Conditional excise exemption does not create duty-free stock; duty attaches on manufacture despite later withdrawal of relief.

Conditional excise exemption does not create absolute duty-free status at the time of manufacture; excise duty arises on manufacture, with collection deferred only while the notification conditions continue to be satisfied. Where goods were manufactured before withdrawal of the exemption but cleared afterwards, refund is not available merely because the goods were in stock before the change, since they were never unconditionally exempt. Authorities dealing with wholly exempt pre-budget stock were distinguished as cases of unconditional exemption, not conditional relief.

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Issues: Whether goods manufactured before 1-3-1982 but cleared after the withdrawal of exemption were entitled to refund on the footing that the goods were fully exempt at the time of manufacture under the relevant notification.

Analysis: The majority held that the exemption notification was conditional and did not grant an absolute exemption at the moment of manufacture. The charge of excise duty arose on manufacture under the charging provision, while collection was deferred only so long as the conditions of the notification were satisfied. Since the goods were not unconditionally exempted when manufactured, the later withdrawal of the exemption did not convert them into duty-free stock for refund purposes. The decisions relating to wholly exempt pre-budget stock were distinguished on the ground that they concerned unconditional exemption, unlike the present case.

Conclusion: The refund claim based on pre-budget stock was not sustainable, and the duty on the goods cleared after the budgetary change was correctly levied in favour of the Revenue.

Ratio Decidendi: Where an exemption notification is conditional, the goods are not treated as fully exempt at the time of manufacture, and excise duty may validly attach to them even if they are cleared after the exemption is withdrawn.

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