WALLACE FLOUR MILLS COMPANY LTD.versusCOLLECTOR OF CENTRAL EXCISE, BOMBAY, DIVISION III.

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                 WALLACE FLOUR MILLS COMPANY LTD.
                                                                                    A

.
                                           V.
              COLLECTOR OF CENTRAL EXCISE, BOMBAY,
                           I>I\'ISION III.

 ,                             SEPTEMBER 28, 1989
                                                                                    B

              [SABYASACHI MUKHARJI ANI> B.C. RAY, JJ.]


             Central Excises and Salt Act 1944/Central Excise Rules, 1944, Sec-
       tions 2(d) and 35L/Rule 9A-Excise Duty-Realisation of-May be
       postponed for administrative convenience to date of·removal of goods         c
       from factory.

             The appellant is a mannfacturer of various types of food pr<idncts
       known as Sapaghetti, Macaroni, Vermicelli, etc., falling under Heading
       No. 1902.10 of the Central Excise Tariff Act. The said goods bad been        I>
       made dutiable only by the Finance Bill 1987-88 with effect from 1st
       March, 1987. The appellant ct8imed that their pre-budget stocks of
       fully manufactured non-excisable goods were entitled to duty free clear-
       ance. The Assistant Collector of Central Excise, the Collector of Cent-
       rat Excise (Appeals) and the Tribunal rejected the claim of the
       appellant.                                                                   E

             Before this Court it was contended on ..behalf of the appellant
       that the relevant date would be the date of mannfacture and in this
       case the manufacture was complete before the introduction of the
       budget.
                                                                                    F

             Dismissing the appeal, this Court,
·~
  !

             HELD: (1) Excise is a duty on manufacture or production. But
       the realisation of the duty may be postponed for administrative con-
       venience to the date of removal of go<ids from the factory. Rule 9A of the   G
       Central Excise Rules inerely does that. [314C]

             (2) The scheme of the Act read with the relevant rules framed
       under the Act, particularly rule 9A, reveals that the taxable even
       is the fact of manufacture or production of an excisable article, the        H
                                         311
    312         SUPREME COURT REPORTS               [1989] Supp. 1 S.C.R.

A   payment of duty is related to the date of removal of such article from
    the factory. [313F]

         (3) On the basis of rule 9A of the Central Excise Rules, the Cent·
    ral Excise authorities were within the competence to apply the rate
    prevailing on the date of removal. [314E]
B
          Karnataka Cement Pipe Factory v. Supdt. of Central Excise,
    [1986] 23 ELT 313 and Tamil Nadu (Madras State) Handloom Weavers
    Co-operative Society Ltd. v. Assistant Collector of Central Excise,        1•
    [1978] ELT J. 57, referred to.
                                                                               1
          CIVIL.APPELLATE JURISDICTION: Civil Appeal No. 3544
c   of 1989.

          From the Judgment and Order No. 131/89-D dated 9.5.1989 of
    the ,Central Excises & Gold (Control} Appellate Tribunal, New Delhi
    in Appeal No. El 1176188-D.
D
          Rajiv Dutta, Nimish Kothare and K.K. Patel for the Appellant.

          The Judgment of the Court was delivered by

          SAB \ASA CHI MUKHARJI, J. This is an appeal under section
E   35L of the Central Excise & Salt Act, 1944 (hereinafter referred to as
    'the Act').

          The appellant is a manufacturer of various types of food products
    known as Sapaghetti, Macaroni, Vermicelli, etc., falling under Head-
    ing No. 1902.10 of the Central Excise Tariff Act. The appellant filed
F   classification list effective from 1st March, 1987 claiming that their
    pre-budget stocks of non-excisable goods, namely, various types of         ~
    food products declared in the classification list as aforesaid were
    entitled to duty free clearance being pre-budget stocks. The Assistant
    Cellector of Cental Excise_, however, held that the question of clearing
    pre-budget ,stocks duty free did not arise because the products in ques-
0   ti on were excisable though exempted from the duty. There was an
    appeal from the said order of the Assistant Collector before the Col-
    lector of Central Excise {Appeals), Bombay. He dismissed the appeal.
    The appellant went up in appeal before the Tribunal. It was contended
    before the Tribunal on behalf of the appellant that the goods in ques-         J
    tion were not leviable to duty under the aforesaid head until 28th             j
H   February, 19_87 and the said goods had been made dutiable only~¥ ~he           l

