2017 (1) TMI 484 - AT - Central Excise

Whether the respondent-assessee engaged in the manufacture of chewing tobacco, is liable to pay additional duty of Excise imposed vide Finance Act, 2005 with effect from 1-3-2005? Held that - the issue in this appeal is similar to the issue decided by Hon ble Supreme Court in Collector of Central Excise, Hyderabad v. Vazir Sultan Tobacco Company Ltd. 1996 (2) TMI 138 - SUPREME COURT OF INDIA , where it was held that where the new levy is imposed, the same is not applicable on the goods manufactured prior to imposition of levy but cleared thereafter and collection of duty at the stage of removal is for the sake of convenience. Once the levy is not there at the time when the goods are manufactured or produced in India, it cannot be collected at the stage of removal of the said goods - appeal dismissed - decided in favor of respondent-assessee.

Summary

Issues Involved:
Whether the respondent-assessee is liable to pay additional duty of Excise imposed under the Finance Act, 2005 on pre-budget stock as on 28-2-2005.

Analysis:
The Appellate Tribunal, CESTAT Allahabad, heard the appeal filed by the revenue against the order-in-appeal passed by the Commissioner (Appeals), Customs and Central Excise, Lucknow. The key issue revolved around the liability of the respondent-assessee, engaged in the manufacture of chewing tobacco, to pay additional duty of Excise imposed under the Finance Act, 2005, effective from 1-3-2005. The Tribunal referred to a similar issue decided by the Hon'ble Supreme Court in a previous case, where it was held that a new levy is not applicable to goods manufactured before the imposition of the levy but cleared thereafter. The collection of duty at the stage of removal is for convenience, and if the levy was not in place when the goods were produced, it cannot be collected at the removal stage. The Tribunal emphasized that the manner of collection is prescribed by rules, and it does not modify the levy itself. Therefore, based on the Supreme Court ruling, the Tribunal dismissed the revenue's appeal, stating that the respondent-assessee is not liable to pay the additional duty of Excise. The respondent-assessee was granted any consequential benefit in accordance with the law as a result of this decision.