Special excise duty on goods cleared after levy commencement applies at the removal date, despite earlier manufacture.

Special excise duty was held payable on excisable goods manufactured before 1 March 1988 but cleared after the levy came into force. The governing principle was that manufacture is the taxable event, while assessment and collection may follow the rate applicable on the date of removal for administrative convenience under Rule 9A of the Central Excise Rules, 1944. Because the goods remained excisable at the time of manufacture and the special duty had already commenced before clearance, the duty rate on the date of removal governed. The decision cited on a change in the concept of manufacture was distinguished as inapplicable.

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Issues: Whether special excise duty introduced by Clause 82 of the Finance Bill, 1988 was leviable on excisable goods manufactured before 1 March 1988 but cleared after the levy came into force.

Analysis: The governing scheme treats manufacture or production as the taxable event, while collection and realisation of duty may be postponed to the date of removal for administrative convenience. Rule 9A of the Central Excise Rules, 1944 operates on that basis and permits application of the rate prevailing on the date of removal. Since the goods in question were already excisable when manufactured and the levy of special excise duty had come into force before their removal, the duty applicable on the date of clearance governed assessment. The cited decision concerning a change in the very concept of manufacture was distinguishable because the present case involved goods already liable to excise duty at the time of manufacture.

Conclusion: Special excise duty was payable on the goods cleared after the levy came into force, even though they had been manufactured earlier, and the Revenue's appeals succeeded.

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