1990 (4) TMI 58 - HC - Central Excise

Summary

Issues:
Challenge to the validity of Rules 9A and 224(2A) of the Central Excise Rules, 1944 based on inconsistency with Section 3 of the Central Excises and Salt Act, 1944.

Detailed Analysis:

1. Background and Petitioner's Claim:
The petitioner, a tobacco company, sought a writ of mandamus for a refund of excess excise duty paid, amounting to Rs. 5,21,477.25, due to a change in duty rates. The dispute arose from the clearance of cigarettes manufactured before 28-2-1983 but cleared after a duty rate increase on 1-3-1983.

2. Interpretation of Section 3:
Section 3 of the Central Excises and Salt Act, 1944, establishes the charging mechanism for excise duty on goods produced in India. It provides the authority to prescribe the manner of levy and collection of duties, indicating a taxable event upon production or manufacture within India.

3. Validity of Rule 9A and Rule 224(2A):
Rule 9A determines the date for imposing duty and tariff valuation, specifying that for goods removed from a factory, duty is assessed on the date of actual removal. The petitioner challenged Rule 9A's consistency with Section 3, arguing for its invalidity. Rule 224(2A) outlines procedural requirements for removal after a specific time.

4. Judicial Precedents and Interpretation:
The judgment analyzed precedents like Union of India v. Kirloskar Brothers and Sirpur Paper Mills Ltd. v. Union of India to distinguish the liability to pay duty from the time of removal. It emphasized that the taxable event of production triggers the duty liability, but the rate and collection mechanism are determined at the time of removal.

5. Clarification on Taxable Event and Duty Rates:
The court clarified that the taxable event of production is distinct from the application of duty rates at the time of removal. Referring to Shree Synthetics Limited v. Union of India, it highlighted the significance of the time of removal for levy of duty under Rule 9A.

6. Supreme Court's Ruling and Conclusion:
Citing Wallace Floor Mills Co. Ltd. v. Collector of Central Excise, the judgment upheld the validity of Rules 9A and 224(2A) as consistent with Section 3. The Supreme Court's decision affirmed that duty can be collected at a later stage for administrative convenience, aligning with the scheme of the Act and Rules.

7. Final Decision:
The court dismissed the writ petition, finding Rules 9A and 224(2A) legally sound and in conformity with the Act. No costs were awarded in this case.

This detailed analysis reflects the court's interpretation of the legal provisions, precedents, and the application of excise duty rules in the context of the petitioner's claim for refund.