Excise duty follows the date of removal, and an erroneous refund may be recalled and recovered.

Excise duty on goods manufactured during a period of exemption but removed after the exemption was withdrawn is determined by the rate and liability in force on the date of removal, not the date of manufacture. Goods remain excisable notwithstanding an earlier exemption notification if they are cleared after the exemption ends. The text also states that where a refund has been granted on an erroneous understanding of the duty position, the excise authority may correct the mistake and recover the refund, and the objection that this amounts to impermissible review of its own order was not accepted.

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Issues: (i) Whether excise duty on goods manufactured during a period of exemption but removed after withdrawal of the exemption is chargeable with reference to the date of manufacture or the date of removal. (ii) Whether the excise authority could invoke section 11A to correct and recover a refund granted on an erroneous basis.

Issue (i): Whether excise duty on goods manufactured during a period of exemption but removed after withdrawal of the exemption is chargeable with reference to the date of manufacture or the date of removal.

Analysis: The scheme of the excise law was applied as explained by the Supreme Court authority relied upon by the Court. Excise is a duty on manufacture or production, but the levy and collection may be related to the stage of removal for administrative convenience. Under the relevant rule, the rate in force on the date of removal governs the liability. Goods do not cease to be excisable merely because they were earlier exempted by notification.

Conclusion: The duty was payable with reference to the date of removal, not the date of manufacture, and the exemption available at manufacture did not save the goods from duty when they were cleared later.

Issue (ii): Whether the excise authority could invoke section 11A to correct and recover a refund granted on an erroneous basis.

Analysis: Since the original refund had been sanctioned on an erroneous understanding of the applicable duty liability, the authority that issued it was competent to correct the error and require repayment. The objection that the authority was virtually reviewing its own order was not accepted in view of the mistake in the refund grant.

Conclusion: The authority was entitled to recall the erroneous refund and recover the amount.

Final Conclusion: The challenge to the recovery proceedings failed, and the refund-related orders were sustained in favour of the revenue side.

Ratio Decidendi: In excise matters, liability is determined by the statutory scheme that links collection to the date of removal, and an authority may correct a refund granted on an erroneous premise.

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