Case: Collector of Central Excise, Patna Vs. Tata Iron & Steel Company Limited

S.P.BHARUCHA(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. The tribunal took the contrary view, relying upon the judgment of this Court in Ponds India Ltd. v. Collector of Central Excise, Madras.(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 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.

Decision reasoning: 0[ds](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 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.