ORDER
V.T. Raghavachari, Member (J)
1. As observed by the Appellate Collector of Customs and Central Excise, Madras, in his order dated 14-10-1980 the point for determination in the present dispute is whether the stock of excisable goods manufactured by the appellant, M/s. HMM Ltd., before the enhanced rates of excise duty came into force, but cleared after such enhancement had taken effect, are liable to pay excise duty at the enhanced rate or at the old rate as prevailed on the date of manufacture.
2. We have heard Shri A.C. Gulati, Advocate, for the appellants, and Shri K.C. Sachar, SDR, for the department.
3. The argument of Shri Gulati is that for imposition of excise duty the chargeable event is manufacture and, therefore, it is the rate of duty that was in force on the date of manufacture that would be relevant for purposes of imposition as well as collection of excise duty. He in fact submitted that even if the rate of duty on the date of clearance is lesser than the rate of duty as was in force on the date of manufacture, the duty payable at the time of clearance would be not at the lesser rate but at the higher rate. He submitted that even if the goods became wholly exempt from payment of duty on the date of clearance, still the duty would be payable at such time of clearance at the rate that was prevalent on the date of manufacture.
4. Shri Sachar contested this proposition and. relied on the words of Rule 9A of the Central Excise Rules, to submit that while chargeability would be according to the law as prevailed on the date of manufacture, the computation of duty would, under the provisions of Rule 9A, be at the rate as was prevalent on the date of clearance. On this question there are several decisions of the High Courts as well as the Supreme Court, all of which have been considered by this Tribunal in its decision in Vazir Sultan Tobacco Company Ltd. v. Collector of Central Excise 1985 (21) ELT 757. In the said decision reference had been made to an earlier order of the Tribunal itself in the case of Collector of Central Excise v. Parmali Wallace Ltd. 1985 (21) ELT 231 in which also all these several decisions had been taken into consideration.
5. Shri Gulati himself referred to the decision in the Vazir Sultan’s case, but stated that he was not relying on the said decision but referred to the same only with reference to the observations made therein, especially in paragraphs 29 and 36. When it was pointed out to him that his contention would make the provisions of Rule 9A entirely nugatory, he stated that it would not be so, and that the provision will have to be merely read down as not applicable in particular circumstances, as in the present case, and not always. But this submission does not appear to be correct, since Rule 9A lays down that the rate of duty payable on the goods would be the rate as prevailed on the date of clearance (as distinguished from the rate that would have been prevalent as on the date of manufacture), Therefore, acceptance of the proposition put forward by Shri Gulati would render Rule 9A otiose. In effect that would be to call upon this Tribunal to declare Rule 9A ultra vires. We may observe that it would not be open to this Tribunal to record such a finding, as that would be beyond the competence of this Tribunal, and not within its jurisdiction or powers.
6. Another decision to which Shri Gulati made reference was the decision of the Supreme Court in the case of D.R. Kohli & Orx. v. The Atul Products Ltd. 1985 (20) ELT 212 (S.C.). But that decision was with reference to a dispute as to the entitlement of exemption under a notification in case the raw material used was duty paid. Admittedly the raw material was not excisable on the date of its manufacture. But the manufacturer offered to pay duty thereon in order to entitle himself to the exemption. The Supreme Court observed that the payment of excise duty on dyes was possible only if they had been manufactured after the introduction of Item 14D in the First Schedule to the Act. It was observed later in the judgment that in the said matter the case of the respondent (manufacturer) did not fall under the notification granting exemption since the basic dyes used by it in producing other processed dyes were not subject to levy of excise duty when they were manufactured and cleared. Therefore, there are no observations in the said judgment as would go to support the contention raised before us by Shri Gulati.
7. We may also refer to another decision of this Tribunal in Castrol Limited, Calcutta v. Collector of Central Excise 1985 (21) ELT 333 in which also the several decisions of the High Courts and the Supreme Court relevant to the dispute before us had been considered. In the said case the dispute related to liability for payment of excise duty on goods which had been manufactured at a time when they were wholly exempt from duty but were cleared subsequent to the withdrawal of the exemption. It was held, following the decision of the Supreme Court (when it dismissed (he special leave petition against the decision of the Madhya Pradesh High Court reported in (1978 ELT 33) that in respect of a commodity which though excisable was on the date of manufacture totally exempted from duty by reason of an exemption notification no duty would be payable though at the time of clearance the exemption notification had been withdrawn.
8. In that decision, as well as in the Parmali Wallace decision the Tribunal had taken note of the distinction between the cases in which excisable goods were totally exempt from excise duty on the date of manufacture and the cases in which such goods were only partly exempt on the date of manufacture. It had been held that when the goods were excisable and were liable to pay duty (though at a reduced rate) on the date of manufacture, the duty that would become payable at the time of clearance would be the duty as was in force on the date of clearance, under Rule 9A of the Central Excise Rules. This was in distinction to the situation where the goods were totally exempt (though excisable) on the date of manufacture in which event no duty would be payable on the date of clearance though by that time the exemption may have been withdrawn. The Vazir Sultan decision dealt with the case of imposition of special excise duty. It was held that as the provision for imposition of special excise duty came into effect on a date subsequent to the date of manufacture, no such special excise duty would be payable on such goods manufactured before that day though they may be cleared subsequent to the date of imposition of special excise duty.
9. It may be noted that the Madhya Pradesh High Court judgment in the Kirloskar case (1978 ELT 33) dealt with goods which ware wholly exempt at the time of manufacture though the exemption had been withdrawn at the time of clearance. The decision of the High Court that no duty was payable in such circumstances was affirmed by the Supreme Court by the dismissal of the SLP. The later decision of the Madhya Pradesh High Court in Shree Synthetics v. Union of India (1982 ELT 97) dealt with goods which were entitled to partial exemption only on the date of manufacture, and not full exemption. It was held that in such circumstances it was the rate of duty as was in force on the date of clearance that would be relevant for the purpose of assessment under Rule 9A of the Central Excise Rules. It was in view of all the above decisions that this Tribunal had in its earlier decisions (cited supra) held in the manner mentioned earlier. In view of the above decisions, the contention now advanced by Shri Gulati to the contrary is not acceptable. Further, as pointed out by Sri Sachar, the Madhya Pradesh High Court had in (cited supra) held that Rule 9A was intra vires and not in excess of the Rule making power of the Government. In this view also, the contention of Shri Gulati that the provision in Rule 9A should not be enforced as being contrary to the provisions of the Act (under which the chargeable event was manufacture only), could not be accepted.
10. In the light of the above discussion, we hold that the orders of the lower authorities were correct. This appeal is accordingly dismissed.