Customs, Excise and Gold Tribunal - Mumbai
M/S. Shree Madhi Vibhag Khand Udyog ... vs Commissioner Of Central Excise & ... on 18 January, 2001
Equivalent citations: 2001(77)ECC96, 2001(135)ELT778(TRI-MUMBAI)
ORDER J.H. Jaglekar, Member (T)
1. The appellants manufactured sugar. At the material time there were different rates of duty for levy sugar and free sale sugar. The rate of duty on the later was higher than on the former because the levy sugar was distributed through the public distribution system. In order to give incentive to the sugar industry certain notifications were issued under the Central Excise Act. One such notification was bearing no. 130/83-CE dated 27.4.1983 as amended. This notification prescribed a concessional rate of Rs.17/- per quintal for any sugar cleared as additional entitlement under incentive scheme. This scheme was operated by the Directorate of Sugar, Department of Food, Ministry of Good and Civil Supplies, New Delhi. Notification 131/83 had similar provisions and extended benefit from the additional duties of excise. The appellants cleared some sugar during the period September - November, 1990 in terms of notification 130/83. Part (3) of the explanation to this notification when these clearances were made read as under:-
"(3) "new sugar factory" or "expansion project sugar factory" means a sugar factory to which a letter of intent or industrial licence was issued between 1st October, 1980 and 30th September, 1985 by the Government of India, Ministry of Industry under the Industries (Development and Regulation) Act, 1951 (65 of 1951) for setting up a new sugar factory or for increasing the capacity of an existing sugar factory and certified as such by the Chief Director, Directorate of Sugar, Department of Food, Government of India."
On 26th March, 1991 notice was issued alleging that the assessees did not qualify for the benefit of the notifications inasmuch as they did not produce a letter of intent or industrial licence issued from 1.10.1980 to 30.9.1985 from the concerned authorities namely Ministry of Industry. Differential duty of Rs.3,77,916/- was demanded. The Collector confirmed the demand and held that the letter referred to in the paragraph of the explanation had not been produced by the assessee. The assessee then filed an appeal. The Collector (Appeals) upheld the lower order. In doing so she observed that the assessees had completed the expansion in 1979 and the letter of intent as required to be issued for expansions etc. undertaken between October 1980 to September 1985. She also held that the Directorate of Sugar was not the authority for determination of the question whether the benefit of the notification was available. Against this order the present appeal has been filed.
2. Shri N.J. Gheewala, learned consultant placed before us the judgment of the Delhi High Court in Civil Writ No. 1584/85 dated 3.9.1987. From a perusal of the order of the Hon'ble Court it appeared that the assessees had requested for permission to expand from the Ministry of Industry but that the Ministry had kept the issue pending for an inordinately long period. In the meanwhile, the assessees had invested substantial amount and had completed the expansion increasing their capacity from 2500 MT per day to 3000 MT per day. In their cited judgment the High Court held that the benefit of registration was available to the assessees for six months from 18.8.1991 and if during this period an application was made for a licence, the benefit would continue to be available until the application was disposed of. The High Court observed that the application was remaining pending till 14.5.1987 and therefore it would appear that from 1981 to 14.5.1987 the expansion was declared to be valid. Thereafter the Hon'ble High Court specifically went into the issue whether the benefit of the incentives was available to the applicant assessees. The Hon'ble High Court observed that the benefit was conditional upon the expansion being approved by the Government. In this case since the approval was not there, the petitioner's claim for incentives had to fail. In holding so, the Court denied the suggestion of the counsel that ex post facto approval would enable the applicants to seek the benefit of the Incentive Scheme. The order of the High Court was challenged by the Government before the Supreme Court. The Supreme Court granted the SLP but did not grant a stay. This order is dated 16.3.1988.
3. Shri Gheewala submits that in making the impugned order the Collector had gone into the area which did not exist when the law provisions were transmitted to her. We do not think that the observation made by the learned Collector would nullify her order. Essentially the same observation was made by the High Court as was made by the Collector.
4. Shri Gheewala places very strong reliance on the certificate given by the Directorate of Sugar. This certificate states that the factory had completed expansion on 18.2.1979 and was therefore eligible to take benefit of the Duty Incentive Scheme. The quota allotted was also shown there. The notification speaks of two authorities. The first authority was the Ministry of Industry under the Industries (Development and Regulation) Act, 1951. This agency had to grant a licence or letter of intent to an entity either for setting up a new factory or to undertake expansion of an existing factory. Only that sugar factory which complied with this condition would qualify for the dual terms "new sugar factory" or "expansion project sugar factory" which are used as enabling terms in the first para of the notification indicating qualifications. The notification also specified the date during which such letter or licence should have been received and that was the period between 1.10.1980 to 30.9.1987. The main charge in the show cause notice was the lack of entitlement of the assessees. One ground was raised in the show cause notice which was finalized by the Assistant Collector. In upholding that order the Collector (Appeals) also referred to another lacuna but it is not a case where the assessee has suffered. Where a lacuna is not pointed out in the show cause notice and where it is adopted by the adjudicator or the appellate authority, there is a scope for grievance from the appellant but where the denial is not made, the additional observations made by the Collector did not in any way harm further the interest of the assessees.
5. As regards the certification given by the Directorate of Sugar, we have no comments to make. The certificate is not in consonance with either the provisions of the notification or the observations made by the Hon'ble High Court. We would not go further into this issue.
6. In the result, the appeal fails and is dismissed.
(Dictated in Court)