Excise exemption timing determines duty liability on goods manufactured during exemption but cleared after withdrawal.

Excise liability on goods manufactured during the currency of a total exemption but cleared after its withdrawal turned on whether levy attached at manufacture or at removal from the factory. The majority view treated the exemption as protecting goods manufactured while it was in force, and followed High Court authority supporting that approach; duty was therefore not recoverable on stock produced during the exempt period and refund was admissible. The dissent held that assessment depended on the date of removal under the scheme of excise levy and Rule 9A of the Central Excise Rules, 1944, so duty would be payable on clearance after withdrawal of the exemption.

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Issues: Whether excise duty was payable on goods manufactured during the currency of an exemption notification but cleared after the notification was withdrawn.

Analysis: The applicable controversy turned on whether the relevant point of time for levy and collection was the date of manufacture or the date of removal from the factory. The majority view treated the earlier Supreme Court order dismissing the special leave petition on merits, though without a detailed speaking order, as affirming the principle that goods manufactured while a total exemption was in force could not be subjected to duty merely because they were cleared after withdrawal of the exemption. The majority also preferred the line of High Court authority adopting that approach and held that the Tribunal was bound to follow it on the facts before it.

Conclusion: The issue was decided in favour of the assessee; duty was not recoverable on the stock manufactured during the exempt period, and refund was admissible.

Dissenting Opinion: H.R. Syiem, Member (T), held that the relevant date for assessment was the date of removal, relying on the scheme of excise levy, Rule 9A of the Central Excise Rules, 1944, and analogous principles under customs law. On that view, the appeal was liable to be rejected.

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