TMI Blog1984 (1) TMI 313X X X X Extracts X X X X X X X X Extracts X X X X ..... n relation to such duty for the time being in force. It appears that the appellants had, as at the midnight of 28-2-1978/1-3-1978, certain quantities of paper and paper board in a fully manufactured condition. They cleared these goods on and from 1-3-1978 on payment of not only the duty of excise in terms of the First Schedule to the Act (we may call this basic excise duty), but also special excise duty in terms of the provisions of the Finance Bill of 1978. Later on, they claimed refund of the amounts of special excise duty paid on these goods on the ground that the levy was not attracted in respect of these goods. The refund claim and the subsequent appeal did not meet with success and hence the present appeal. 3. In the Memorandum of Revision Application (the appeal before us), the following grounds are urged :- (a) Special excise duty is not in the nature of a change or increase in the rate of basic excise duty. It is a fresh levy and, therefore, it applies only to goods manufactured and brought into existence from the mid-night of 28-2-1978/1-3-1978; (b) As a corollary, the levy of special excise duty is not applicable to goods that had already been manufactured on wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loskar s case arose out of a situation in which the goods under consideration were not subject to any duty at all during a particular period of time by virtue of an exemption Notification and on withdrawal of the said Notification, the Department sought to charge duty on the goods manufactured at a time when the exemption was in force but cleared subsequent to the withdrawal of the exemption. Such was not the case before us. Here, paper and paper board were always liable to the excise duty and the effect of the levy of special excise duty was to increase the incidence of that duty by 1/20th. She submitted that the rate of duty leviable had to be determined with reference to the date of the clearance of the goods and not the time of manufacture. In support of this proposition, the SDR cited the decision of the Bombay High Court in Elphinstone Spinning Weaving Mills Ltd., 1978 E.L.T. J680, of the Madras High Court in Tamil Nadu Handloom Cooperative Society Ltd., 1978 E.L.T. J56 and of the Gujarat High Court in Alembic Chemical Ltd., 1979 E.L.T. 258. Had the subject goods been free of basic excise duty prior to 1-3-1978, Smt. Zutshi submitted, the appellants might have had an arguab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... excisable articles produced or manufactured on 17-3-1972 and onwards only. The Court further held that the liability for payment of excise duty would not be determined with reference to Section 4 or the Rules made thereunder where exemption had for the first time been revoked and an article had been made subject to excise duty with effect from a particular date. 7. In the case before us, the goods attracted excise duty even prior to 1-3-1978, but special excise duty was not in force. With effect from 1-3-1978, in addition to basic excise duty, an additional levy of special excise duty came into force. The situation, therefore, is not on all fours with that in the Kirloskar s case. 8. The Union of India took up the aforesaid judgment of the Madhya Pradesh High Court in SLP to the Supreme Court. The Supreme Court dismissed the SLP on merits. 9. As against the aforesaid judgment, the Senior Deptl. Representative has cited the judgment of the Bombay High Court in the Union of India Others v. The Elphinstone Spinning Weaving Co. Ltd. [1978 E.L.T. (J 680)] in which the Division Bench held that there was no warrant in the Central Excise Act or the Rules to spell out a constr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Act : excisable goods means goods specified in the First Schedule as being subject to a duty of excise and includes salt; ] - the Madras High Court held that the words as being subject to a duty of excise were only descriptive of the goods specified in the First Schedule and had no reference to the factum of their liability to duty. The character as excisable goods does not depend on the actual levy of duty but on the description as excisable foods in the First Schedule to the Act. 12. The Madhya Pradesh High Court in Shree Synthetic Ltd., Ujjain v. Union of India Others - 1982 E.L.T. 97 (M.P.), decided on 16-1-1982, held as follows :- It is not possible to accept the argument that Section 3 impliedly applies the rates of duty as in force on the date of manufacture or production for the reason that though excise duty is a tax on manufacture or production it need not necessarily be levied at the stage of manufacture or production and it may even be levied at the stage the excisable article reaches the retailer. This inference is further supported from Section 4 of the Act which deals with determination of value for purposes of duty. The material point of time with ref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act in the year 1955. Paper has thus been excisable goods within the meaning of Sections 2(d) and Section 3 of the Act since then, in the light of the ratio of the decisions of the Gujarat High Court in the Alembic Chemical Works (1979 E.L.T. J 258) case; of the Bombay High Court in the Elphinstone case (1978 E.L.T. J 680) and the Madras High Court in the Tamil Nadu Handloom Weavers Co-operative Society case (1978 E.L.T. J 57). 