Duty on excisable goods follows the rate in force on removal date after exemption withdrawal.

Withdrawal of the exemption on texturised yarn made the goods excisable and duty became payable from the budget date, so the earlier view that the goods were not excisable was incorrect. For excisable goods, the applicable rate is the rate in force on the date of removal, and that principle governed clearance of the yarn on 28-02-1994 after the exemption had been withdrawn. The precedent relied on below was inapplicable because it concerned a different situation where excisability itself was not in issue. Duty liability on the cleared goods was therefore sustained and the Revenue's appeal succeeded.

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Issues: Whether duty was payable on texturised yarn cleared on 28-02-1994 after withdrawal of the exemption notification, and whether the rate of duty applicable was that prevailing on the date of removal.

Analysis: The exemption from duty on texturised yarn was withdrawn by Notification No. 26/94 dated 01-03-1994, with the result that the goods remained excisable and duty became payable from the relevant budget date. The finding that the goods were not excisable was held to be incorrect. The principle that the rate of duty applicable to excisable goods is the rate prevailing on the date of removal governed the dispute, and the earlier precedent relied upon by the lower authority was found inapplicable because it dealt with a different situation where excisability itself was not in issue.

Conclusion: Duty was payable on the cleared texturised yarn and the Revenue's appeal succeeded.

Final Conclusion: The order of the lower appellate authority was set aside and the demand was sustained on the basis that removal date governed the duty liability after withdrawal of exemption.

Ratio Decidendi: For excisable goods, when an exemption is withdrawn, duty is determined with reference to the rate in force on the date of removal.

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