1978 (8) TMI 84 - HC - Central Excise

Court interprets Notification No. 146/74 on rebate eligibility criteria, directs Rs. 6,59,104 refund

The court upheld the petitioner's interpretation of Notification No. 146/74-Central Excises, ruling that the average production for rebate eligibility ... Average production - treatment of years with nil production in averaging - interpretation of Notification No. 146/74-C.E. (rebate for sugar) - writ of mandamus to compel grant of rebate - maintainability of writ under Article 226(3) vis-a-vis remedy under Section 35Average production - treatment of years with nil production in averaging - interpretation of Notification No. 146/74-C.E. (rebate for sugar) - Whether the average production for OctoberNovember of the five preceding sugar years must include years of 'nil' production for a mill which commenced production prior to 196768, i.e., whether the total production must be divided by five. - HELD THAT: - The Notification distinguishes mills that commenced production in or prior to 196768 from those commencing thereafter and expressly contemplates different treatment where production in one or more of the five sugar years was nil only for the latter class. 'Sugar year' is defined in Explanation 1(d). The wording of clause (1)(a) referring to 'the average production of the corresponding period of the preceding five sugar years' indicates that for mills which began production in or before 196768 the averaging contemplates inclusion of years with no production in the corresponding period. Excluding years of nil production would frustrate the distinct twotier scheme of rebates and improperly read into clause (1) a limitation that the Notification imposes only for mills starting after 196768. Consequently the petitioner's calculation, which divides the total by five, accords with the Notification and must be accepted. [Paras 9, 10, 14, 15]The average is to be calculated by dividing the total production for the corresponding period of the five preceding sugar years by five; the petitioner's interpretation is correct and entitles it to the rebate claimed under the Notification.Writ of mandamus to compel grant of rebate - maintainability of writ under Article 226(3) vis-a-vis remedy under Section 35 - Whether the writ petition under Article 226 is maintainable in view of Article 226(3) and the statutory remedy under Section 35 of the Central Excises and Salt Act. - HELD THAT: - Article 226(3) bars entertaining a petition where another remedy for redress is provided by law. Section 35 provides appellate or revisionary remedies against decisions or orders of a Central Excise Officer. Here the Assistant Collector's communication amounted to a requirement to revise the claim and the respondents' counteraffidavit characterises it as a 'view' rather than a formal decision or order under the Act. There is no decision or order of the kind contemplated by Section 35 which the petitioner could be required to pursue; accordingly the bar in Article 226(3) is not attracted and the writ petition seeking mandamus to compel grant of the rebate is maintainable. [Paras 11, 12, 13]The petitioner may invoke Article 226; the petition is maintainable because there is no decision or order under Section 35 for which the statutory appellate remedy would be available.Final Conclusion: Writ issued directing the respondents to grant the petitioner's rebate claim in accordance with Notification No. 146/74C.E., dated 12101974, on the basis that the average for OctoberNovember is to be calculated by dividing total production by five and that the writ petition is maintainable. Issues:Claim for rebate under Notification No. 146/74-Central Excises, calculation of average production for rebate eligibility, interpretation of Notification clauses, maintainability of writ petition under Article 226.Analysis:The petitioner, a sugar mill, sought a writ of mandamus for a rebate of Rs. 6,59,104 under Notification No. 146/74-Central Excises. The dispute arose from the calculation of average production for rebate eligibility. The Notification provided exemptions for sugar factories based on production years. The petitioner argued for a calculation method considering all five preceding years, while the respondents advocated for excluding years with no production. The court analyzed the Notification's language and intent, emphasizing the distinction between mills starting production before and after 1967-68.The petitioner's interpretation of the Notification was upheld by the court, stating that the average production should be calculated based on all five preceding years, even if some years had no production during specific months. The court rejected the respondents' argument to exclude years with no production during certain months, emphasizing the Notification's language referring to 'average production' without specifying an 'average period of production.' The court found the petitioner's calculation method and interpretation of the Notification to be correct.Regarding the maintainability of the writ petition under Article 226, the respondents argued for seeking remedy through appeal and revision under Sec. 35 of the Act. However, the court held that since there was no formal decision or order by a Central Excise Officer, the petitioner's recourse to Article 226 for a writ of mandamus was appropriate. The court emphasized that the rejection of the petitioner's claim and the Assistant Collector's view did not constitute a formal 'decision or order' under Sec. 35.Ultimately, the court directed the respondents to grant the petitioner's claim for rebate in accordance with Notification No. 146/74-Central Excises. The court found the petitioner's calculation method aligned with the Notification's provisions, leading to the issuance of the writ of mandamus for the rebate amount. No costs were awarded in the judgment.