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TMI Blog1990 (4) TMI 165X X X X Extracts X X X X X X X X Extracts X X X X ..... cise Duty (SED) imposed under Clause 82(1) of the Finance Bill, 1988 could be levied on the stock of goods manufactured and lying in stock as on 28-2-1988/1-3-1988, but cleared on or after that date. The Department s view is that though the taxable event is the manufacture or production of excisable goods, the duty can be levied and collected at a later date for administrative convenience in terms of Rule 9-A of Central Excise Rules. The Collector (Appeals), in those cases wherein they disagreed with this view of the department and allowed the appeals or refund claims, had followed certain decisions of the CEGAT. The Collector (Appeals) Madras has referred to and followed the CEGAT decision of the Five-Member Bench in the case of M/s. Vazir Sultan Tobacco Co. Ltd, reported in 1985 (21) E.L.T. 757, TELCO case reported in 1987 (28) E.L.T. 462 as well as the Tribunal s order in Appeal No. 3206/88-B.I in the case of Collector of Central Excise, Hyderabad v. Sri Ram Refrigeration and held that the SED could not be charged on the Pre-Budget stock when the duty became chargeable only w.e.f. 1-3-1988. 2. Before us, the arguments on behalf of the appellant Collectors were presented by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not leviable on the goods, will not make any difference. The learned SDR further fully adopted the reasoning given by the Collector of Central Excise (Appeals) Calcutta in his detailed order-in-appeal No. 66/Cal.I/89 dated 22-3-89 in the case of M/s. Hindustan Petroleum Corporation and emphasised that the facts of the present cases are distinguishable from Vazir Sultan Tobacco Co. decision of the Five-Member Bench of the Tribunal. In that case, the situation was that the imposition of SED by the Finance Bill did not exist previously. In that case the Tribunal was considering the Finance Bill of 1978 which came into effect from 1-3-1978 and for the period prior to that date, there was no enactment levying SED. On the other hand, in the cases before the Tribunal presently, the SED had been imposed under the previous Finance Bill, 1987 but by virtue of exemption notification referred to earlier there was total exemption from SED. The learned SDR urged that therefore, the Finance Bills, 1987 as well as 1988 though different enactments thus provided for a continuity to the levy of SED. Therefore, the ratio of the Supreme Court decision in Wallace Flour Mills Company case is directly app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n, the SED could not have been collected on and from 1-3-1988. Shri Iyer, therefore, put forth five main propositions on which he elaborated; (i) that special duty is also a duty of excise in pith and substance; (ii) being a duty of excise, it has the status of a constitutional concept which has been comprehensively expounded by the Supreme Court, the Federal Court and Privy Council in various decisions; (iii) according to the Supreme court decisions, firstly, excise duty is a levy on goods, secondly, the taxable event is manufacture or production of goods, and thirdly, removal is not the taxable event; (iv) liability to excise duty on any goods arises only if the goods had been manufactured on or after the date of imposition of duty; (v) a contrary interpretation would amount to giving retrospective effect to the Finance Bill/Finance Act for which there is no legal authority. 4. As regards the first proposition, Shri Iyer pointed out that the Tribunal in the Vazir Sultan Tobacco Co. case had held that both, basic and special excise duties have the same attribute and had also held that all the conditions for excisability and leviability to duty in respect of basic excise duty wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xt, placed reliance on the reported case decided by the Supreme Court in the case of D.R. Kohli v. Atul Products - 1985 (20) E.L.T. 212 where the Supreme Court had observed that payment of excise duty on dyes in that case was possible only if they had been manufactured after the introduction of Item 14-D into the Central Excise Tariff and that in that case the dyes which were used by the respondents therein had been manufactured prior to that date. Therefore, there could be no levy of duty on the Pre-Budget stock. Shri Iyer further contended that even in the Wallace Flour Mills case decided by the Supreme Court and relied upon by the department, the situation was that the goods concerned in that case were already specified in the Tariff Schedule as being goods subject to duty of excise and only the statutory tariff rate previously was nil. Subsequently, the nil rate was ended and a statutory rate of duty was prescribed the goods concerned being those falling under Chapter 19 of Central Excise Tariff Act, 1985. The situation is not the same in the case of SED in the present appeals because the SED in the Finance Bill, 1988 was a fresh impost. Shri Iyer further urged that removal can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be decided is whether Special Excise Duty (SED) levied by virtue of Clause 82 (1) of the Finance Bill, 1988 could be levied on the stock of goods which had been fully manufactured prior to 1-3-1988 but which were cleared on or after that date. The department holds that the SED was rightly charged and collected on such goods at the time of their clearance after 1-3-1988 and reliance has been placed on the latest Supreme Court judgment in the case of Wallace Flour Mills v. CCE, 1989 (44) E.L.T. 598 (SC) wherein the Supreme Court held that the goods produced during exemption period but cleared when there was no exemption are dutiable. On the other hand, the assessees who were appellants/respondents in these cases have sought to rely upon the ratio of the Five-Member Bench of this Tribunal in the case of Vazir Sultan Tobacco Co. Ltd., 1985 (21) E.L.T. 757 to say that the SED imposed on 1-3-1988 for which there was also a declaration under the Provisional Collection of Taxes Act, 1931 was a new impost and as such on the goods which were fully manufactured prior to the date of such impost no SED can be levied at all, because SED was levied under Clause 82 (1) of the Finance Bill for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is enacted see K.P. Varghese v. I.T.O., 1981 131 I.T.R. 597 (SC). The Special Duty of Excise was imposed by Clause 82 of the Finance Bill, 1988 @ 5% certain essential commodities and other priority items were exempted. The Finance Minister mentioned this in his speech while moving the Bill as follows : 91. In view of the continuing pernicious effects of the drought and the natural calamities, I propose to continue with these surcharges for one more year. In addition, it is now proposed to levy a surcharge by way of Special Excise Duty at the rate of 1/20th of the Basic Duty of Excise. The incidence of this surcharge will generally be small; for example, it will be only one quarter of one percent i.e. 0.25%, where the basic duty is 20%. 92. Essential commodities and other priority items which are presently exempt from excise duty will continue to remain exempt. I am also exempting from this surcharge, certain other essential goods of common consumption, namely, sugar, matches, cotton fabrics, vanaspati, refined vegetable oil, tea, coffee and kerosene." The argument that the SED levied by the Finance Bill of 1988 is a new impost does not have much force in the background of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The argument, that this could not be so because the Finance Act of each year by which the SED was imposed were separate enactments in themselves, though attractive, cannot be accepted in the context of the legislative intention as revealed by the announcement on the floor of the House by mover of the Finance Bill to which we have already referred, and also considering that the nomenclature, nature, quantification and modality of collection of the duty remained identical throughout. We also observe that the other case law relied upon by the assessee, namely, that of the Tribunal in the Sri Ram Refrigeration case is no more good law in the light of the subsequent Supreme Court judgment in the Wallace Flour Mills case, and we also observe that this Tribunal on this very issue already found the ratio of the Supreme Court decision in Wallace Flour Mills case applicable, and had followed the same, in respect of CCE Bombay-II v. Amar Dye Chem, 1990 (26) ECC 199 (SB) and also in the case of CCE Bombay-II v. Godrej Soaps Ltd. 1990 (26) ECC 202 (SB). In the circumstances, therefore, we hold that the collection of SED on the clearances on or after 1-3-1988 on goods which had been fully manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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