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CASE NO.:

Appeal (civil) 6634 of 1995

PETITIONER:

Sahyadri Sahakari Sakhar Karkhana Limited

RESPONDENT:

Collector of Central Excise, Pune

DATE OF JUDGMENT: 25/02/2003

BENCH:

Syed Shah Mohammed Quadri & Ashok Bhan

JUDGMENT:

J U D G M E N T

With

CA No. 5495/1995, CA No. 9052/1996, CA No. 7451/1995,

CA No. 12666/1996 and CA No. 5870 of 1997

BHAN, J.

In these appeals the dispute relates to the method of calculation

of average production of sugar for the purpose of grant of central

excise concession in terms of the exemption Notification No. 135/83-

CE dated 30th April, 1983.

In these appeals the point of law is common and the facts are

similar. Facts are narrated from Civil Appeal No. 6634 of 1995 being

illustrative.

Sahyadri Sahakari Sakhar Karkhana Limited, District Satara

(hereinafter referred to as 'the appellant') is a registered co-operative

Society, registered under the Maharashtra Co-operative Societies Act,

1960. It is carrying on the business of manufacturing sugar under

tariff item No. 17.01 under the Central Excise Tariff Act, 1985. It is

holding a registration in terms of Rule 174 of the Central Excise Act,

1944 and Central Excise Rules, 1944 (hereinafter referred to as 'the

Act & Rules, respectively').

Government of India issued a rebate notification No. 135/83

dated 30th April, 1983 with the intention to take more production of

sugar in the lean period of the sugar year 1982-83. The sugar year

starts on 1st October and ends on 30th September each year. Normally

sugar production season commences in November of each year and

continues for six months, i.e., up to April next year. The incentive

period from 1.5.1983 to 30.9.1983 in terms of the relevant notification

No. 135/83 comes during the lean period (off season of the sugar

year). In order to induce a sugar factory to produce more sugar,

during the off season period, this incentive was given by way of

rebate (refund) of central excise duties. The rebate was given on

excess production of sugar produced during the incentive period as

per notification on the basis of average production during the lean

period of three preceding Sugar years 1979-80, 1980-81 and 1981-82.

The excess production in this incentive period had to be worked out in

terms of the notification. Relevant portion of the notification reads as

under:

"Exemption to excess production during

1.5.1983 to 30.9.1983 In exercise of the

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powers conferred by sub-rule (1) of rule 8 of

the Central Excise Rules, 1944, the Central

Government hereby exempts, sugar,

described in column (1) of the Table and

falling under sub-item of the First Schedule

to the Central Excise & Salt Act, 1944 (I of

44), from so much of the duty of excise

leviable thereon under the said Act at the

rate specified in the said First Schedule in

the corresponding entry in columns (2) and

(3) of the said Table:

Table

-----------------------------------------------------

Description Duty of Excise Levy

Of sugar Free sale Sugar

Sugar

-----------------------------------------------------

(1) (2) (3)

(Rs. per quintal)

-----------------------------------------------------

Sugar produced 31.80 19.00

in a factory during

the period commencing

on the 1st day of May,

1983, and ending with

the 30th day of September,

1983, which is in excess

of the average production

of the corresponding period

of 1979-80, 1980-81 and

1981-82 sugar years.

Provided that the amount of

exemption calculated at the rate of specified

in column (2) or column (3) of the said

Table shall not exceed the amount of duty of

excise payable on free sale sugar or levy

sugar, as the case may be.

xxx xxx xxx

3. Where during the period commencing

on the 1st day of May and ending with the

30th day of September in any of the three

sugar years 1979-80, 1980-81 and 1981-82,

production of sugar in a factory was nil, the

average production of sugar of the

corresponding period of 1979-80, 1980-81

and 1981-82 shall, for the purposes of this

notification be determined by taking into

account only such of the period of which

sugar was produced in such factory and the

period in which sugar was not produced

therein, shall be ignored.

4. Where during the period commencing

on the 1st day of May and ending with the

30th day of September, in all the three years

1979-80, 1980-81 and 1981-82, the

production of sugar in factory was nil, the

entire production of sugar of such factory

during the period commencing on the 1st

May, 1983, shall be entitled to exemption

under this notification."

