Central excise duty follows the date of removal, and an erroneously granted refund may be recovered under Section 11A.

In central excise, the taxable event is manufacture, but under the Act and Rule 9A the duty may be assessed and collected at the stage of removal, so the rate applicable is the one prevailing on the date of removal. Goods do not cease to be excisable merely because they were earlier covered by an exemption notification. The Assistant Collector could invoke Section 11A to recover a refund that had been granted on an erroneous legal basis. The departmental demand was therefore upheld and the assessee obtained no relief.

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Issues: Whether excise duty on goods manufactured while exempt but cleared after withdrawal of exemption is governed by the date of manufacture or the date of removal, and whether the Assistant Collector could recover a refund wrongly granted under Section 11A.

Analysis: Excise duty is a duty on manufacture or production, but under the scheme of the Act and Rule 9A of the Central Excise Rules, 1944, its levy and collection may be deferred for administrative convenience to the date of removal from the factory. The rate applicable is therefore the rate prevailing on the date of removal, and goods do not cease to be excisable merely because an exemption notification had earlier applied. Once the refund was granted on an erroneous basis, the Assistant Collector was competent to proceed under Section 11A of the Central Excises and Salt Act, 1944 to recover the amount.

Conclusion: The goods were liable to duty at the rate applicable on the date of removal, and the recovery of the erroneously refunded amount was valid; the challenge to the departmental orders failed.

Final Conclusion: The writ appeal succeeded and the departmental demand was upheld, leaving the assessee without relief.

Ratio Decidendi: In central excise, although the taxable event is manufacture, the duty is lawfully assessed and collected at the stage of removal under Rule 9A, and a refund granted on an erroneous legal basis may be recovered under Section 11A.

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