Dhrangadhra Chemical Works Ltd. Vs. Collector of Central Excise
EmailCentral Excise Act, 1944
Notification dated 1.3.1981 – Interpretation – Benefits given to goods clearance, in excess of base period – Clause 1 (iv) of notification mentioning year 1980-81, 1981-82 and 1982-83 whereas clause 2 mentioning 1981-82 and 1982-83 only – Clearance by appellant prior to 1.4.80 for the first time and then only in year 1982-83 – If entitled to benefit. Held that on correct interpretation, clearance was to be in each year from 1980 to 1983.
The decision of the tribunal is correct. The wording is a bit ambiguous but it is clear that the intention of this notification was to give additional benefit to the industry which had higher production. Reference to the year 1980-1981 in sub-clause (iv) and no reference to the same in clause 2 clearly indicates that whereas the year 1980-1981 is relevant for the purpose of sub-clause (iv), it has no part to play in determining the base period. The notification, would be ineffective, if the clearance is only in the year 1980-81 and not in the subsequent two years. (Para 4)
1. The only question which arises for consideration in the present case pertains to the interpretation of notification dated 1st March, 1981 whereby an incentive scheme was provided for higher production. The notification inter alia provided that goods mentioned in the first schedule of the Central Excise Act which were cleared by a factory for home consumption during the period 1st March, 1983 to 29th February, 1984 which were in excess of the base clearances would be entitled to certain benefit as far as excise duty was concerned. The notification also stipulated the conditions on which the benefit could be available. The appellants have been denied benefit because of condition no. (iv) which reads as follows :
“(iv) No credit shall be allowed in respect of a factory from which clearances of the specified goods :-
(a) were effected for the first time on or after the 1st day of April, 1980; or
(b) were not effected during the financial years 1980-81, 1981-82 and 1982-83.”
2. It is not in dispute that though the appellants had effected clearance for the first time prior to 1st April, 1980, but they had no clearances in respect of the years 1980-81 and 1981-82. There were clearances effected by the appellants only in the year 1982-83.
3. The tribunal came to the conclusion that on a correct interpretation of the said notification, it was imperative that the appellants should have effected clearances in each one of the years 1980-81, 1981-82 and 1982-83. Apart from construing the language of the aforesaid sub-clause (iv) in that way, the tribunal also referred to the fact that clause 2 which defined “base period” indicated that the contention of the appellants that if there was clearance in any one of the three years 1980-81, 1981-82 and 1982-83, was insufficient. This clause 2 reads as follows :
“(2) ‘base period’ shall be the year in which the aggregate of the clearances of specified goods during the period, commencing on and from the 1st day of March, 1981 and ending with the 28th day of February, 1982 or the period commencing on and from the 1st day of March, 1982 and ending with the 28th day of February, 1983, whichever was higher.”
4. In our opinion, the decision of the tribunal is correct. The wording is a bit ambiguous but it is clear that the intention of this notification was to give additional benefit to the industry which had higher production. Reference to the year 1980-1981 in sub-clause (iv) and no reference to the same in clause 2 clearly indicates that whereas the year 1980-1981 is relevant for the purpose of sub-clause (iv), it has no part to play in determining the base period. If the contention of Mr. Vellapally is correct that there could be a factory which had clearance in the year 1980-81 and no clearance in 1981-82 and/or 1982-83, in such a case the question always arises as to what could be the base period because the benefit is given by considering the production for the year 1983-84 which is in excess of the base period production with a base period reference to the years 1981-82 and 1982-83. There is no reference to the year 1980-81. The notification, if the interpretation of Mr. Vellapally is accepted, would be ineffective, if the clearance is only in the year 1980-81 and not in the subsequent two years.
5. It appears to us that the decision of the tribunal is correct, namely, that sub-clause (iv) requires that firstly there must be clearance prior to 1st day of April, 1980 and secondly there must be clearances effected in each of the financial years 1980-81, 1981-82 and 1982-83. Read in this way, the various provisions of the notification would stand harmonised.
6. For the aforesaid reasons, these appeals are dismissed, but with no order as to costs.
