Collector Of Central Excise, Patna vs Tata Iron & Steel Co. Ltd.
- SCC(2002) 10 SCC 527
Ratio decidendi
The rule this decision rests on
Where goods are fully manufactured and held in stock before a rate increase in special excise duty takes effect, and those goods are cleared after the rate increase, the special excise duty applicable is the rate in force at the time of manufacture, not the enhanced rate in force at the time of clearance, because special excise duty is an annual levy that is distinct and separate for each fiscal period. The levy of special excise duty during one fiscal period and the levy during a subsequent fiscal period are separate and different levies, and therefore goods manufactured in an earlier period are deemed to have been cleared in that same period and are exigible at the rate prevalent during manufacture, notwithstanding that the actual physical clearance occurs after a rate increase.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
1. The assessee held a stock of exigible goods in fully manufactured condition on 1st March, 1989. On this date the special excise duty leviable on such goods was enhanced. The goods were cleared after 1st March, 1989. The question in this appeal is : Are the goods exigible to special excise duty at the rate that was in force prior to 1st March, 1989, when they were manufactured, or at the rate in force after 1st March, 1989, when they were cleared? The authorities held that they were liable to special excise duty at the enhanced rate, basing themselves upon the judgment of this Court in Wallace Flour Mills Company Ltd. v. Collector of Central Excise (44 E.L.T. 598). The Tribunal took the contrary view, relying upon the judgment of this Court in Ponds India Ltd. v. Collector of Central Excise, Madras (90 E.L.T. 3).
2. In our view, the Tribunal was right in the view that it took. Special excise duty is an annual levy, as has been explained in the judgment in Ponds. It ceases to have effect on the 28th of February of a given year and a new levy, distinct and different, comes into operation with effect from the 1st of March of that year. Therefore, goods manufactured during the earlier period must be deemed to have been cleared on the last day of that period and exigible to special excise duty at the rate, if any, prevalent during that period.
3. We are unable to accept the submission on behalf of the Revenue that the enhanced rate of special excise duty applies to goods manufactured during the earlier period but cleared during the later period because special excise duty was leviable during the earlier period. This is for the reason that the levy during the previous period and the levy during the later period are different, as explained in Ponds.
4. The decision of the Tribunal must, therefore, be affirmed. The assessee will be entitled to refund in accordance with the provisions of the statute, as amended, and the judgment of this Court in Mafatlal Industries Ltd. v. Union of India and Ors. .
5. The appeal is accordingly dismissed.
6. No order as to costs.
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