Marketability and removal date govern excise duty on woollen yarn despite nil rate at manufacture.

Unscoured woollen yarn was treated as marketable because it was sent for scouring at other premises and cleared in packed form, and the assessee failed to rebut the Department's factual basis. The yarn was therefore held excisable. The further argument that duty could not apply because manufacture occurred before 28-2-1994 was rejected, since goods specified in the tariff remain excisable even when the rate is nil. Applying the rule that manufacture is the taxable event but duty is collected on removal, duty was held payable at the rate prevailing on the date of clearance.

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Issues: Whether unscoured woollen yarn was marketable and therefore liable to excise duty, and whether duty was payable on yarn manufactured before the levy was increased but removed after the levy came into force.

Analysis: Excise duty is attracted only to goods that are manufactured and marketable. The yarn was sent to other premises for scouring, and its clearance in packed form supported the conclusion that it was capable of being brought to market. Once the Department established the basic factual foundation, the burden shifted to the assessee to prove non-marketability, which was not done. The further contention that duty could not be levied because the yarn was manufactured before 28-2-1994 was rejected. Goods specified in the tariff did not cease to be excisable merely because the rate earlier stood at nil. Under the settled rule that manufacture is the taxable event but collection may be deferred till removal, duty is chargeable at the rate prevailing on the date of removal.

Conclusion: The yarn was held to be marketable and excisable, and duty was held payable on the clearances made on 1st and 2nd March 1994.

Ratio Decidendi: Goods remain excisable if they are specified in the tariff, even when the applicable rate is nil, and excise duty may be levied on the date of removal where manufacture had already taken place.

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