Average sugar production under Notification 135/83-C.E. is based on actual factory operation periods, not nil-production years.

Clause 3 of Notification No. 135/83-C.E. requires average sugar production to be computed by reference to the periods of actual factory operation, not by a notional three-year average that includes nil-production periods. The cited Tribunal view treated the relevant working period as decisive, and the Bombay High Court decision was distinguished as arising under different notifications. On that basis, the Revenue's method of computation was preferred and the rebate claim under the assessee's method was not admissible.

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Issues: Whether, for the purpose of Clause 3 of Notification No. 135/83-C.E. dated 30-4-1983, the average production of sugar had to be worked out on the basis of the entire three preceding sugar years even where production in one or more corresponding periods was nil, or only on the basis of the year in which actual production existed.

Analysis: Clause 3 of the notification required the average production to be determined with reference to the corresponding periods in the three specified sugar years, while ignoring the period in which sugar was not produced. The earlier Tribunal decision on the same notification had held that the emphasis was on the relevant period of actual working of the factory, and that where the factory had worked only for one year, the calculation of production for the purpose of the notification was confined to that year. The cited Bombay High Court decision was found to relate to different notifications and was not treated as governing the present computation issue.

Conclusion: The average was to be computed in the manner applied by the Revenue, and the rebate claim was not admissible on the assessee's method.

Ratio Decidendi: For Clause 3 of Notification No. 135/83-C.E., the computation of average production is governed by the period of actual factory operation contemplated by the notification, and not by a notional average of three years where production in the relevant periods was nil.

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