Date of removal governs excise duty when the rate is enhanced after manufacture of excisable goods.

Refined edible oils packed before 1 March 2003 but removed after the Finance Act, 2003 came into force were held liable to central excise duty at the enhanced 8% rate on removal. The article applies the settled principle that manufacture is the taxable event, but the duty payable is determined by the rate prevailing on the date of removal. It notes that the later chapter note treating labelling, relabelling and repacking as manufacture did not alter that position, and the refund claim was also undermined by passing on of the duty element. The goods were therefore correctly subjected to duty and refund was not tenable.

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Issues: Whether refined edible oils packed before 1 March 2003 but removed thereafter were exigible to central excise duty at 8% under the Finance Act, 2003.

Analysis: Prior to 1 March 2003, edible oils under the relevant tariff headings were excisable, though at nil rate. The Finance Act, 2003 enhanced the rate to 8% and inserted the chapter note treating labelling, relabelling and repacking as manufacture. Applying the settled principle that the taxable event is manufacture but the duty payable is determined with reference to the date of removal, goods that were manufacture-wise exigible and removed after the enhanced rate came into force attracted duty at the prevailing rate on removal. The objection based on the later insertion of the chapter note did not dislodge this position, and the refund claim was further weakened by the finding that the duty element had been passed on.

Conclusion: The goods were rightly subjected to central excise duty at 8% on removal after 1 March 2003, and the refund claim was not tenable.

Ratio Decidendi: Where excisable goods are removed after an enhanced rate of duty comes into force, duty is chargeable at the rate prevailing on the date of removal, even if manufacture occurred earlier and the goods were earlier liable only at nil rate.

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