ORDER
G. Sankaran, Member (T)
1. The captioned appeal was initially filed as a revision application before the Central Government which, under the provisions of Section 35-P of the Central Excises & Salt Act, 1944, has come as transferred proceedings to this Tribunal for disposal as if it were an appeal before it.
2. The issue arising for determination in the present appeal is whether stocks of petroleum products held in bond by the appellant company as at the end of 28-2-1978 would, on their clearance from the bonded warehouses on or after 1-3-1978, attract levy of special excise duty which was imposed for the first time on 1-3-1978 by Section 37 of the Finance Act, 1978.
3. By a letter dated 11-7-1978, the Assistant Collector, Visakhapatnam, decided that special excise duty was payable on such stocks cleared on or after 1-3-1978 on payment of basic excise duty (the excise duty leviable under the First Schedule to the Central Excises & Salt Act, 1944). The effect of this decision, though not spelt out in so many words, was that the claim for refund of the special excise duty paid by the appellants on such stocks stood rejected. The matter was pursuedjin appeal. The Appellate Collector, Hyderabad did not accept the contention that such goods would not attract special excise duty because they were manufactured prior to 1-3-1978 and, as such, in terms of judicial pronouncements, would not be liable to be charged with special excise duty. He held that in the case of bonded goods, the rate of duty applicable would be the rate in force on the date of actual removal of the goods from the warehouse in terms of Central Excise Rule 9-A (1) (ii). In this view of the matter, he upheld the Assistant Collector’s order and rejected the appeal. It is against this order that the appellants are now before us.
4. The appeal was heard on 10-7-1984. Shri G.M. Badkar, Tax Manager of the appellant firm, vehemently urged before us that excise duty was a duty on manufacture of goods and that if on the date of manufacture, the goods did not attract excise duty, they could not be charged with excise duty on their clearance from the factory or the warehouse even though on the date of clearance there might be in force a duty of excise on goods of the same description. The levy of special excise duty was a new levy and would be attracted only in the case of goods which were manufactured on or after 1-3-1978, the date of imposition of the levy. Though basic excise duty was leviable in terms of Section 3 of the Central Excises & Salt Act, 1944, special excise duty was an independent and new levy which, in the present case, was not in force on the date or dates of manufacture of the goods. In this context, he drew our attention to the judgment of the Madhya Pradesh High Court in Shree Synthetics Ltd., Ujjain v. Union of India and Ors.- 1982 ELT 97 (M.P). particularly para 8 thereof. The decision of the same High Court in Kirloskar Bros. Ltd. v. Union of India-1978 ELT J (33) (M.P.)-to the effect that if goods were wholly exempt on the date of manufacture, they would not be liable to excise duty even if before the date of removal, the exemption was withdrawn, was also relied upon. The situation in the present case was analogous. There was no levy of special excise duty on the date (s) of manufacture of the goods and so they would not attract the levy of special excise duty on their clearance. With reference to the Court’s decision to the effect that where goods were liable to excise duty both on the date of manufacture and the date of removal, then only the rate of duty applicable would be that prevailing on the date of removal, it was submitted that “duty, as per Rule 2(v) of the Central Excise Rules was the duty of excise as specified in the First Schedule to that Act, i.e. the basic excise duty. Here, what was involved was not basic excise duty but special excise duty and the ratio of the decision was not applicable. Rule 9-A dealing as it did with “duty”, had no application to special excise duty. Shri Badkar also cited the decision of the Delhi High Court in Orient Paper Mills Ltd. v. Deputy Director of Inspection and Ors.-1982 ELT 247-wherein the Court held that basic and special excise duties were not one and the same thing but two distinct and different duties. Shri Badkar, however, fairly stated that the issue arising in the present appeal stands decided by the Tribunal in the Sirpur Paper Mills Ltd. v. Collector of Central Excise, Madras-1984 (3) ETR 693-1984 (16) ELT 546 (Tribunal). However, the said decision which was against the appellarts ‘Wild need to be reconsidered in the light of his submissions.
5. On behalf of the Respondent, it was submitted by Shri V. Lakshmi Kumaran, that he relied on the Tribunal’s decision in the Sirpur Mills case in support of the Appellate Collector’s order. He agreed with Shri Badkar that special excise duty was distinct and different from basic excise duty. The question was whether it was chargeable on the date of removal of goods, not whether it was in force on the date of manufacture especially because special excise duty was leviable on all dutiable excisable goods. Adverting to the Delhi High Court decision in 1982 ELT 247, he submitted that the said decision which was in the context of the tax credit scheme for incometax purposes had no application to the present case.
