Central excise duty is chargeable on removal, so a pre-removal demand notice is without jurisdiction and invalid.

Under the central excise scheme, the taxable event is removal of the goods, and duty is chargeable at the rate prevailing on the date of removal rather than manufacture. A demand notice issued before the goods were removed, or sought to be removed, was contrary to the levy scheme and without jurisdiction. The notices were therefore invalid and were set aside, and enforcement against the respondents was restrained.

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Issues: Whether the demand notices issued under Rule 10A of the Central Excise Rules, 1944 were valid when raised before removal of the goods and whether excise duty was chargeable at the rate prevailing on the date of removal rather than the date of manufacture.

Analysis: The applicable principle was that, under the central excise scheme, the taxable event is the removal of the goods and not their manufacture, and duty becomes payable at the rate in force on the date of removal. On that basis, no demand for duty could validly be made before the goods were removed or sought to be removed from the factory. A notice demanding duty before that stage was therefore contrary to the scheme of levy and lacked jurisdiction. The argument that the goods had been cleared on nil assessment was not pursued further because the demand notices themselves were held unsustainable on the primary ground.

Conclusion: The demand notices were invalid and were set aside; the respondents were restrained from enforcing them.

Ratio Decidendi: In central excise, duty is leviable at the rate prevailing on the date of removal, and a demand raised before removal of the goods is without jurisdiction.

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