Excise exemption can be varied within the statutory ceiling, and duty on stock is fixed by the removal date.

An exemption notification under excise law may be withdrawn, varied or restructured, provided the resulting duty remains within the statutory ceiling and the basic duty is not impermissibly increased. For goods manufactured before a new notification but removed thereafter, the governing rate for levy and collection is the rate in force on the date of actual removal, not the date of manufacture. The note therefore states that excise law distinguishes the taxable event from the point at which duty is determined and collected, and that stock on the date of withdrawal of exemption is chargeable at the removal rate.

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Issues: (i) Whether the impugned exemption notification under the excise rules could validly alter the basis of exemption and thereby change the duty payable on man-made fabrics without exceeding the statutory ceiling. (ii) Whether, for goods manufactured before the new notification but removed thereafter, the applicable rate of duty is the rate in force on the date of manufacture or on the date of actual removal under the excise rules.

Issue (i): Whether the impugned exemption notification under the excise rules could validly alter the basis of exemption and thereby change the duty payable on man-made fabrics without exceeding the statutory ceiling.

Analysis: The power to grant exemption under the excise rules includes the power to withdraw, vary, modify, or restructure the exemption, so long as the duty payable does not exceed the basic statutory duty. The additional duty on the relevant man-made fabrics remained below the statutory rate, and the change in the basis of exemption did not amount to an impermissible enhancement of the basic duty. The altered method of exemption was also permissible under the rule permitting exemption by different forms or methods of levy, provided the duty does not exceed the statutory duty.

Conclusion: The impugned notification was valid and intra vires the rule-making power; the challenge failed.

Issue (ii): Whether, for goods manufactured before the new notification but removed thereafter, the applicable rate of duty is the rate in force on the date of manufacture or on the date of actual removal under the excise rules.

Analysis: The scheme of excise law distinguishes between the taxable event and the point of collection. While manufacture or production is the event that attracts excise, the rules fix the relevant date for determination of duty and tariff valuation, in the case of goods removed from a factory or warehouse, as the date of actual removal. The court followed the earlier binding view that where duty had not already been paid, goods lying in stock at the time of withdrawal of exemption are chargeable at the rate prevailing on the date of removal. The contrary view treating manufacture as fixing the rate for collection was rejected.

Conclusion: The duty was payable at the rate in force on the date of actual removal, not on the date of manufacture.

Final Conclusion: The petitions were devoid of merit because the impugned notification was legally sustainable and the rate applicable at the time of removal governed the levy and collection of duty on the goods in stock.

Ratio Decidendi: In excise matters, the taxable event is manufacture or production, but the rate of duty applicable for levy and collection may validly be fixed with reference to the date of actual removal under the governing rules, and an exemption notification may be varied or withdrawn so long as the duty remains within the statutory ceiling.

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