Excess production rebate applies against a nil base, and writ jurisdiction remains available when statutory remedy is futile.

Exemption notifications under rule 8(1) of the Central Excise Rules, 1944 intended to encourage higher sugar production were held applicable even where the corresponding period in the earlier year showed nil production, because later production over a nil base still constituted excess production. The exclusion for factories that did not work during the defined base period was confined to total non-working during that base period and did not apply merely because the corresponding period had no output. The writ petitions were also held maintainable despite an alternate statutory remedy, as the departmental interpretation challenged was already fixed and the ordinary remedy would have been futile. The demands were unsustainable and amounts recovered were directed to be refunded.

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Issues: (i) whether the exemption notifications granting rebate on excess production of sugar applied where the corresponding period in the base year had nil production; (ii) whether the writ petitions were maintainable despite the availability of an appellate or revisional remedy.

Issue (i): whether the exemption notifications granting rebate on excess production of sugar applied where the corresponding period in the base year had nil production.

Analysis: The notifications were framed under rule 8(1) of the Central Excise Rules, 1944 to encourage early commencement of manufacture and higher sugar production. Their language and object showed that the relevant comparison was between the quantity produced in the later period and the corresponding period in the earlier year. Nil production in the earlier corresponding period did not make the notifications inapplicable; on the contrary, production in the later year over a nil base still represented excess production. The proviso excluding factories that did not work during the defined base period confirmed that the exclusion operated only where the factory did not work at all during the base period, not where the corresponding period alone showed no production.

Conclusion: The benefit of the notifications was available even where no sugar had been produced during the corresponding period in the earlier year, and the petitioners were entitled to the rebate.

Issue (ii): whether the writ petitions were maintainable despite the availability of an appellate or revisional remedy.

Analysis: The availability of a statutory remedy did not bar writ jurisdiction where the authority administering the scheme had already adopted a binding interpretation and the remedy had thereby become illusory in the circumstances. The challenge concerned the legality of the departmental interpretation that governed all the impugned demands, and pursuing the ordinary remedy would have been futile.

Conclusion: The preliminary objection to maintainability was rejected and the writ petitions were maintainable.

Final Conclusion: The demands based on the restrictive interpretation of the notifications could not be sustained, the petitioners succeeded, and the amounts already recovered were directed to be refunded.

Ratio Decidendi: For a rebate notification aimed at encouraging production, production in the later period may be treated as excess over a nil corresponding production in the earlier year, and a writ petition is maintainable notwithstanding an alternate remedy where that remedy is rendered futile by a pre-determined departmental interpretation.

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