Excise duty attaches on manufacture, while collection may be tied to removal; Rule 9A was held consistent with the statute.

Under the Central Excises and Salt Act, 1944, the taxable event is manufacture or production, while the timing of payment and collection may validly be linked to removal of goods for administrative convenience. Applying that scheme, Rule 9A of the Central Excise Rules was treated as consistent with Section 3 of the Act and not repugnant to the statutory framework. The challenge that Rule 9A was ultra vires therefore failed, and the appeal was dismissed.

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Issues: Whether Rule 9A of the Central Excise Rules was ultra vires Section 3 of the Central Excises and Salt Act, 1944, and whether duty could be levied and collected at the stage of removal although the taxable event was manufacture or production.

Analysis: The appeal was found to be covered by the earlier decision holding that, under the scheme of the Central Excises and Salt Act, 1944 and the relevant Rules, the taxable event is manufacture or production, while the timing of payment and collection may be linked to removal of the goods for administrative convenience. On that basis, Rule 9A was treated as consistent with Section 3 of the Act and not repugnant to the statutory scheme.

Conclusion: The challenge to Rule 9A failed and the appeal was dismissed.

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