Average production under exemption notification must exclude nil-production years when computing rebate eligibility.

An exemption notification computing relief by reference to average production over preceding sugar years required periods of nil production to be excluded from the calculation. Clause (3), read with clause (4), showed that years in which no sugar was produced could not be counted in the denominator merely because production occurred in only one of the relevant years. The term "any" was read in context to cover one or more of the preceding years, so the average had to be worked out only on the basis of actual production periods. The assessee's view that one year's output should be divided by three was rejected.

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Issues: Whether, for computing the average production under Notification No. 135/83-C.E., the periods of nil production in the preceding three sugar years had to be ignored, so that the average was to be worked out only on the basis of the year or years in which production actually occurred.

Analysis: The notification granted exemption for excess sugar produced during the incentive period over the average production of the corresponding period in the three preceding sugar years. Clause (3) directed that where production was nil during the relevant period in any of the three years, the period in which no sugar was produced had to be ignored for determining the average. Reading clause (3) with clause (4), the scheme showed that nil-production years were not to be counted in the denominator merely because the factory had production in only one of the three years. The word "any" was construed in context to include one or more of the three years, and the average was to be arrived at by excluding the periods of nil production.

Conclusion: The average production had to be calculated by ignoring the periods in which there was no production, even if that left only one year of actual production for the relevant period. The rebate claim was therefore not entitled to be computed by dividing one year's production by three, and the contention of the assessee was rejected.

Ratio Decidendi: In an exemption notification using the formula of average production over preceding years, express words requiring periods of nil production to be ignored must be given effect according to context, and the average cannot be artificially reduced by counting years in which no production occurred.

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