                                                                               J
           WALLACE FLOUR MILLS '· C.C.E. {MUKHARJI, J.]               313

Finance Bill, 1987-88 with effect from 1st March, 1987. It was submit-
                                                                            A
ted further that on 27th February, 1987, the appellant had in their
factory a stock of the said product which were fully manufactured,
packed and ready for sale and the inventory of the said stock 'was
prepared by the Supdt. of Central Excise on 1st March, 1987. Reliance
was placed on several decisions of the different High Courts, namely,
decision of the Madhya Pradesh High Court in Kirloskar Brothers Ltd.        B
v. Union of India, [1978] ELT 33; Union of India v. Kirloskar Brothers
Ltd., [1978] ELT 690, decision of the Bombay High Court in Synthetic
Chemicals Pvt. Ltd. v. S. C. Coutinho, [ 1981] ELT 414, decision of the
Bombay High Court in New Chemicals Ltd. v. Union of India, I 1981]
EL T 920 decision of the Madras High Court in Sundaram Textiles
Ltd. v. Asstt. Collector of Central Excise, [1983] ELT 909, decision of
the Allahabad High Court in Union of India v. Delhi Cloth & General
                                                                            c
Mt/ls, [1973] ELT 177. On the other hand, the revenue contended that
the goods forming the pre-budget stocks were very much excisable
goods and that for the purpose of collecting duty, date of manufacture
was not material under the scheme of the Act even though the taxable
event is the manufacture. It was, therefore, contended that at the time     D
of manufacture of the goods in question, the goods were excisable
goods and in view of rule 9A of the Central Excise Rules, 1944, though
the taxable event is the manufacture and production, the payment of
duty is related to and postponed to the date of removal of articles from
the manufactury. The Tribunal accepted the said contention.
                                                                            E
      We are of the opinion that the Tribunal. was right. It is well
settled by the scheme of the Act as clarified by several decisions that
even though the taxable event is the manufacture or production of an
excisable article, the duty can be levied and collected at a later stage
for administrative convenience. The Scheme of the said Act read with
the relevant rules framed under the Act particularly rule 9A of the said    F
rules, reveals that the taxable event is the fact of manufacture or
production of an excisable article, the payment of duty is related to the
date of removal of such article from the factory. In that view of the
matter, the Tribunal dismissed the appeal and rejected the assessee's
contention.
                                                                            G
      Appearing before us in support of the appeal, Mr. Rajiv Dutta,
learned counsel for the appellant contended that in several decisions it
has been held, and referred us to the said decisions referred to
hereinbefore, that the relevant date would be the date of manufacture
and in this case the manufacture was complete before the introduction
of the budjlet. It was submitted that unti1128th February, 1987, when,      H
    314         SUPREME COURT REPORTS               [1989] Supp. 1 S.C.R.

A · according to Shri Dutta, the goods had been manufactured, the goods
    in question were unconditionally exempt from the duty. Under the
    Finance Bill, 1987-88, the said products were made dutiable at the rate
    of i5% ad valorem on or from !st March, 1987. But the appellant had
  . in their factory, a stock of the said products which were duly
    manufactured, according to Shri Dutta, packed and ready for sale
B
    prior to 28th February, 1987. In those circumstances, the goods in
    question, according to Shri Dutta, would not be subjected to duty at
    15 % ad valorem. Having considered the facts and the circumstances of
    the case, we are unable to accept this submission. Excise is a duty on
    manufacture or production. But the realisation of the duty may be
    postponed for administrative convenience to the date of removal of
C goods from the factory. Rule 9A of the said rules merely does that.
    That is the scheme of the Act. It does not, in our opinion, make
    removal be the taxable event. The taxable event is the manufacture.
    But the liability to pay the duty is postponed till the time of removal
    under rule 9A of the said Rules. In this connection, reference may be
O made to the decision of the Karnataka High Court in Karnataka
    Cement Pipe Factory v. Supdt. of Central Excise, [1986] 23 ELT 313,
    where it was decided that the words 'as being subject to a duty of
    excise' appearing ins. 2(d) of the Act are only descriptive of the goods
    and not to the actual levy. 'Excisable goods", it was held, do not
    become non-excisable goods merely by the reason of the exemptiori
    given under a notification. This view was also taken by the Madras
E High Court in Tamil Nadu (Madras State) Handlook Weavers Co-
    operative Society Ltd. v. Assistant Collector of Central Excise, [1978]
    ELT J 57. On the basis of rule 9A of the said rules, the central excise
    authorities were within the competence to apply the rate prevailing on
    the date of removal. We are of the opinion that even though the
    taxable event is the manufacture or the production of an excisable
    article, the duty can be levied and collected at a later date for
    administrative convenience.

          Having regard to the facts and the circumstances of this case and
    having regard to the scheme of the excise law, we are of the opinion
G   that the Tribunal was right and there are no grounds to assail the order
    of the Tribunal. In the aforesaid view of the matter, the appeal must
    fail and, accordingly, is dismissed. there will, however, be no order as
    to costs.

    'R.S.S.                                              Appeal dismissed.