1985 (12) TMI 149 - AT - Central Excise

Summary

Issues:
Determining liability for excise duty on goods manufactured before a rate increase but cleared after the increase took effect.

Analysis:
The dispute in this case revolves around the liability to pay excise duty on goods manufactured before a rate increase but cleared after the increase had taken effect. The appellant argued that the duty should be based on the rate prevailing at the time of manufacture, even if higher than the rate at clearance. Conversely, the respondent contended that duty computation should align with the rate at clearance, citing Rule 9A of the Central Excise Rules. The Tribunal referenced various court decisions, including M/s. Vazir Sultan Tobacco Company Ltd. v. Collector of Central Excise, to analyze this issue.

The appellant's reliance on the Vazir Sultan case was questioned as it would render Rule 9A ineffective. The Tribunal emphasized that Rule 9A mandates duty calculation based on the rate at clearance, not manufacture. The Tribunal highlighted that declaring Rule 9A ultra vires was beyond its jurisdiction. Another case, D.R. Kohli & Ors. v. The Atul Products Ltd., was distinguished as it pertained to exemption eligibility for raw materials, not the duty rate discrepancy at manufacture and clearance.

Referring to the Castrol Limited case, the Tribunal reiterated the distinction between total and partial duty exemptions at manufacture. It was established that goods wholly exempt at manufacture remained duty-free at clearance even if the exemption was withdrawn. Conversely, goods partially exempt at manufacture would be subject to the rate at clearance under Rule 9A. The Tribunal emphasized the relevance of the date of clearance for duty assessment, as per the cited precedents.

In conclusion, the Tribunal upheld the lower authorities' decisions, affirming that duty should be calculated based on the rate at clearance. The appellant's argument, challenging the enforcement of Rule 9A, was dismissed. The Tribunal's ruling was grounded in the interpretation of relevant legal provisions and established precedents, emphasizing the significance of the date of clearance in determining excise duty liability.