6. We have carefully considered the contentions of both sides. The very same issue as in the present appeal arose for our determination in the Sirpur Paper Mills case-1984 (3) ETR 693-1984 (16) ELT 546 (Tribunal). In the said order, after considering and discussing the following judgments-
(i) Madhya Pradesh High Court in Kirloskar Bros. Ltd., Dewas, v. Union of India and Ors.-1978 ELT J-33;
(ii) Madhya Pradesh High Court in Union of India vs. Kirloskar Bros. Ltd., Dewas-1978 ELT J-690;
(iii) Bombay High Court in Union of India and Ors. v. Elphinstone Spinning & Weaving Mills Co. Ltd.-191% ELT J 680;
(iv) Gujarat High Court in Alembic Chemical Works Co. Ltd. v. Union of India and Ors.-1979 ELT J-258;
(v) Madras High Court in Tamil Nadu Handloom Weavers Cooperative Society Ltd. v. Assistant Collector of Central Excise, Erode-1978 ELT J-57;
(vi) Madhya Pradesh High Court in Shree Synthetics Ltd., Ujjain v. Union of India and Ors.-1982 ELT 97 (M.P.);
(vii) Supreme Court in M/s Shinde Brothers etc. v. Deputy Commissioner, Raichur-AIR 1967 SC 1512;
this Bench, by a majority of 2 to 1 held that special excise duty was leviable on all “excisable goods”, that is to say, goods figuring in the First Schedule to the Central Excises & Salt Act and bearing effectively some basic excise duty and not wholly exempt from basic excise duty as on the date of their removal from the producing factory or bonded warehouse. The test to be applied is whether on the date of removal of goods from the place of manufacture or warehouse, the goods were chargeable with a duty of excise (basic excise duty) under the Central Excises & Salt Act read with any relevant notification for the time being in force. If the answer was in the affirmative, special excise duty was automatically attracted. The date of removal of the goods from the producing factory or warehouse in terms of Central Excise Rule 9-A (1) (ii) would, therefore, be relevant for determining the levy of special excise duty and not the date of manufacture or production of the goods.
7. Shri Badkar urged before us that special excise duty was not a duty of excise within the meaning of Section 3 of the Central Excises & Sa Act read with Rule 2(v) of the Central Excise Rules, 1944 which defines “duty” as the duty payable under Section 3 of the Act. Section 3 of the Act, which is the charging section, reads as follows :-
“There shall be levied and collected in such manner as may be prescribed duties of excise on all excisable goods other than salt which are produced or manufactured in India and a duty on salt manufactured in, or imported by land into, any part of India as, and at the rates, set forth in the First Schedule.
He also cited the Delhi High Court decision in 1982 ELT 247 in support of his contention that special excise duty is distinct and different from basic excise duty. The argument is that Rule 9-A which deals with basic excise duty has no application to special excise duty. This argument, in our view, has no merit. It is not difficult to see that basic excise duty and special excise duty are two distinct and different duties though both are duties of excise. The autho rity for their levy flows from different enactments, the Central Excises & Sail Act in the case of basic excise duty and the Finance Act in the case of specia excise duty. However, it needs to be borne in mind that Sub-section (4) of Section 37 of the Finance Act, 1978 provides that-
“37 (4). The provisions of the Central Excises Act and the rules made thereunder, including those relating to refunds and exemptions from duties, shall, as far as may be, apply in relation to the levy and collection of the special duties of excise leviable under this section in respect of any goodf as they apply in relation to the levy and collection of the duties of excise oi such goods under that Act or those rules, as the case may be.
It is, therefore, clear that Rule 9-A which inter alia specifies the relevant dates for determination of the rate of basic excise duty chargeable on excisabh goods removed from a factory or warehouse applies to the levy and collectioi of special excise duty as it applies to the levy and collection of basic excis-duty.
8. The Delhi High Court decision in 1982 ELT 247(Del.) deals with an entirely different situation. The Court, after referring to the relevant provision! of the Incometax Act, 1961, Central Excises & Salt Act, 1944 and the Financi Act, 1965 held that special excise duty was quite distinct and different fron basic excise duty. There can be no quarrel with this proposition. However, thi Court was concerned in that case with Section 280 ZD of the Incometax Ac which, for the purposes of that section, defined “duty of excise” as “the dut of excise leviable under the Central Excises & Salt Act, 1944”. It was urgei before the Court that for the purpose of tax credit, special excise duty shouli also be taken into account, in addition to basic excise duty. The Court projec ted this contention having regard to the aforesaid definition of “duty c excise”. We fail to see the relevance of this decision to the matter before us We think it has no application.
9. In the result, and following our decision in the Sirpur Paper Mill case, we reject this appeal.