Excise exemption at manufacture controls duty liability, and plastic goods keep their essential classification despite end use.

Goods fully exempt at the time of manufacture do not become liable to central excise merely because the exemption is withdrawn before clearance, provided the assessee proves manufacture during the exempt period. The document also affirms that PVC grips made of plastic retain classification as articles of plastic under Tariff Item 15A(2), and their use on motor vehicles does not shift them to the residual entry under Tariff Item 68. Relief on duty liability is therefore conditional on proof of prior manufacture, while the classification challenge fails.

---

---

Issues: (i) Whether goods manufactured during a period of complete exemption could be subjected to excise duty on their later clearance after the exemption was withdrawn; (ii) whether Indola PVC Grips were correctly classifiable as articles of plastic under Tariff Item 15A(2) rather than as non-specified parts of motor vehicles under Tariff Item 68.

Issue (i): Whether goods manufactured during a period of complete exemption could be subjected to excise duty on their later clearance after the exemption was withdrawn.

Analysis: The applicable principle was that excisability had to be tested with reference to the stage at which the goods were manufactured. The goods in question were fully exempt when manufactured, and the later withdrawal of exemption did not alter that position. The reasoning followed the earlier Tribunal view that duty could not be levied merely because clearance took place after the exemption ended, provided the goods were in fact produced during the exempted period.

Conclusion: The issue was decided in favour of the assessee. Goods manufactured while fully exempt were not liable to duty merely because they were cleared after withdrawal of the exemption, subject to proof of prior manufacture during the exempt period.

Issue (ii): Whether Indola PVC Grips were correctly classifiable as articles of plastic under Tariff Item 15A(2) rather than as non-specified parts of motor vehicles under Tariff Item 68.

Analysis: The goods were made of plastic and had been classified under Tariff Item 15A(2) in prior proceedings. Their use on motor vehicles did not change their essential character as plastic articles. The assessee had acquiesced in that classification, and no sufficient basis was shown to disturb it.

Conclusion: The issue was decided against the assessee. The classification under Tariff Item 15A(2) was upheld.

Final Conclusion: The appeal succeeded only on the duty liability arising from clearance after withdrawal of exemption, while the challenge to classification failed. Relief was made conditional on proof that the goods for which exemption was claimed had been manufactured before the relevant cut-off date and cleared during the disputed period.

Ratio Decidendi: For central excise purposes, goods fully exempt on the date of manufacture do not become dutiable merely because the exemption is withdrawn before clearance, but the assessee must prove that the goods were in fact manufactured during the exempt period; classification based on the essential character of the goods will not be displaced merely by their end use.

---