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Issues Involved:
1. Concessional rates of excise duty. 2. Applicability of exemption notification. 3. Determination of excise duty based on the date of manufacture versus the date of removal. 4. Relevant statutory provisions and their interpretations. 5. Case law precedents. Issue 1: Concessional Rates of Excise Duty The petitioner, a public limited company, sought concessional rates of excise duty for the years 1976 and 1977. The company had enlarged its production capacity, and the Government of India had initially extended concessional rates for paper attributable to the enlarged production capacity. However, this notification was rescinded on 1-3-1973. The petitioner claimed the benefit of the concessional rates for paper produced during the period related to the enlarged production capacity but removed from the factory after the notification was rescinded. The Assistant Collector of Central Excise rejected the claim, and this decision was upheld by the Appellate Collector and the Government of India. Issue 2: Applicability of Exemption Notification The petitioner argued that excise duty is a tax on the manufacture or production of goods, and the exemption should apply based on the production due to expanded capacity, irrespective of the removal date. The respondent contended that Rule 9A postulates the exigibility of tax at the time of removal of goods, and since the exemption notification was rescinded at the time of clearance, the benefit could not be claimed. Issue 3: Determination of Excise Duty Based on the Date of Manufacture Versus the Date of Removal Section 3(1) of the Central Excises and Salt Act, 1944, indicates that excise duty is levied on goods produced or manufactured in India. Rule 9A specifies that the rate of duty applicable is the one in force at the time of removal of the goods. The petitioner cited case law supporting the view that excise duty is on the manufacture or production of goods, and the exemption should apply if the goods were produced during the exemption period, even if removed later. The respondent cited case law supporting the view that the duty is determined at the time of removal. Issue 4: Relevant Statutory Provisions and Their Interpretations The court analyzed Sections 3 and 4 of the Act, and Rules 8, 9, and 9A of the Central Excise Rules, 1944. Section 3 imposes the duty on production or manufacture. Section 4 determines the value for duty purposes. Rule 8 allows the government to exempt goods from duty. Rule 9 specifies the time and manner of payment of duty. Rule 9A determines the date for duty and tariff valuation. The court noted that the imposition of duty is on the manufacture or production of goods, and Rule 9A primarily deals with the mode and manner of assessment. Issue 5: Case Law Precedents The petitioner cited cases where courts held that excise duty arises at the time of manufacture or production, and goods produced during an exemption period are entitled to the exemption even if removed later. The respondent cited cases where courts held that the duty is determined at the time of removal, and goods removed after the exemption was rescinded are not entitled to the exemption. The court found the petitioner's case law more persuasive, emphasizing that the imposition of duty arises at the time of manufacture or production. Conclusion The court concluded that excise duty arises the moment the manufacture or production of the commodity is complete, irrespective of the removal date. The petitioner was entitled to the benefit of the exemption notification and the refund of excess duty paid. The impugned orders were quashed, and the respondents were directed to refund the excess duty collected. The writ petitions were allowed accordingly.
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