15. Section 37 of the Finance Act, 1978 which levied special excise duties for the first time reads thus :- 37. (1) In the case of goods chargeable with a duty of excise under the Central Excises Act as amended from time to time read with any notification for the time being in force issued by the Central Govt. in relation to the duty so chargeable, there shall be levied and collected a special duty of excise equal to five per cent, of the amount so chargeable on such goods. (2) Sub-section (1) shall cease to have effect after the 31st day of March, 1979, except as respects thing done or omitted to be done before such cesser, and Section 6 of the General Clauses Act, 1897 shall apply upon such cesser as if the said sub-section had then been repea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his view of the matter, the levy of Basic Excise Duty cannot be said to be on all fours with levy of Basic Excise Duty on an article for the first time. It was more in the nature of a surcharge on the basic excise duty already leviable on excisable goods. The test to be applied was whether the goods were chargeable with a duty of excise (Basic Excise Duty) under the Central Excises Act read with any relevant notification for the time being in force. If the answer was in the affirmative, Special Excise Duty was automatically attracted. The date of removal of the goods from the producing factory or warehouse in terms of Rule 9A(1)(ii) would, therefore, in our opinion, be relevant for determining the levy of Special Excise duty and not the date of manufacture of production of the goods. If the excisable goods, in this case paper, were so removed on and from 1-3-1978, Special Excise Duty was attracted since the goods were excisable goods as on 1-3-1978 (in fact, even prior to that date) and effectively bore some Basic Excise Duty. 17. In the light of the above discussions, we see no merit in the appeal which we, therefore, dismiss. 18. [Order per : M. Gouri Shankar Murthy, Memb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plied was not whether the goods were previously chargeable with duty of excise under the Central Excises and Salt Act, 1944, but whether the goods were previously chargeable to the Special Excise Duty. If they were not so chargeable at the time of their manufacture, such Special Excise Duty cannot be levied just because their removal takes place after 1-3-1978. 23. It is true that in Union of India v. The Elphinstone Spinning and Weaving Co. Ltd. [1978 E.L.T. 680], it was held that duty in terms of Item 22B, which came into operative force with effect from 29-2-1968, could be levied on goods fully manufactured prior to the said date but removed after the said date. But then, it may, with the utmost respect, be stated that - (a) it does not appear from para 14 of the judgment that the attention of their Lordships had been specifically drawn to - (i) the observation subject always to the legislative competence of the taxing authority, a duty on home produced goods will obviously be imposed at the stage which the authority find to be the most convenient and the most lucrative, wherever it may be; but that is a matter of the machinery of collection and does not affect the ess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the said case was prior to the introduction of Item 14B in the Central Excise Tariff with effect from the midnight of 28th February, 1961 and was thus, not exigible to duty. 24. Nor can the rate of duty prevailing on the date of removal be confused with the imposition of or charge to duty itself. While the rate imposed on the date of removal is the applicable rate for assessment (Orient Paper Mills Ltd. v. Union of India - AIR 1967 S.C. 1564 = 1978 E.L.T. 328) and Rule 9A specified the date with reference to which the duty payable was to be determined (Asstt. Collector of Central Excise, Calcutta v. National Tobacco Co. of India Ltd. - AIR 1972 S.C. 2563 = 1978 E.L.T. 416), the character of imposition as a duty on the manufacture or production is immutable and cannot be lost sight of. In 1979 E.L.T. 258 (Alembic Chemical Works Ltd., Baroda v. U.O.I.) the charge to duty was very much in existence right from 1-3-1969 when protinules became excisable goods. No duty, however, was levied because of an exemption notification. Once that exemption was withdrawn, the rate in force determined the rate of duty payable, for the excisable goods never ceased to be excisable during all the re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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