Excise duty on pre-budget stock applies at the removal date rate, even if goods were exempt when manufactured.

Under the Central Excise scheme, manufacture is the taxable event, but assessment and collection depend on the rate in force on the date of removal. Goods that were exempt when manufactured do not stop being excisable merely because of that exemption, so duty becomes payable if they are removed after the levy applies. Applying Rule 9A of the Central Excise Rules, 1944, the Tribunal treated the pre-budget stock as liable to duty at the removal rate and rejected duty-free clearance.

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Issues: Whether pre-budget stock of goods that were exempt from excise duty on the date of manufacture, but became dutiable on the date of removal, could be cleared without payment of duty.

Analysis: The dispute turned on the distinction between the taxable event and the point of time for levy and collection. The governing excise scheme, particularly Rule 9A of the Central Excise Rules, 1944, treats manufacture as the taxable event but links assessment and collection to the rate prevailing on the date of removal. On that basis, goods do not cease to be excisable merely because they were fully exempt on the date they were manufactured, and exemption does not convert excisable goods into non-excisable goods. The Tribunal followed the settled view that duty is attracted when the goods are removed, applying the rate then in force.

Conclusion: The claim for duty-free clearance of the pre-budget stock was rejected and the goods remained liable to duty at the rate applicable on removal.

Final Conclusion: The appeal failed because exemption at the time of manufacture did not prevent levy on excisable goods when they were removed after the duty became payable.

Ratio Decidendi: For excise purposes, goods remain excisable notwithstanding exemption at the time of manufacture, and duty is chargeable at the rate in force on the date of removal under the applicable rules.

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