LexM/S. PONDS INDIA LTD. versus COLLECTOR OF CENTRAL EXCISE, MADRAS
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M/S. PONDS INDIA LTD. A v. COLLECTOR OF CENTRAL EXCISE, MADRAS .JANUARY 27 1997 (S.P. BHARUCHA AND FAIZAN UDDIN, JJ.) B Finance Act, 1987 Special Excise Duty-Levy of on excisable goods manufactured prior to 28.2.1987 and cleared after 1.3.198~Notification issued under Rule 8 of C Central Excise Rules, 1944 with simultaneous effect exempting the goods from levy-Special excise duty levied under Finance Act 1988-No exemption notification issued for the period-Held, special excise duty. being an annual levy, will cease to have effect at the close of the financial year--By reason of exemption notification, manufacturers are not liable to pay special excise duty on goods manufactured prior to 28.2.1987 and cleared after l.3.198~T7te D said goods must be deemed to have been cleared on 28.i. J98~entral Excise Rules, 1944-Rules 8 and 9. Special excise duty, a levy imposed annually under the provisions of the Finance Acts on excisable goods, was levied under the Finance Act, 1987 for the period 1.3.1987 until 28.2.1988. But during this period, by virtue of a notification issued under Rule 8 of the Central Excise Rules, 1944, there was a total exemption from the levy. In the following year, special excise duty was again levied by Finance Act, 1988 and it was payable, as there was no exemption notification for the relevant period. The Customs, Excise and Gold (Control) Appellate Tribunal, allow- ing the appeals filed by the Revenue against a number of the assessees, held that the collection of special excise duty on clearance on or after 1.3.1988, of .goods which had been manufactured prior to that date was E F valid. Aggrieved, two of the assessees filed the present appeal. G !twas contended for the appellants that on the principle enunciated by this Court in Vazir Sultan Tobbacco Co. Ltd. *the goods manufactured by the appellants prior to 28.2.1988 and cleared after 1.3.1988 were not liable to the fresh special excise duty levied under the Finance Act, 1988. For the Revenue it was contended that by reason of Rule 9A of the Central H 541 542 SUPREME COlIRT REPORTS [1997] 1 S.C.R. ~ - A Excise Rules 1944, the goods were liable to the levy. Allowing the appeal, this Court Held : 1.1. Under the terms of the Finance Acts, special excise duty is so levied as to cease to have effect at the close of the financial year. It B is an annual levy. It may or may not be levied in the following year. [547-E] 1.2. The appellants were not liable to pay any special excise duty on clearance on or after l.3.1988 of goods manufactured by them prior to >: that date. The said goods must be deemed to have been cleared on that c last date of the levy of the special excise duty that was in force when they were manufactured; that is to say, they must be deemed to have been cleared on 28.2.1988. On that day the said goods were; by reason of the exemption notification, wholly exempt from special excise duty. It cannot be said that the said goods would be liable to bear special excise duty as levied after 1.3.1988, for the reason that the special excise D duty that operated subsequent to 1.3.1988 was a new levy under a >- different statute and distinct from that which operated during the _,./ ~- period l.3.1987 until 28.2.1988. Rule 9A of the Central Excise Rules, 1944 does not operate in such circumstances. [547-H, C, 546-G-, B) 1.3. The judgment in Vazir Sultan Tobbacco Ltd. *is to the effect that E the date of manufacture is the date on which the levy attaches to the goods; the date of payment is deferred to the date of clearance, the rate being the rate which is effective on the date of clearance. Where goods have been manufactured while the levy of special excise duty is operative and have not been cleared until the last date of that levy,Jhe goods must be deemed F to have been removed on that last date. [547-F] ·*Collector of Central Excise, Hyderabad v. Vazir Sultan Tobacco Co. Ltd., (1996) 83 E.L.T. 3 explained and relied on. CIVIL APPELLATE JURISDICTION : Civil Appeal No. 4411 of G 1990. From the Judgment and Order dated 6.4.90 of the Customs, Excise and Gold (Control), Appellate Tribunal, New Delhi in A. No. E/4113/89- )... C) (Order No. 363/90-C to 409/90-C). H WITH MIS PONDS INDIAv. C.C.E. [S.P. BHARUCHA,J.] 543 Civil Appeal No. 4667-73 of 1996. From the Judgment and Order dated 16.11.95 of the Customs Excise and Gold (Control) Appellate Tribunal, Eastern Bench,
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