Exempt stock at transition point cannot be retroactively charged under a later duty merely on post-change clearance.

Fully manufactured hard coke that was exempt from duty before 1-3-1978 could not be charged to the later levy under T.I. 11-D merely because it was cleared after that date. The decisive factor was the exemption status in force when the new duty came into operation: goods already lying in exempt, completed stock at the transition point were not retrospectively subjected to the new duty. On that basis, the show cause objection failed and the departmental appeal did not succeed.

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Issues: Whether hard coke which was fully manufactured and exempt from duty before 1-3-1978 could be subjected to the new duty under T.I. 11-D on clearance after that date.

Analysis: The goods were found to have been excisable but exempt from duty prior to 1-3-1978 under the relevant exemption notification. They were lying in fully manufactured condition at the midnight of 28-2-1978. The levy under T.I. 11-D came into force thereafter, and the Tribunal applied the principle that where goods were exempt before a date and later became dutiable on withdrawal or change of exemption, the relevant consideration is the legal regime at the time the new duty became operative. On that basis, the earlier exempt stock could not be subjected to the new levy merely because it was cleared after 1-3-1978.

Conclusion: The goods were not liable to the new duty under T.I. 11-D, and the objection raised in the show cause notice failed.

Final Conclusion: The exemption position prevailing before 1-3-1978 protected the fully manufactured stock from the subsequently introduced duty, so the departmental appeal did not succeed.

Ratio Decidendi: Where goods are fully manufactured while exempt from duty, and a new duty is introduced thereafter, the later levy does not attach to that stock merely because it is cleared after the change, if the governing principle treats the exemption status at the critical transition point as decisive.

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