Special excise duty and date of removal: levy applied to goods cleared after the new duty commenced.

Special excise duty introduced by Section 37 of the Finance Act, 1978 was analysed as a duty of excise payable on goods already subject to excise, with the majority view treating the relevant date for levy and collection as the date of removal under Rule 9A(1)(ii), not the date of manufacture. On that basis, goods manufactured before 1-3-1978 but cleared on or after that date were treated as liable to the new duty. A dissenting view stated that excise is attracted by manufacture and that a wholly prospective levy should not apply merely because clearance occurred later.

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Issues: Whether special excise duty introduced by Section 37 of the Finance Act, 1978 applied to goods manufactured before 1-3-1978 but cleared on or after that date.

Analysis: The majority held that special excise duty was a duty of excise and was attracted to goods which were already excisable under the Central Excises and Salt Act, 1944 and on which some basic excise duty was effectively chargeable. It treated the new levy as closely connected with manufacture, but held that, for purposes of levy and collection, the crucial date was the date of removal under Rule 9A(1)(ii) of the Central Excise Rules, not the date of manufacture. Since the goods were cleared after the special excise duty came into force, the levy was held applicable even though manufacture had taken place earlier.

Conclusion: The special excise duty was leviable on the goods cleared on or after 1-3-1978, and the appeal failed.

Dissenting Opinion: One Member held that excise duty is attracted by manufacture, that a wholly prospective new levy cannot apply to goods manufactured before its imposition, and that the special excise duty was not chargeable merely because clearance occurred later.

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