1989 (9) TMI 106 - SC - Central Excise

Rule 9A allows deferral of excise duty payment until removal; pre-budget stocks are not entitled to duty-free clearance.

WALLACE FLOUR MILLS COMPANY LTD. Versus COLLECTOR OF C. EX.

The SC upheld the Tribunal's dismissal of the appeal, holding that while the taxable event under the Act is the manufacture or production of excisable ... Entitlement to duty free clearance being pre-budget stocks - Whether Tribunal right in accepting that at the time of manufacture of the goods in question, the goods were excisable goods and in view of Rule 9A of the Central Excise Rules, 1944, though the taxable event is the manufacture and production, the payment of duty is related to and postponed to the date of removal of articles from the manufactory.? Held that:- It is well settled by the scheme of the Act as clarified by several decisions that even though the taxable event is the manufacture or production of an excisable article, the duty can be levied and collected at a later stage for administrative convenience. The scheme of the said Act read with the relevant rules framed under the Act particularly Rule 9A of the said rules, reveals that the taxable event is the fact of manufacture of production of an excisable article, the payment of duty is related to the date of removal of such article from the factory. In that view of the matter, the Tribunal dismissed the appeal and rejected the assessee's contention. Excise is a duty on manufacture or production. But the realisation of the duty may be postponed for administrative convenience to the date of removal of goods from the factory. Rule 9A of the said rules merely does that. That is the scheme of the Act. It does not, in our opinion, make removal be the taxable event. The taxable event is the manufacture. But the liability to pay the duty is postponed till the time of removal under Rule 9A of the said Rules. We are of the opinion that even though the taxable event is the manufacture or the production of an excisable article, the duty can be levied and collected at a later date for administrative convenience. Appeal dismissed. Issues:Classification of pre-budget stocks for duty-free clearance under the Central Excises and Salt Act, 1944.Analysis:The appellant, a manufacturer of food products, filed a classification list claiming duty-free clearance for pre-budget stocks. The Assistant Collector held the products excisable but exempt from duty. The Collector of Central Excise (Appeals) and the Tribunal upheld this decision. The appellant argued the goods were not leviable until 28th February, 1987, when they were made dutiable by the Finance Bill, 1987-88. The revenue contended the goods were excisable at the time of manufacture, and duty payment was postponed to removal date under Rule 9A of the Central Excise Rules, 1944. The Tribunal agreed with the revenue, emphasizing duty collection for administrative convenience.The Tribunal's decision was based on the Act's scheme, where duty payment is related to the date of removal, not manufacture. The appellant argued the goods were exempt until 28th February, 1987, but the Court disagreed, stating excise duty is on manufacture or production, with payment postponed for administrative convenience. Citing Rule 9A, the Court clarified that removal, not manufacture, triggers duty liability. Referring to precedents, the Court affirmed that goods do not become non-excisable due to exemptions. The Court emphasized that duty collection can be postponed to removal date for administrative ease, despite manufacture being the taxable event.Considering the excise law's scheme and the case's circumstances, the Court upheld the Tribunal's decision, finding no grounds to challenge it. The appeal was dismissed, with no order as to costs.