Central excise rebate depends on comparing full base-year production with the sugar year, not splitting the base year into closed periods.

Central excise rebate under the applicable sugar scheme had to be determined by comparing production during the entire base year with production in the relevant sugar year. The base year could not be split into separate sub-periods by excluding periods when the factory was closed, because the scheme treated the base year as a single unit. Where overall production in the sugar year exceeded production in the whole base year, rebate could not be denied merely on the ground that the factory did not work for part of the base year. The denial on that basis was therefore unsustainable.

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Issues: Whether, for determining entitlement to Central Excise rebate, the base year could be split into sub-periods by excluding periods when the factory did not work, and whether the petitioner was entitled to rebate on the basis of overall excess production during the sugar year compared with the base year.

Analysis: The applicable rebate scheme required comparison of production in the sugar year with production in the base year. The base year was treated as a single unit and not as divisible into separate sub-periods. Production during the entire base year had to be compared with production during the relevant sugar year, and if there was excess production, rebate could not be denied merely because the factory remained closed for some period in the base year.

Conclusion: The petitioner was entitled to have the rebate determined on the basis of the whole base year, without splitting it into sub-periods, and the denial of rebate on the impugned basis was unsustainable.

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