Strict construction of exemption notifications requires rebate to be computed on actual excess sugar production, not average production.

An exemption notification for sugar produced in excess of the average production of the preceding five sugar years was construed on its plain terms, with rebate slabs applied to the actual excess production and not to the average production itself. The court noted that the revenue's interpretation would add words not found in the notification and that, in taxing provisions, exemption must be determined strictly from the clear language used. On that construction, the rebate had to be computed only on actual excess output, and the contrary refund demand was unsustainable.

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Issues: Whether the rebate under the exemption notification dated 12-10-1974 was to be computed on the basis of the actual excess production over the average production of the preceding five sugar years, or on the basis of the average production itself.

Analysis: The notification granted exemption under sub-rule (1) of rule 8 of the Central Excise Rules, 1944, to sugar produced in excess of the average production of the corresponding period of the preceding five years, and fixed different rebate slabs according to the extent of excess production. The language of the notification was held to be plain and unambiguous. The construction urged by the revenue would require adding words not found in the notification, namely that the percentage slabs were to be applied to the average production of the preceding five years. In a taxing provision, exemption must be gathered from the clear words used, and no assumption of a supposed intention can override the text.

Conclusion: The rebate had to be computed on the actual excess production over the average production of the preceding five sugar years, and not on the average production itself. The demand for refund based on the contrary method was unsustainable.

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