Special excise duty cannot be levied on goods made before the levy began merely because removal occurred later.

Special excise duty newly imposed under the Finance Act, 1978 was treated as attaching to the stage of manufacture for the goods in question, so goods manufactured before the levy came into force were not chargeable merely because they were removed afterward. The prior Tribunal ruling on the same principle was found materially identical and decisive, and general observations that excise may sometimes be collected at a later stage did not alter the result where the levy did not exist at the time of manufacture. The levy therefore could not be sustained on pre-levy manufactured goods, and relief was indicated for the assessee.

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Issues: (i) Whether special excise duty was chargeable on goods manufactured before the date of its imposition but removed thereafter. (ii) Whether the ratio of the prior decision concerning goods manufactured before the levy applied to the facts of the present case.

Issue (i): Whether special excise duty was chargeable on goods manufactured before the date of its imposition but removed thereafter.

Analysis: Special excise duty was introduced for the first time by Section 37(1) of the Finance Act, 1978 as an additional levy linked to basic excise duty. The goods in question had been manufactured before the levy came into force, and the controversy was whether liability could arise merely because removal took place after the new duty was imposed. The decision treated the levy as attaching to the stage of manufacture for this class of duty and held that a duty newly imposed after manufacture could not be collected on goods already manufactured before the imposition.

Conclusion: The goods were not liable to special excise duty merely because they were removed after the levy came into force; the issue is answered in favour of the assessee.

Issue (ii): Whether the ratio of the prior decision concerning goods manufactured before the levy applied to the facts of the present case.

Analysis: The earlier Tribunal ruling on special excise duty had concluded that where the duty was not leviable at the time of manufacture but was introduced later, it could not be levied at the time of removal. The present facts were found to be materially identical, and no later contrary authority was found to displace that reasoning. The discussion also rejected the Revenue's reliance on general observations about excise being capable of collection at a later stage, since those observations did not alter the conclusion on a levy newly introduced after manufacture.

Conclusion: The prior ratio was held applicable and decisive against the Revenue.

Final Conclusion: The levy could not be sustained on goods manufactured before the introduction of special excise duty, and the assessee was entitled to relief.

Ratio Decidendi: A special excise duty newly imposed after the manufacture of goods cannot be levied merely because the goods are removed after the date of imposition, where the levy was not in existence at the time of manufacture.

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