1980 (5) TMI 36 - HC - Central Excise

Dutiability of excisable goods when not removed from the place of manufacture - Place of issue - Connotation of

Summary

Issues:
Challenge to order of Additional Secretary regarding excise duty on product known as Bentol.

Analysis:
The petitioner, a synthetic rubber manufacturer, challenged the excise duty on Bentol, a byproduct reused in the manufacturing process. Due to a strike, the petitioner burnt Bentol, leading to excise duty demand notices. The petitioner argued that no duty was leviable as Bentol was not removed from the factory. The petitioner contended that excise duty is only leviable upon removal from a specified place, citing Rule 49 and Section 4(4)(b) of the Act defining "place of removal" as the factory or premises. Respondents argued duty is leviable at the time of manufacture, stating the factory plan specified Bentol production location.

A previous case clarified that duty is payable upon removal from the specified place under Rule 9 or approved storage. As the Collector did not specify a place of manufacture, the factory is considered the place of manufacture. Rule 49 mandates duty payment only when goods are about to be issued from the specified place. The place of issue need not be the place of manufacture, and the Collector must pass a specific order under Rule 9 for removal. Rule 47, regarding storage, was deemed irrelevant as no goods were stored, and the duty was levied on destroyed goods within the factory premises.

The court accepted the petitioner's argument, ruling that excise duty is only leviable upon removal from a specified place, not at the time of manufacture. As the petitioner did not remove Bentol from the factory, excise duty was not applicable. The order imposing duty was quashed, and each party was directed to bear their own costs.