Excise exemption withdrawal made stock cotton yarn liable to duty, while already consumed yarn was not covered.

Withdrawal of an excise exemption can make duty payable on excisable goods still lying in stock and not yet consumed in manufacture. The taxable event remains manufacture, but collection may validly be deferred to the stage of removal for administrative convenience. On that basis, cotton yarn remaining in the assessee's stock after withdrawal of the exemption was held liable to duty, while yarn already used in cotton fabrics was outside the surviving demand.

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Issues: Whether, after withdrawal of the exemption notification, duty could be levied on cotton yarn lying in stock with the assessee but not already used in the manufacture of cotton fabrics.

Analysis: The exemption on yarn used in composite textile mills was withdrawn before the relevant stock remained in the mill premises. The duty demand was confined to yarn still lying in stock and not to yarn already consumed in manufacture. Since excise duty is relatable to manufacture but its collection may be deferred to the stage of removal for administrative convenience, the withdrawal of exemption made the stock yarn liable to duty under the prevailing notification and excise scheme.

Conclusion: The duty demand on cotton yarn in stock, but not already used in cotton fabrics, was valid and the assessee was liable for such duty.

Final Conclusion: The Revenue succeeded only to the extent of duty on stock yarn remaining with the assessee after withdrawal of the exemption, and the challenge to liability on already consumed yarn was not accepted.

Ratio Decidendi: Where an exemption from excise duty is withdrawn, duty may validly be levied on excisable goods still in stock and not yet consumed, because the collection of duty can be linked to the stage of removal even though the taxable event is manufacture.

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