1997 (1) TMI 188 - AT - Central Excise

Summary

Issues:
1. Whether special excise duty can be levied at the time of clearance of goods when the goods were exempt from levy of this duty on the date of their manufacture.

Analysis:
The appeal before the Appellate Tribunal CEGAT, New Delhi revolves around the issue of whether special excise duty can be imposed at the time of goods clearance, even if the goods were initially exempt from such duty at the time of manufacture. The appellants relied on a previous Tribunal judgment in the case of Vazir Sultan Tobacco Co. v. CCE, Hyderabad, which held that special excise duty is not leviable if it was not imposed or exempt at the time of manufacture. However, the lower appellate authority disagreed, citing Rule 9A of the Central Excise Rules, 1944, and the Supreme Court judgment in the case of M/s. Wallace Flour Mills Company Ltd. The Tribunal had to determine the applicability of special excise duty in such circumstances.

In a recent judgment by the Supreme Court in the case of CCE v. Vazir Sultan Tobacco Co. Ltd., it was established that special excise duty could be levied on goods that were exempt at the time of manufacture but no longer exempt at the time of clearance. The exemption notification ceased to be in force during clearance, leading to the duty being payable. The Tribunal, therefore, upheld the imposition of duty on the goods cleared by the appellants, based on the Supreme Court's ruling and rejected the appeal.

The Tribunal considered the arguments presented by both parties, highlighting the importance of the Supreme Court's judgment in settling the issue. It was noted that the special excise duty was leviable, albeit exempt, at the time of clearance, leading to the duty being chargeable. The Tribunal emphasized the distinction between levy and exemption, stating that once the duty was imposed, the exemption did not negate the levy but affected the amount payable. Therefore, even if goods were wholly exempted, they remained excisable, and the date of clearance determined the duty liability. Following the Supreme Court's precedent, the Tribunal confirmed the duty payable on the goods cleared by the appellant and dismissed the appeal.

In conclusion, the Tribunal's decision aligned with the Supreme Court's interpretation regarding the imposition of special excise duty on goods that were initially exempt but became chargeable at the time of clearance. The judgment emphasized the significance of the clearance date in determining duty liability, irrespective of initial exemptions, and upheld the imposition of duty based on the prevailing legal framework and judicial precedents.