Holding

Clause 3 of Notification No. 135/83 CE mandates that any year with nil production be ignored and the average production be determined by the output in the year(s) where sugar was produced; thus, if only one year has production, that figure constitutes the average for the three‑year period.

Summary

The appellant, a cooperative sugar factory, claimed a rebate under Central Excise Notification No. 135/83 CE based on the average sugar production during the three preceding lean years (1979‑80, 1980‑81, 1981‑82). It had produced sugar only in 1979‑80 and nil in the other two years. The Revenue argued that the two nil‑production years should be ignored and the average should be calculated on the basis of the single year of production. The Tribunal upheld the Revenue's view, and the appellant appealed to the Supreme Court. The Court held that clause 3 of the notification expressly requires ignoring any year with nil production and determining the average by taking into account only the periods in which sugar was produced. Consequently, when production occurs in only one of the three years, that year's output is treated as the average for the three‑year period; clause 4 applies only when all three years have nil production. The Court dismissed the appeals.

Issues considered

How should the average production of sugar be calculated for the purpose of the rebate under Notification No. 135/83 CE when there is nil production in two of the three base years?
Does clause 3 of the notification require ignoring years with nil production and using the output of the remaining year(s) as the average, or must the average be computed over all three years regardless of nil production?

Legislation cited

Central Excise Act, 1944s. Rule 174, s. Rule 8 (sub‑rule (1))
Central Excise Rules, 1944
Central Excise Tariff Act, 1985

Subjects

central exciserebateaverage productionsugar industrynotification interpretationnil productionexcise duty exemptionclause construction

Judgment

)

A SAHY ADRI SAHAKARI SAKHAR KARKHANA LTO.
v.
COLLECTOR OF CENTRAL EXCISE, PUNE

FEBRUARY 25, 2003

B [SYED SHAH MOHAMMED QUADR1 AND ASHOK BHAN, JJ.]

Central Excise Tariff Act, 1985-Tariff Item No. 17.01-Centra/ Excise
Act, 1944-Centra/ Excise Rules, 1944- Ru/e 174-Excise duty-Rebate in
C payment on the basis of average production during three preceding sugar
years by a notification-Out of the three years, production in first year while ..,
nil production in the subsequent two years-Rebate claim calculating the
average production on the basis ofthree base years-Determination ofaverage
production-Held, for the purpose of calculating average production periods
in which there is nil production has to be ignored-Sugar produced in one
D year would be taken to he average of all the three years for determining the
average production. ·

Appellant a registered Cooperativt: society was carrying oo the
busine$s of manufacturing sugar under Tariff Item No.l 7.01 under Central
Excise Tariff Act, 1985. Government issued a rebate notification No.l35/
E 83 by which rebate was given on excess production of sugar during the
incentive period on the basis of average production during the lean period
of three preceding sugar years 1979-80, 1980-81 and 1981-82. Appellant
had produced sugar in the year 1978-79 but there was no production
during the years 1979-80 and 1980- 81. Appellant claimed rebate
F calculating the average production of three years by dividing the total
production by three years. According to Revenue, out of three years, two
years were to be ignored for determining the average production of the
base year. Assistant Collector of Central Excise rejected the claim in excess
of the admissible amount. Collector of Central excise allowed the appeal
with consequential relief. In appeal Central Excise and Gold (Cont!ol)
G Appellate Tribunal set aside the order of Collector and restored that of
the Assistant Collector. Relying on clause 3 of the notification it held that
the two yea rs in which there was no production had to be ignored and
the average could be worked out on the basis of production of one year
during the relevant period.

H 3 l0
SAHYADRI SAHAKARI SAKHAR KARKHANA LTD. v. C.C.E. 31]

In appeal to this Court appellant-assessee contended that the average A
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; that clause 3 of the notification
stated that sugar production of more than one year has to be taken into
consideration while determining average and it docs 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 B
year, the question of taking average production did not arise as there was
no production in o·ther two years; that the use of the word 'any' in clause
3 of the notification is indicative of the fact that clause 3 would apply in
a case where there was production in atleast two years out of three and
not where the production was there only in one sugar year. c
Revenue contended 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; that
clause 3 of the notification required that year or yea.r s of 'nil production'
have to be ignored while arriving at average production; and that since D
'nil production' was there in two years, the period of two years shall be
ignored for· the purposes of calculation of average production.