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Appellant had manufactured sugar between 18th of May to 30th

of September of the sugar year 1978-79 to the extent of 43,434.400

quintals. Although the appellant had produced sugar in the years

1979-80 and 1980-81, there was no production during the relevant

period from 1st May to 30th September which is rebatable period under

the notification. Appellant produced 69,784.00 quintals of sugar for

the rebatable period May 1983 to September 1983 for the sugar year

1982-83. For reference the sugar produced for the rebatable period

for the preceding three years is tabulated as below:

Base year Periods Production

1 2 3

1978-79 1.5.1978 30.9. 1978 43434.400 quintals

1979-80 1.5.1979 30.9.1980 Nil

1980-81 1.5.1980 30.9.1981 Nil

Total 3 years Total 3 periods Total 43434.400 qtls.

________________________________________________________

The dispute between the department and the appellant is

restricted to the short point. In the above table three years, three

periods and productions are shown. According to the department, out

of three years, two years are to be ignored for determining the average

production of the base years. According to the appellant the average

is to be calculated on the basis of three years and the periods of which

there is no production are to be ignored and as such there will be an

average of three years by dividing the total production of 44,434.400

quintals by three years as shown in the above table and that figure

will be the average for rebate in terms of notification No. 135/83. By

dividing the figure of 43,434.400 by three it comes to 14644.80

quintals. According to the appellant on the basis of the said above

average quantity the said rebatable quantity comes to 55333.00

quintals. Appellant claimed rebate to the tune of Rs.12,99,218.84

thereon.

The Assistant Collector of Central Excise, Satara issued and

served a show cause notice on the appellant dated 28th February, 1984

and called upon the appellant to show as to why the rebate claimed in

excess of Rs. 6,66,948.60 under the notification be not rejected as not

admissible. Appellant filed its reply to the show cause notice.

Assistant Collector of Central Excise did not accept the reply filed by

the appellant and by his order dated 26th June, 1984 restricted the

rebate claimed to Rs.6,66,948.60 as admissible and rejected the claim

in excess of above amount as not admissible. Appellant preferred an

appeal to the Collector of Central Excise (Appeals), Bombay.

Collector by his order dated 10th October, 1986 set aside the Assistant

Collector's orders and allowed the appeal with consequential relief.

The department preferred an appeal against the order of Collector

(Appeals) before the Central Excise & Gold (Control) Appellate

Tribunal, Special Bench, New Delhi (for short 'the Tribunal'). The

Tribunal by the impugned order allowed the appeal and set aside the

order of Collector (Appeals) and restored that of the Assistant

Collector. According to the Tribunal the two years in which there was

no production had to be ignored and the average could be worked out

on the basis of the production of one year only during the relevant

period. The Tribunal relied upon clause (3) of the notification which

according to it clearly explained that the year in which there was no

production of sugar was to be ignored and average production was to

be determined by taking into account only such of the period of which

sugar was produced in the factory. The sugar years in which there

was no production were to be ignored while working out the average

production.

Exemption notification in question was issued to provide an

incentive to the sugar factories to produce sugar during the lean

period, i.e., 1st May, 1983 to 30th September, 1983. Entitlement for

exemption from paying the excise duty is to be calculated on the

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average production of sugar commencing on 1st day of May and

ending with 30th day of September in the three sugar years 1979-80,

1980-81 and 1981-82. The method of arriving at the average

production of sugar in the three sugar years is provided in clauses 3

and 4. Clause 4 provides that if production of sugar in the lean

period in the preceding three Sugar years 1979-80, 1980-81 and 1981-

82 is 'nil' then the entire production of sugar of such factory during

the lean period between 1st May, 1983 to 30th September, 1983 shall

be entitled to exemption under the notification. This clause is not

applicable in the present case as there was production in one of the

sugar years, i.e., 1979-80. Clause 3 provides that if the production of

sugar in any of the three preceding Sugar years 1979-80, 1980-81 and

1981-82 in a factory was 'nil' then the average production of sugar of

the corresponding period of 1979-80, 1980-81 and 1981-82 for the

purposes of the notification would be determined by taking into

account only such of the period of which sugar was produced in such

factory and the period in which sugar was not produced therein shall

be ignored.

The contention of the counsel for the appellant is that average

has to be worked out on the basis of all the three base years and not

only on the basis of production of one year during the corresponding

period of which factory has produced sugar. It is his contention that

clause 3 of the notification states that sugar production of more than

one year has to be taken into consideration while determining the

average and it does not expressly exclude the number of years in

which there was no production. That average refers to more than one

figure and since in this case production was only in one year; the

question of taking average production did not arise as there was no

production in other two years. He laid lot of emphasis on the word

'any' occurring in clause 3. According to him, the use of the word

'any' in clause 3 is of significance and indicative of the fact that

clause 3 would apply in a case where there was production in at least

two years out of three and not where the production was there only in

one sugar year. Otherwise, according to him, the words used in the

clause 3 of the notification would have been, in any one or more of

the three preceding sugar years. As against this the stand of the Union

of India is that if there was no production in any of the three years in

the base period then the same is to be ignored while calculating the

average production of the said three sugar years. According to it,

clause 3 of the notification required that year or years of 'nil

production' have to be ignored while arriving at average production.

