1995 (11) TMI 225 - AT - Central Excise

Summary

Issues Involved:
1. Applicability of special excise duty on goods manufactured prior to the imposition of such duty but cleared after its imposition.
2. Interpretation of Clause 82 of the Finance Bill, 1988.
3. Relevance of the Supreme Court's decision in Wallace Flour Mills v. Collector of Central Excise.
4. Validity of Rule 9A of the Central Excise Rules, 1944.
5. Applicability of the Tribunal's previous decision in Ganesh Extrusion Artistries v. Collector of Central Excise.

Issue-wise Detailed Analysis:

1. Applicability of Special Excise Duty on Pre-Budget Stock:
The primary issue is whether special excise duty, introduced by Clause 82 of the Finance Bill, 1988, applies to goods manufactured before 1st March 1988 but cleared on or after this date. The Collector of Central Excise (Appeals) held that such duty is not chargeable on pre-budget stock cleared post-imposition, setting aside the Assistant Collector's orders and ordering refunds.

2. Interpretation of Clause 82 of the Finance Bill, 1988:
The Revenue argued that Clause 82 imposes a special levy, requiring payment of special excise duty on goods cleared after its imposition, regardless of their manufacture date. They cited the Supreme Court's decision in Wallace Flour Mills, asserting that duty can be levied and collected at the time of removal for administrative convenience.

3. Relevance of Wallace Flour Mills v. Collector of Central Excise:
The respondents contended that Wallace Flour Mills is inapplicable, as it dealt with unconditional exemption and not the imposition of a new duty. They argued that the Supreme Court's decision does not address the imposition of special excise duty on pre-budget stock, and applying Rule 9A in this context would be ultra vires Section 3 of the Central Excises and Salt Act, 1944, and contrary to Entry 84, List 1, Schedule VII of the Constitution of India.

4. Validity of Rule 9A of the Central Excise Rules, 1944:
The Tribunal examined the principles laid down in Wallace Flour Mills, concluding that while the taxable event is the manufacture, the duty can be levied at the time of removal for administrative convenience. The liability to pay duty is postponed until removal under Rule 9A. The Tribunal found that the goods in question were not exempt from tax at manufacture, and the special excise duty introduced by Clause 82 applies upon their removal.

5. Applicability of Ganesh Extrusion Artistries v. Collector of Central Excise:
The respondents cited Ganesh Extrusion Artistries, where the Tribunal held that goods not considered manufactured before a certain date were not liable for duty. However, the Tribunal distinguished this case, noting that the goods in the present appeals were already excisable at manufacture. Therefore, the special excise duty applies upon their removal post-1st March 1988.

Conclusion:
The Tribunal concluded that the goods were excisable at manufacture and the special excise duty introduced by Clause 82 of the Finance Bill, 1988, applies upon their removal. The appeals filed by the Revenue were allowed, and the orders of the Collector (Appeals) were set aside, restoring the Assistant Collector's orders.