Excise exemption depends on the date of removal, not manufacture, when duty is collected at clearance.

In excise matters where duty is levied and collected at the stage of removal, the applicable rate and exemption entitlement are determined by the law in force on the date of removal, not the date of manufacture. An exemption notification that has become operative before removal can therefore govern the goods, even if they were manufactured earlier. A refund claim cannot be rejected merely because the goods were made before the notification took effect when they were cleared on payment of duty after the exemption applied. The refund was accordingly allowed and the contrary order was unsustainable.

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Issues: Whether excise duty and refund entitlement were to be determined with reference to the date of manufacture or the date of removal of the goods, and whether the refund claim could be denied on the basis that the goods were manufactured before the exemption notification came into force.

Analysis: The applicable excise scheme treats manufacture as the taxable event, but duty may be levied and collected at the stage of removal under the relevant rules for administrative convenience. On the date of removal, the goods were no longer liable to duty because the exemption notification had become operative. The goods had been cleared on payment of full duty, and the assessee's claim for refund could not be rejected merely because manufacture had taken place earlier, before the notification came into force. The controlling principle is that the rate and incidence of duty are governed by the position obtaining at the time of removal from the factory.

Conclusion: The refund was rightly allowed, and the order denying it was unsustainable.

Ratio Decidendi: In excise matters, where duty is chargeable at the time of removal, the applicable rate and exemption entitlement are determined by the law in force on the date of removal, not by the date of manufacture.

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