Since 'nil production' was there in two years, the period of two years

shall be ignored for the purposes of calculation of average

production.

The interpretation of the word 'any' came up for consideration

in Shri Balaganesan Metals Vs. M.N. Shanmugham Chetty, 1987 (2)

SCC 707, and referring to the meaning ascribed to the word in

Black's Law Dictionary, 5th Edn., it was held that the word 'any' has a

diversity of meaning and may be employed to indicate 'all' or 'every'

as well as 'some' or 'one' and its meaning in a given statute depends

upon the context and the subject matter of the statute. The same

interpretation of the word 'any' was reiterated by this Court in

Lucknow Development Authority Vs. M.K. Gupta, 1994 (1) SCC,

243 and it was held:

"The word 'any' dictionarily means 'one

or some or all'. The use of the word 'any' in

the context it has been used in clause (o)

indicates that it has been used in wider sense

extending from one to all."

Clause 3 provides that period in which there is 'nil production'

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has to be ignored while arriving at average production of the three

sugar years. As there was no production in the two years, the period

of two years has to be ignored for the purposes of calculating average

production. Average production is to be arrived at notwithstanding

that only one year out of three preceding years is left for working out

average. The use of the word 'any' in clause 3 in the context of the

notification has to be interpreted to mean in one or two years. Average

production of the three preceding years where there was no production

in two of the three preceding years cannot be arrived at by dividing

the production of one year by three. Had that been the intention then

it would not have been provided in clause 3 that the period in which

there was no production is to be ignored. The use of the words 'any

of the three sugar years' and then the words 'the average production

of Sugar' years of 1979-80, 1980-81 and 1981-82 for the purpose of

the notification be determined by taking into account 'only such of

the period of which sugar was produced' coupled with the words 'the

period in which sugar was not produced therein shall be ignored'

clearly indicates the intention that average production has to be

arrived at by ignoring the period in which there was no production

irrespective of the fact whether the period to be ignored is of one or

two years. Clause 4 operates where there was 'nil production' in all

the three preceding sugar years. We can not assume that the Central

Government was not conscious of the fact that production could have

been only in one of the three preceding sugar years and did not

provide to meet such a situation. Clause 3 governs the situation

where there is a production in one or more than one year and average

production of three preceding sugar years arrived at by ignoring the

period in which there was no production while calculating the average

production.

In our view, the Tribunal has correctly considered the rebate

claim arising out of the three base years. Appellant had manufactured

sugar between 1st May, 1979 to 30th September, 1979 only and since

there was no production in the two periods, i.e., 1980-81 and 1981-82

the same are to be ignored and the sugar produced in the year 1979-80

would be taken to be the average for all the three years for

determining the average production. In a case of factory where there

was no production in any of the three years during the lean period

then the sugar produced between 1st May, 1983 to 30th September,

1983 was to be taken as the average production for exemption from

the payment of excise duty. In cases where there was a production in

any of the three preceding years then the average had to be calculated

by ignoring the periods in which there was no production. Since in

this case there is no production in two out of the three years the

average has to be the production in one year only.

Counsel for the appellant placed reliance on two judgments of the

Tribunal, namely, M/s Kalambar Vibhas Sahakari Sakhar Karkhana Ltd. and

Collector of Central Excise, Aurangabad VS. Niphad Sahakari Sakhar

Karkhana Ltd. Pimplas, 1986 (24) ELT 53 (Tribunal) and the judgment of

this Court in Saswad Mali Sahakair Sakhar Karkhana Ltd. Vs. Union of

India, 1995 (1) SCC 200. Neither of these judgments are applicable in the

present cases as the question of method of calculation of average production

was not an issue in those cases. Moreover, the notifications involved in

those cases were differently worded. A clause similar to clause 3 of present

notification had not come up for consideration in those cases. The judgment

of this Court is totally on a different point and has no application to the facts

of the present cases or the point involved in these cases.

For the reasons stated above, we do not find any merit in these

appeals and dismiss the same with no order as to costs.