SASWAD MALI SAHAKARI SAKHAR KARKHANA LTD. versus UNION OF INDIA AND ANR.

Citation: [1994] SUPP. 5 S.C.R. 460 · Decided: 11-11-1994 · Supreme Court of India · Bench: KULDIP SINGH, R.M. SAHAI, B.L. HANSARIA · Disposal: Appeal(s) allowed
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Judgment (excerpt)

A 
SASWAD MALI SAHAKARI SAKHAR KARKHANA LTD. 
B 
c 
D 
E 
F 
G 
H 
v. 
UNION OF INDIA AND ANR. 
NOVEMBER II, 1994 
[KULOIP SINGH, R.M. SAHAI AND B.L. HANSARIA, JJ.] 
Central Excise Rules, 1944-Notification No. 146174 dated 12.10.1994 
issued by the Department of Revenue and Insurance, Ministry of Finance-
Scope of-Whether percentage mentioned in sub-clauses (a) to (e) of Table 
to Notification are to be calculated on excess production or average 
production of sugar of the preceding five sugar years-Held, rebate being 
made rebatable on excess production, it is this production (beyond 
average) which has to be looked into. 
The matter is relatable to the interpretation of the Notification No. 
146n4 dated 12.10.74 issued by the Department of Revenue and 
Insurance, Ministry of Finance, in exercise of powers conferred by Rule 
8 (I) of the Central Excise Rules, 1944, whereby sugar described in 
column (2) of the Table to the Notification was exempted from so much 
of the duty of excise leviable thereon as is specified in the 
corresponding entry in columns (3) and (4) of the Table. The dispute is 
on the question as to whether the percentage mentioned in sub-clauses 
(a) to (e) are to be calculated on the excess production or average 
production of the preceding five sugar years. An earlier Bench in 
Collector of Central Excise v. Neoli Sugar Factory, JT (1993) 2 SC 587, 
held that the percentage would not apply to the excess production, but 
would it be to the average production. This interpretation put on the 
Notification has been questioned by the factory owners. 
According to the appellants, the sub-.clauses of the Notification 
having mentfoned about 'excess production', the percentage has to be 
calculated not on the average production but on the excess production. 
As against this, the respondents submitted that the concept of excess · 
production being intimately related with average production because of 
what has been stated in the main part of column (2), the view taken in 
Neoli Sugar Factory Case is correct and sound. According to the 
respondents, the ascending percentage of rebate was offered to the 
manufacturers to induce them to produce more and more and if the 
interpretation put by appellants were to be accepted, the object behind 
granting rebate would not be realised. 
460 
,.. 
S. M. S. SAK.HAR KARKHANA LTD. v. U.0.1 [HANSARIA, J.] 
461 
Allowing the appeal, this Court 
A 
HELD : On the language of the Notification No. 146n4 dated 
12.10.1974, rebate being made relatable on the excess production, it is 
this production (beyond the average) which has to be looked into. This 
reading of the Notification would not defeat the object of granting of B 
rebate. The quantum of rebate would increase with the rate of excess 
production going higher and higher. So, the manufacturer would have 
the impetus to produce more and more, as higher the percentage of 
excess, more would be quantum of rebate. (463-H, 464-A-B) 
Collector of Centra~ Excise v. Neo/i Sugar Factory, JT (1993) 2 SC C 
587, overruled to this extent. 
CIVIL APPELLATE JURISDICTION : Civil Appeal Nos. 488-93 of 
1979. 
From the Order dated 4.10.78 and 6.10.78 of the Government oflndia, D 
Ministry of Finance, Deptt. of Revenue, New Delhi in Order Nos. 1127, 
1125178, 1129 and 1132of1979. 
G.L. Sanghi, and S.B. Wad, Manoj Wad and Mrs. J.S. Wad for the 
Appellants. 
E 
K.T.S. Tulsi, Additional Solicitor General, M. Gauri Shankar, T.V. 
Ratnam, V.K. Verma and Rajiv Sharma, for C.V.S. Rao, for the 
Respondents. 
The Judgment of the Court was delivered by 
HANSARIA, J. The short point which needs to be decided by us, on 
F 
the matter being required to come before a larger Bench, is relatable to 
Notification No. 146/74 dated 12.10.74 issued by the Department of 
Revenue and Insurance, Ministry of Finance, in exercise of powers 
conferred by Rule 8 (1) of the Central Excise Rules, 1944, whereby sugar G 
described in column (2) of the Table to the Notification was exempted from 
so much of the duty of excise leviable thereon as is specified in the 
corresponding entry in columns (3) and (4) of the Table. 
2. The relevant portion of the Notification reads as below:-
H 
A 
B 
c 
D 
E 
F 
G 
H 
462 
SUPREME COURT REPORTS 
(1994) SUPP. 5 S.C.R. 
TABLE 
SI. Description of sugar 
No. 
Duty of excise 
Free sale sugar . 
Levy 
sugar 
1. xxxx 
2. 
Sugar produced in a factory during the period commencing on the 
lst day of December, 1974 and ending with the
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