Nil-rate excisable goods can attract enhanced duty on post-budget clearance, with refund denied where levy continues to exist.
Excisable goods remained subject to central excise even though the tariff rate was nil, because a nil rate does not make the goods non-excisable. The levy attaches at manufacture, while collection may occur on removal for administrative convenience; on that basis, a later enhanced rate applied to pre-budget stock cleared after the budget. The distinction between a nil rate in the tariff and a nil rate under an exemption notification was treated as immaterial for this purpose, and a case involving no levy at all was distinguished. The refund claim therefore failed, and the order rejecting refund was upheld.
Issues: Whether pre-budget stock of excisable goods attracting nil tariff rate was liable to duty at the enhanced rate when cleared after the budget.
Analysis: The goods were excisable even when the tariff prescribed a nil rate of duty. A nil rate does not convert excisable goods into non-excisable goods. The levy attaches to manufacture, while collection may be deferred till removal for administrative convenience. The distinction drawn between a nil rate under an exemption notification and a nil rate in the tariff itself was held to be immaterial for this purpose. The authority further held that the decision dealing with a situation where there was no levy at all was distinguishable, because in the present case the goods remained subject to excise duty and only the rate was enhanced later.
Conclusion: The pre-budget stock was liable to duty at the enhanced rate on clearance after the budget, and the claim for refund was not sustainable.
Final Conclusion: The appeal failed and the order rejecting refund was upheld.
Ratio Decidendi: Where goods are excisable, a pre-existing nil rate of duty does not prevent the application of an enhanced duty rate on their removal after the rate change; the taxable event is manufacture, while recovery may lawfully follow the rate prevailing at removal.
TaxTMI 
AI Drafter ✕
TaxTMI 
