1999 (10) TMI 66 - SC - Central Excise

Goods made under full excise exemption still treated as excisable; duty rate fixed on clearance date at 8%

Goods manufactured during the currency of a full excise exemption remained 'excisable' because excisability is determined with reference to the tariff ... Duty on manufacture or production - realization of duty postponed to date of removal for administrative convenience - date of manufacture determines whether goods are excisable - date of clearance determines rate of excise duty - effect of exemption notification on exigibility and rateDate of manufacture determines whether goods are excisable - effect of exemption notification on exigibility and rate - duty on manufacture or production - Whether goods manufactured when an exemption notification rendered the rate nil remain exempt when cleared after the exemption was amended to levy duty - HELD THAT: - The Court applied the principle that excise is a duty on manufacture or production, while recognising that realization may be administratively postponed until removal. For the purpose of determining whether the articles were excisable, the relevant date is the date of manufacture; on that date the goods were excisable under the tariff and were covered by an exemption notification which made the rate nil. As to the quantum of duty payable, the determinative date is the date of clearance; on that date the exemption notification had been amended so as to make the goods liable to duty at the rate then prevailing. The Tribunal's conclusion that exemption at manufacture insulated the goods from subsequently leviable duty was therefore erroneous. The Court relied on precedent holding that goods produced when exempt remain excisable and that the rate applicable may be the rate in force at removal. [Paras 2, 3]Goods manufactured when exempt were nonetheless excisable and, upon clearance after amendment of the exemption notification, attract duty at the rate in force on the date of removalFinal Conclusion: Appeals allowed; the Tribunal's order set aside; no order as to costs. Issues involved: Determination of excise duty liability on goods manufactured under an exemption notification but cleared under a modified notification.In the judgment, the Supreme Court addressed the issue of excise duty liability on goods that were manufactured under an exemption notification but cleared under a modified notification. The goods in question were articles of plastic that were excisable goods but were wholly exempt from excise duty at the time of manufacture due to Notification 68/71. However, when they were cleared, another Notification (52/82) had been amended to levy excise duty at the rate of eight per cent. The Tribunal had concluded that the goods, having been fully exempt from excise duty at the time of manufacture, should not attract the eight per cent duty at the time of clearance.The Court referred to previous judgments to clarify the issue. It cited the case of Wallace Flour Mills Co. Ltd. v. Collector of Central Excise, Bombay, where it was held that excise duty, although on manufacture, can be collected at a later date for administrative convenience. The Court also referred to Collector of Central Excise, Hyderabad v. Vazir Sultan Tobacco Co. Ltd., Hyderabad, where it was emphasized that goods, even if exempt from duty initially, remain excisable goods, and the duty is levied based on the rate prevailing at the time of clearance.The Court disagreed with the Tribunal's view and held that the goods were excisable to duty under the prevailing tariff at the time of manufacture, despite being fully exempt. The relevant factor for determining excisability was the manufacturing date, while the duty rate was based on the clearance date under the amended exemption notification.Ultimately, the Court allowed the appeals by the Revenue, setting aside the Tribunal's order without any specific direction on costs.