Average production under rebate notification must exclude non-production years when the factory actually worked only part of the base period.

Clause (3) of Notification No. 135/83-C.E. required average sugar production for rebate to be computed only with reference to the period in which the factory actually produced sugar, excluding years or periods with no production. The notification was read as focusing on actual working time rather than a notional full three-year base period, so where the factory produced only during one base year, computation had to be confined to that year. On that construction, the rebate claim was not admissible and the rebate order was set aside.

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Issues: Whether, for rebate under Clause (3) of Notification No. 135/83-C.E. dated 30.04.1983, the average production of sugar had to be computed by taking the full three sugar years or only the period during which the factory actually produced sugar.

Analysis: Clause (3) required the relevant production period to be determined by taking into account only the period in which sugar was produced in the factory and by ignoring the period in which sugar was not produced. The wording of the notification made the emphasis fall on the actual working period of the factory, not on a notional inclusion of years during which there was no production. Since the factory had worked only for one of the three base years, the period for computation had to be confined to that year. The cases cited by the assessee related to different notifications and could not control the construction of this notification, which contained an unambiguous method of computation.

Conclusion: The average production was correctly computed by excluding the years during which there was no production, and the rebate claim was not admissible.

Final Conclusion: The order granting rebate was set aside and the revenue appeal succeeded on the construction of Clause (3) of the notification.

Ratio Decidendi: Where a notification expressly directs that the period in which no production took place shall be ignored, the average production must be computed only with reference to the actual production period and not by mechanically taking the full base years.

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