of the production of 1976-77 and 1977-78. The notification as such did not bar such adjustment and there was no justification to deny the respondents the benefit of the notification as correctly held the Collector (Appeals).

4. We have carefully considered the submissions of both sides. There is no dispute as regards the eligibility of the respondents to the duty concession incentive contained in Notification No. 36/76. This is evidenced by the certificate issued by the Chief Director (Sugar). The present dispute has, however, arisen because of the fact that by the time the certificate was received by the respondents, the production of the sugar year 1975-76 had already been cleared in the usual ratio of 65 : 35 evidently without availment of the benefit of Notification No.36/76, No part of the production of 1975-76 was left in stock to be cleared under the said notification. The respondents, therefore, approached the Director of Sugar who, having regard to the circumstances, wrote on 24-12-1977 to the respondents as follows :- I am to refer to your teleegram dated 16-12-1977 on the above subject and observe that the total stocks of sugar for the year 1975-76 which was already released in the usual ratio of 65 : 35 has been sold by you prior to the receipt of extra free sale sugar release accruing due to incentives. It is, however, clarified that the quantity of additional free sale sugar under the incentive scheme for both the years i.e. 1975-76 and 1976-77 will therefore be released to you out of the production of 1976-77 and 1977-78.

The appellants contention is that the above assurance is not binding on the Central Excise authorities and that there is no provision in Notification No. 36/76 for such carry over of unutilised quantity of additional levy -free sale sugar to later years to be adjusted against the later years quota of additional levy free sugar.

5. We do not find anything in Notification No. 36/76, to warrant that appellant's contention that the benefit thereof must be availed of in the very years of production itself or that if it is not so availed of, the assessee forfeits the entitlement to the same in respect of that quantity of sugar. The duty concession is in respect of sugar which exceeds 35% of the production which is in excess of the average production as defined in the notification and subject to the factory being certified to be entitled to the duty concession by the Director, Sugar. In the present case, the certificate was available after the production of sugar year 1975-76 had duly been cleared in the normal manner evidently without the benefit of the duty concession. Realising this situation, the Director, Sugar, clarified on 24-12-1977 that the quantity of additional free sale sugar for 1975-76 and 1976-77 would be released to the respondent's factory out of the production of 1976-77 and 1977-78. Para 4(iv)(b) of the incentive scheme detailed by the Directorate of Sugar, Government of India, in Circular No, F.27(6)/75-ST, dated 6-12-1975 to all Sugar factories reads as follows :- "(b) Any shortfall in production during the 5 years period in which the incentives are available as compared to average for the base period would be carried over the subsequent season for adjustment." 6. The para talks of shortfall in production, which is not the case here. If anything, the present case stands on a better footing. The production was available, the factory was entitled, but could not avail itself of the concession on account of non-availability of the required certificate. Had the certificate been available in time, there would have been no problem. Since, it was not available in time, the Director, Sugar allowed the carry over and adjustment as stated in the letter of 24-12-1977.

7. In the above view of the matter, we are of the opinion that the Collector (Appeals)'s order is correct,, We uphold the same and reject this appeal.