Special excise duty on bonded goods was linked to the date of removal, not manufacture, where basic duty applied on clearance.

Special excise duty on bonded petroleum products was treated as a duty of excise to which the Central Excises & Salt Act machinery applied through statutory incorporation. For goods removed from a bonded warehouse, Rule 9-A(1)(ii) governed the relevant date, so liability depended on whether the goods were chargeable to basic excise duty on the date of removal. The date of manufacture was immaterial. On that basis, special excise duty attached when the goods were cleared on or after 1-3-1978.

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Issues: Whether special excise duty was leviable on bonded petroleum products cleared on or after 1-3-1978 when they had been manufactured before that date and whether the relevant date for levy was the date of manufacture or the date of removal from the bonded warehouse.

Analysis: Special excise duty, though distinct from basic excise duty, was held to be a duty of excise to which the machinery provisions of the Central Excises & Salt Act and the rules made thereunder applied by virtue of Section 37(4) of the Finance Act, 1978. Rule 9-A(1)(ii) therefore governed the relevant date for determining the incidence of duty on goods removed from a bonded warehouse. The governing test was whether, on the date of removal, the goods were chargeable to basic excise duty under the Central Excises & Salt Act read with the relevant notification; if so, special excise duty was automatically attracted. The date of manufacture was held to be immaterial for this purpose.

Conclusion: Special excise duty was leviable on the goods on their clearance from the bonded warehouse on or after 1-3-1978, and the levy was correctly determined with reference to the date of removal. The appeal failed.

Ratio Decidendi: For bonded excisable goods, special excise duty attaches on the date of removal from the warehouse if the goods are then chargeable to basic excise duty, because the procedural and charging machinery of the Central Excises & Salt Act and the rules applies to special excise duty by statutory incorporation.

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