JUDGMENT

HANSARIA, J. :- The short point which needs to be decided by us, on 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 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 : -

TABLE

Sl.No. Description of sugar Duty of excise

Free sale sugar Levy sugar

1. x x x x

2. Sugar produced in a factory during the period commencing on the 1 st day of December, 1974 and ending with the 30th day of September, 1975, which is an excess of the average production of the corresponding period of the preceding five sugar years, that is : -

(a) on excess production up to 7.5% Rs. 20/- Rs. 5/-

per quintal

(b) on excess production on the next 10% Rs. 40/- Rs.10/-

Per quintal

(c) on excess production on the next 10% Rs. 5/- Rs. 14/-

per quintal

(d) on excess production on the next 10% Rs. 60/- Rs. 18/-

per quintal

(e) on excess production beyond 37.5% Rs. 82/- Rs. 22/-

per quintal

3. It is not for the first time that this Court has been called upon to decide the purport of the aforesaid Notification inasmuch as in Collector of Central Excise v. Neoli Sugar Factory, (1993) 2 JT (SC) 587 : (1993 AIR SCW 2198), a two-judge Bench had expressed its view on the same. On the appeals at hand, however, coming before another two-Judge Bench, it was felt that what was stated in Neoli Sugar Factorys case needed fresh look and it is because of this that the appeals have been placed before this Bench of three-Judges.

4. Let it first be seen as to what was held in Neoli Sugar Factorys case (1993 AIR SCW 2198). In that case this Notification has been dealt in paras 18 and 19 and the interpretation put by the counsel of the Union of India was accepted by the Court, Inter alia, because none of the counsel of the factory owners had disputed the same. The factory owners in these appeals have, however disputed the stand taken by the Union of India in that case, and the dispute is on the question as to whether the precentage mentioned in subclauses (a) to (e) are to be calculated on the excess production or average production of the preceding five sugar years. The earlier Bench held that the percentage would not apply to the excess production, but it would to the average production. This was illustrated in paragraph 19 by taking the hypothetical case where the average production of a factory during preceding five sugar years is 1,000 quintals and that factory produces 2,500 quintals during December 1, 1974 to September 30, 1975. The Bench then stated that as "the basis of these percentages is the average production of the previous five years and not the excess production", what would be required to be done is that from the production of 2,500 quintals, the average (1,000 quintals) should be deducted first, which would mean that the excess production is 1,500 quintals. The next step is material and the same is that the percentage of 7.5% of which mention has been made in sub-clause (a) would be relatable to the average, which is 1,000 quintals; and so, rebate as per sub-clause (a) will be on 75 quintals (i.e. 7.5% of 1,000 quintals). The rebate mentioned in sub-clause (b) would then be given to 100 quintals which is 10% of the average; and so on.

5. The interpretation put on the Notification explained with the aid of the aforesaid illustration has been questioned by Shri Sanghi, appearing for the appellants, According to the learned counsel, the sub-clauses of the Notification having mentioned about "excess production", the percentage has to be calculated not on the average production, but on the excess production, which means that for the