Excise duty on removal from factory governs Item 22B goods where the Act and Rules fix collection at that stage

Excise duty on goods falling under newly introduced Item 22B was treated as payable at the stage of removal from the factory, not solely at the moment of manufacture. Section 3 was described as the charging provision, but the rules governed levy and collection by requiring payment before removal and by fixing the applicable rate on the date of actual removal. The statutory scheme was read as permitting duty to attach after manufacture where the Act and Rules so provide, and trade notices could not alter that position. The document states that the appeal succeeded and the writ petition failed on this interpretation.

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Issues: Whether excise duty under the Central Excises and Salt Act, 1944 on goods falling under the newly introduced Item 22B became leviable only at the time of manufacture or production, or at the stage of removal from the factory under Section 3 read with the Central Excise Rules, 1944.

Analysis: Section 3 is the charging provision, but it requires levy and collection to be made in the manner prescribed by the rules. Rule 7 obliges the manufacturer to pay duty, Rule 9 prohibits removal until duty is paid, and Rule 9A(1) fixes the applicable rate on the date of actual removal from the factory or warehouse. The scheme of the Act and Rules therefore does not confine the levy to the instant of manufacture; once goods are manufactured in India and are excisable, the duty may validly be attached at a later stage specified by the statute and rules. The authorities and trade notices could not override the statutory scheme, but the statutory interpretation advanced by the appellants was accepted.

Conclusion: The duty on goods covered by Item 22B was payable when the goods were sought to be removed from the factory, even if they had been manufactured earlier, and the contention that liability arose only at manufacture was rejected.

Final Conclusion: The appeal succeeded and the writ petition failed because the impugned goods were correctly subjected to excise duty under Item 22B on removal from the factory, while the alternative questions were left unanswered as unnecessary for decision.

Ratio Decidendi: Where the charging provision makes levy and collection subject to the prescribed manner, the point of duty can validly be fixed by the rules at the stage of removal, so excise duty may attach after manufacture if the statute so provides.

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