Excise duty attaches at manufacture, so pre-budget stock cleared later was not liable to the enhanced rate.

Excise duty attaches to the taxable event of manufacture or production, while rules governing removal deal only with assessment and collection. Rule 9A may fix the rate for computation at the time of clearance, but it cannot shift the levy itself from manufacture to removal. On that basis, goods manufactured before the enhanced duty came into force could not be charged at the higher rate merely because they were cleared later, and excess duty paid on such pre-budget stock was refundable.

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Issues: Whether excise duty on goods manufactured before the increase in duty but cleared after the increase was chargeable at the enhanced rate, and whether refund of duty paid at the enhanced rate was admissible.

Analysis: Section 3 fixes the charge of excise duty on manufacture or production of excisable goods, while the rule-making power under Section 37 permits rules for assessment and collection. Rule 9A governs the rate applicable for computation and collection at the time of removal, but it cannot be read as shifting the taxable event from manufacture to clearance. The authoritative principles applied were that the levy attaches at manufacture and only the collection is deferred to removal. Since the goods were manufactured before the enhanced levy came into force, the higher rate could not be applied merely because the stock was cleared later.

Conclusion: The enhanced excise duty was not payable on the pre-budget stock, and the assessee was entitled to refund of the excess duty paid.

Ratio Decidendi: Excise duty is chargeable on the taxable event of manufacture or production, and a rule governing collection at the stage of removal cannot enlarge the levy to goods manufactured before the higher rate came into force.

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