Excise duty on pre-budget stock: cash pre-deposit dispensed with and indemnity bond accepted as security.

Excise duty on pre-budget stock cleared after the budget date was examined in the context of pre-deposit pending appeal. The Court noted the principle that excise duty is attracted at the stage of manufacture or production, while recovery at the stage of removal is only a mode of collection. On that basis, and considering the pleaded hardship, it dispensed with the cash pre-deposit and accepted an indemnity bond as security for the revenue, allowing the appeal to proceed on that condition.

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Issues: Whether the petitioner could be relieved from the requirement of pre-deposit pending appeal, and whether furnishing an indemnity bond would be an appropriate substitute in the circumstances of the case.

Analysis: The dispute concerned excise duty demanded on pre-budget stock cleared after the budget date. The Court referred to the legal position that excise duty is attracted at the stage of manufacture or production and that collection at the stage of removal is only a mode of recovery. In view of that position and the pleaded hardship, the Court found it appropriate to dispense with the cash pre-deposit and to secure the revenue by an indemnity bond instead.

Conclusion: The petitioner was granted relief against pre-deposit and was permitted to proceed with the appeal on furnishing an indemnity bond.

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