Dismissi11g the appeals, the Court

HELD: I. Clause 3 of the Notification provides that period in which E
there is ' nil production' bas to be ignored while llrriving at average
production of the three sugar years. 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
F
no production in two of the three preceding years cannot be arrived at
by dividing the production of one year by tha:.ee. 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 G
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
to be ignored is of one or two years. It can not be assumed that the Central H
312 SUPREME COURT REPORTS (2003] 2 S.C.R. ..
--=
A 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 ~y ignoring the period in which there was no
production while calculating the average production. 1318-B-FI
B '
Shri Balaganesan Metals v. M.N. Sahnmugham Chetty, 119871 2 SCC ,._
707 and Lucknow Development Authority v. M.K. 'Gupta 119941 1 SCC 243,
relied on.

2. Tribunal has correctly considered the rebate claim arising out of
c the three base years. Appellant.has manufactured sugar betw~n
1st May,
1979 to 30th September, 1979 only and since there was no production in
the two period, 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
D factory ~here there was no production in any of the three years during
of
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 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
E there is no production in two out of the three years the average has to be
the production in one year only. f318-G-H; 319-A, Bl

Saswad Mali Sahakari Sakhar Karkhana Ltd. v. Union of India, (19951
1 sec 200, distinguished.
'
F Mls Kalambar Vibhas Sahakari Sakhar Karkhana Ltd. and Collector of
Central Excise, Aurangabadv. Niphad Sahakari Sa/char Karkhana Ltd. Pimp/as,
(1986) 24 ELT 53(TribunaQ, referred to.

· CIVIL APPELLATE JURJSDTCTION : Civil Appeal No. 6634 of 1995.

G From the Judgment and Order dated 6.3.1995 of the Central Excise,
Customs and Gold (Control) Appellate Tribunal, New Delhi in A. No. E1
2675/86-D in F.O. No. 75 of 1995-D.

WITH
H C.A. Nos. 5495195, 9052/96, 7451/95, 12666/96 and 5870/97.
SAHY ADRI SAHAKARI SAKHAR KARKHANA LTD. v C.C.E. (BHAN. J.] 313
Dushyant A. Dave, Umesh Bhagwat. V.B. Joshi and Harris Beeran, for A
the Appellant.

Mukul Rohtagi, Additional Solicitor General, Sanjiv Sen,"G.V. Rao and
B.K. Prasad, for the Respondent.
.
The Judgment of the Court was delivered by B
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.
c
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 D
business of manufacturing sugar under tariff item No. 17.0 I under the Central
Excise Tariff Act, 1985. It is holding a registration in terms of Rule 174 of
the Central Excise Act, I944 and Central Excise Rules, 1944 (hereinafter
referred to as 'the Act & Rules, respectively').

Government of India issued a rebate notification No. 135/83 dated E
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 Ist 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 F
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 w~s 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 G
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 powers conferred by sub-rule (I) of rule 8 of the H
314 SUPREME COURT REPORTS 12003) 2 S.C.R.

A Central Excise Rules, I944, the Central Government hereby exempts,
sugar, described in column (I) of the Table and falling under sub-
item of the First Schedule to the Central Excise & Salt Act, I 944 (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:
B
Table

Description Duty of Excise Levy
of sugar Free sale Sugar
(I) (2) (3)
c (Rs. per quintal)
Sugar produced in a factory 31.80 19.00
during the period commen-
cing on the I st day of May,
1983, and ending with the
D 30th day of September,
I 983, which is in excess of
the average production of
the corresponding period of
1979-80, 1980-8 I and
1981-82 sugar years.
E
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.
F
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, 1980-8 I and I981 -82, production of sugar in a factory was
G nil, the average production of sugar of the corresponding period of
1979-80, 1980-8 1 and I981-82 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.
H 4. Where during the period commencing on the 1st day of May and
SAHYADRI SAHAKARI SAKHAR KARKHANA LTO. ~· C.C.E. [SHAN, J .) 315

ending with the 30th day of September, in all the three years 1979- A
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 of
commencing on the Ist May, 1983. shall be entitled to exemption
under this notification."

