Pre-budget exempt stock remains outside excise duty despite later tariff change at clearance.

Printed cartons and boxes manufactured before the 1982-83 budget, when they fell under Tariff Item 68 and were covered by exemption Notification No. 122/75-C.E., did not become liable to central excise duty merely because they were cleared later after being placed under Tariff Item 174. The Tribunal applied its earlier view that liability for pre-budget stock is governed by the exemption and tariff position existing at the time of manufacture, not by a subsequent budgetary change at the stage of clearance. On that basis, the goods were held not liable to duty and the assessee succeeded.

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Issues: Whether printed cartons and boxes manufactured when exempt from duty but cleared after a budgetary change became liable to central excise duty on the date of clearance.

Analysis: The goods were manufactured before the budget for 1982-83, when they fell under Tariff Item 68 and were exempt under Notification No. 122/75-C.E., but were cleared later after being brought under Tariff Item 174. The Tribunal followed its earlier decision that pre-budget stock manufactured during the period of exemption does not attract duty merely because the goods are cleared after the tariff change. The rule applied was that the prior exemption at the time of manufacture governs liability for such stock.

Conclusion: The goods were not liable to duty, and the appeal succeeded in favour of the assessee.

Ratio Decidendi: Pre-budget stock manufactured when exempt from duty does not become liable merely because it is cleared after a subsequent budgetary change in tariff classification.

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