Excise duty on manufacture, not clearance, barred a fresh levy on blended wool tops after duty was already paid on the intermediate product.

Excise duty on wool tops was treated as attracted at the point of manufacture or production under Section 3 of the Central Excises & Salt Act, 1944, and Rule 9 was described as governing collection only. On the stated facts, duty on the 100% wool tops had already been discharged when that intermediate product came into existence, so later blending with synthetic fibre inside the same factory did not create a new commodity or a fresh taxable event. No further excise duty was therefore leviable on clearance, and the impugned order was set aside in favour of the assessee.

---

---

Issues: Whether excise duty on blended wool tops was payable only at the stage of removal from the factory, or whether duty was chargeable at the stage of manufacture of the 100% wool tops when the goods were later blended within the same integrated factory.

Analysis: The charging event for excise is the manufacture or production of goods under Section 3 of the Central Excises & Salt Act, 1944. Rule 9 regulates the manner of collection and cannot alter the point at which the duty liability arises. On the facts, duty had already been discharged when the 100% wool tops came into existence. The later blending with synthetic fibre did not bring into existence a new commodity or a different article, and the classification remained unchanged. The question of any alleged breach of Rule 51A was outside the issue referred for decision.

Conclusion: No further excise duty was leviable on the blended wool tops at the stage of clearance. The impugned order was therefore unsustainable and the decision was in favour of the assessee.

Final Conclusion: The petition succeeded on the question of the proper stage of levy, and the Central Government's order was quashed.

Ratio Decidendi: Excise duty is attracted at the stage of manufacture or production, and where duty has already been paid on the manufactured intermediate product, no fresh levy can be imposed merely because that product is subsequently blended into another article that does not amount to a new manufacture.

---