Appellant had manufactured sugar between 18th of May to 30th of B
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 Ist May to 30th
September which is rebatable period under the notification. Appellant produced
69,784.00 quintals of sugar for the rcbatable' period May 1983 to September C
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
I 2 3
D
1978·79 1.5.1978-30.9. 1978 43,434.400 quintals

1979-80 1.5.1979-30.9.1980 Nil

1980-81 1.5.1980-30.9.1981 Nil
E
Total 3 years Total 3 periods Total 43,434.400 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 F
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 G
dividing the figure of 43,434.400 by three it comes to 14.,644.80 quintals.
According to the appellant on the basis of the said above average quantity the
said rebatable quantity comes to 55,333.00 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 H
.·
316 SUPREME COURT REPORTS [2003] 2 S.C.R.

A show cause notice on the appellant dated 28th February, 1984 and called
I
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
B June, I984 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 1Oth October, i 986 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
C 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 wh ich
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.
D 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
E working out the average production.
Exemption notification ill" question was issued to provide an incentive
to the sugar factories to produce sugar during the lean period, i.e., .lst May,
. 1983 to 30th September, 1983. Entitlement for exemption from paying the
excise duty is to be calculated on the average production of sugar commencing
F on Ist day of May and ending with 30th day of September in the thr~e 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
G production of sugar of such factory during the lean period between Ist May,
1983 to 30th September, 1983 shall be entitled to exemption uoder 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 ~f sugar in any of the th;ee preceding Sugar years 1979-80,
1980-81 and 1981-82 in a factory was 'nil' then the average production of
H sugar of the corresponding period of 1979-80, 1980-81 and 1981-82· for the
SAHYAORI SAHAKARI SAKHAR KARKHAN A LTD. 1'. C.C.E.{BHAN. J.] 3I 7

purposes of the notification would be determined by taking into account only A
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
b~ 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 B
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 C
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 D
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 ~as 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 E
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 s~all be ignored for the purposes
of calculation of average production.

The interpretation of the wor:d 'any' came up for consideration in Shri F
Balaganesan Meials v. MN. Shanmugham Cherty, [ 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 G
this Court in Lucknow Development Authority v. MK. Gupta, [1994] I 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) H
318 SUPREME COURT REPORTS (20031 2 S.C.R.

A indicates that it has been used in wider sense extending from one to
all."

Clause 3 provides that periuJ !!l which there is ·,,il production ' 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
B 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
C 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, I 980-81 and I 981-82 for the purpose of the notification be determined
D by taking into account ' only"such ofthe period ofwhich 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
E 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
F 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
G 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 ~·ears for detennining 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 Ist May, 1983 to 30th September.
..
H 1983 was to be taken as the average production for exemption from the
"\
\

SAI-fYADRI SAHAKARI SAKI-fAR KARKI-fANA LTD.v. C.C.E. (BI-fAN, J.] 319
payment of excise duty. In cases where there was a production in any of the A
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 B
Tribunal, namely, Mls Kalambar Vibhas Sahakari Sakhar Karkhana Ltd and
Collector ofCentral Excise, Aurangabad v. Niphad Sahakari Sakhar Karkhana
Ltd Pimp/as, (1986) (24) ELT 53 (Tribunal) and the judgment of this Court
in Saswad Mali Sahakari Sakhar Karkhana Ltd. v. Union of India, [1995] I
SCC 200. Neither of these judgments are applicable in the present cases as C
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 jud"'ment 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. D
For the reasons stated above, we do not find any merit in these appeals
and dismiss the same• with no order as to costs.

K.K.T. Appeals dismissed.