2023 (9) TMI 453 - AT - Central Excise

Levy of Additional Excise Duty under Additional Duties Of Excise (Textiles And Textile Articles) Act, 1978 - date of manufacture of goods is decisive in determination of levy in case of Excise Duty - HELD THAT - Both the lower authorities upheld the demand relying upon the decision in the matter of COLLECTOR OF C. EX., HYDERABAD VERSUS VAZIR SULTAN TOBACCO CO. LTD. 1996 (2) TMI 138 - SUPREME COURT in which it was held that even if goods were manufactured prior to the date of the same becoming dutiable, but were cleared later, the same become subject of levy of duty from the date of levy and such goods shall not be leviable to Excise Duty, if produced earlier. In short, the Hon ble Supreme Court held that it is point and date of levy which is important and not the point or date of clearance of the goods to determine, if the goods manufactured were dutiable or not - The Hon ble Apex Court also held the recovery of duty according to the date of removal does not make removal to be the taxable event for Central Excise. While it is true from the analysis of aforesaid decisions that the impugned goods i.e. Yarn in this instance were taxable as on the date they were manufactured as levy was subsisting. On the date of clearance, on withdrawal of levy, the applicable rate of A.E.D had become Nil . Therefore as, on the date of clearance Nil rate of A.E.D. shall be applied to the goods cleared. The demand does not sustain. Appeal is therefore allowed.

Summary

Issues:
The issues involved in the judgment are related to the determination of levy of Excise Duty on Yarn manufactured before the withdrawal of Additional Excise Duty under the Additional Duties Of Excise (Textiles And Textile Articles) Act, 1978.

Issue 1 - Date of Manufacture vs. Date of Levy:
The case revolved around the question of whether the date of manufacture or the date of levy is crucial in determining the applicability of Excise Duty on goods. The Hon'ble Supreme Court emphasized that the point and date of levy are significant, rather than the point or date of clearance, to ascertain if the goods manufactured were dutiable or not. The Court referred to relevant provisions and previous decisions to establish that goods must be excisable before being subjected to the levy of Excise duty upon their removal from the factory.

Issue 2 - Applicability of Duty Rates:
Another key issue addressed in the judgment was the applicability of duty rates based on the date of manufacture and clearance of goods. The Court clarified that even if goods were exempted from duty at the time of manufacture but became dutiable upon clearance, they would be liable for duty as per the prevailing rates on the date of removal. The Court emphasized that the taxable event is the manufacture of goods, and the payment of duty is linked to the date of their removal from the factory.

Judgment Summary:
The Appellate Tribunal CESTAT AHMEDABAD, in the case concerning the levy of Excise Duty on Yarn manufactured before the withdrawal of Additional Excise Duty, ruled in favor of the appellants. The Tribunal highlighted the importance of the date of levy over the date of clearance in determining the dutiability of goods. It was established that goods must be excisable before being subject to Excise duty upon removal. The Tribunal concluded that since the applicable rate of Additional Excise Duty had become "Nil" at the time of clearance, the demand for duty did not stand, and the appeal was allowed. The judgment underscored the significance of the date of manufacture and the prevailing duty rates at the time of clearance in determining the liability for Excise Duty.