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 and Salt Act, 1944, has come as transferred proceedings to this Tribunal for disposal as if it were an appeal filed before it.
2 The dispute in this case is about the dutiability of the product "PVC Compound" manufactured by the appellants prior to 18-6-1977 but cleared on or after 18-6-1977 till 28-6-1977. According to the appellants no duty was leviable in the relevant period while the Department holds the contrary view.
3. The facts of the case, briefly stated, are that upto the budget of 1977 (the Finance Bill was introduced in the Parliament on 18-6-1977), PVC compound used to be assessed to duty under Item No. 68 of the Central Excise Tariff Schedule (CET). With effect from 18-6-1977, the Department brought the product under Item 15-A, CET and the appellants were paying duty accordingly. On 29-6-1977, the Central Government issued a notification under Central Excise Rule 8(1) exempting PVC compound from the whole of the duty leviable thereon. On 19-7-1978, the appellants filed a claim for refund of the duty paid during the period 18-6-1977 to 28-6-1977. This was rejected by the Assistant Collector who held that the levy of duty under Item No. 15-A, CET on the clearances during the aforesaid period was in order and that the claim that the goods were not liable to duty as pre-budget stocks was not tenable since they were paying duty even prior to the budget under Item No. 68, CET. The appeal against this order did not meet with success before the Appellate Collector.
4. In the memorandum of revision application, several grounds have been urged including one of non-application of mind and reliance on budget instructions on the part of the lower authorities and the claim is for refund of Rs. 18,096/- paid as duty on 1,740 Kgs. of PVC compound cleared between 18-6-1977 and 28-6-1977 with deduction of Rs. 1,987/- already refunded to the appellants as proforma credit under Central Excise Rule 56-A. However, in the hearing before us, Shri Ganesan, the learned Counsel for the appellants, made only very few submissions. We are, therefore, in this order dealing with only these submissions. Shri Ganesan also made it clear that the claim was limited to Rs. 7,904/- paid as duty on 760 Kgs. of PVC compound which had already been manufactured before 18-6-1977 but cleared between 18-6-1977 and 28-6-1977. Shri Ganesan's submissions may be summarised thus :- (i) The aforesaid quantity of 760 Kgs. of PVC compound had already been manufactured prior to the budget date-18-6-1977. Earlier, the product was being assessed to duty under Item No. 68, CET. Although this classification was wrong in the light of a tariff advice by the Board, Shri Ganesan said he was not pressing this point. Since the product was brought under Item No. 15-A, CET on 18-6-1977, no duty could be levied on it under that Item since, as on the date of the change, the goods had already been manufactured and would not attract the new levy under Item No. 15-A CET. (ii) Alternatively, and if the above submission was not accepted, Shri Ganesan would contend that since Parliament did not approve the inclusion of PVC compound and the new levy thereon under Item No. 15-A as evidenced by the exemption of the product from duty by Notification No. 206/77, dated 29-6-1977, the duty collected during the period 18-6-1977 to 28-6-1977 was liable to be refunded by virtue of Section 5(1) of the Provisional Collection of Taxes Act.
(The Counsel was not in a position to clarify his contention that PVC compound was brought under Item No. 15A for the first time on 18-6-1977).
5. Opposing the appeal, Shri Khanna, Departmental Representative, submitted as follows : (i) PVC compound was correctly assessable under Item No. 15A even prior to 18-6-1977. He cited the Tribunal decision in 1984 (15) E.L.T. 434. There was no question of disapproval by the Parliament of the inclusion of PVC compound in Item No. 15A. (ii) The fact that the subject goods were manufactured prior to 18-6-1977 was of no consequence. It was the date of removal of the goods which mattered. In this connection, he relied on the Allahabad High Court decision in 1983 E.L.T. 285 (All.) and the Bombay High Court in 1978 E.L.T. J 680.
6. We have carefully considered the submissions before us. The Counsel for the appellants has taken the position that PVC compound fell under Item No. 68 before 18-6-1977 (and under Item 15A with effect from 18-6-1977) while Shri Khanna has taken the position that the goods had all along fallen under Item 15-A CET. This dispute, in our view, is not really relevant to the matter before us. Both sides agree that the product fell under Item No. 15A during the relevant period. The question is whether duty could have been charged under Item 15A, CET on the stocks manufactured prior to 18-6-1977. In our considered view, the date of removal of the goods from the producing factory and not the date of their manufacture determines the rate of duty applicable to the goods. In the Union of India v. The Elphinstone Spinning & Weaving Mills Co. Ltd.-1978 E.L.T. (J 680), the Bombay High Court, after considering the combined effect of Section 3 of the Central Excises and Salt Act and Central Excise Rules 7, 8, 9 and 9-A, held that the point of time at which goods are liable to duty would be the actual removal of the goods from the factory or warehouse and not the date of manufacture or production of the goods in the factory. Their Lordships held that there was no warrant in the Act or Rules to spell out a construction that it was only the stage of manufacture or production of goods which attracted duty. Therefore, if on the date when goods are removed from the place of manufacture, they are specified in Schedule I to the Act, they cannot be removed unless duty is paid on them even though such goods might have been manufactured when there was no excise duty-on them. In Kesar Sugar Works Ltd. v. Union of India and Ors. - 1983 E.L.T. 285 (All.), the Allahabad High Court held that though molasses was classifiable under Item No. 68, CET prior to 19-6-1980 (and exempt by a notification subject to certain conditions it was liable to duty with effect from 19-6-1980 (when a specific Item 15-CC was inserted in the Tariff to cover molasses) on its clearance on and after that date even though it might have been manufactured prior to 19-6-1980. After considering Central Excise Rules 9, 9A and 49, their Lordships held that there was "no room for doubt that excise duty is leviable not with reference to the date of manufacture of the excisable goods but at the time and at the rate on the date of removal of goods from the place of manufacture or from the approved place of storage.
Thus the duty is linked in point of time to the date of removal and not to the date of manufacture".
7. It is thus clear that the contention of the Counsel for the appellants in the present case that the pre-1876-1977 stocks of PVC compound were not liable to be charged with duty under Item No. 15A, CET during the period 18-6-1977 to 28-6-1977 is not tenable and is, therefore, rejected.
8. The Counsel for the appellant made an alternative submission relying upon Section 5(1) of the Provisional Collection of Taxes Act, 1931. The Section reads as follows :- "5. Certain refunds to be made when declarations cease to have effect.-(1) Where a declared provision comes into operation as an enactment in an amended form before the expiry of the seventy-fifth day after the day on which the Bill containing it was introduced, refunds shall be made of all duties collected which would not have been collected if the provision adopted in the enactment had been the declared provision : Provided that the rate at which refunds of any duty may be made under this Sub-section shall not exceed the difference between the rate of such duty proposed in the declared provision and the rate of such duty in force when the Bill was introduced." When the Counsel was asked to explain how it could be said that by issue of an exemption notification under Central Excise Rule 8(1), there was an amendment to Item No. 15-A of the Central Excise Tariff Schedule read with the declaration under the Provisional Collection of Taxes Act, he could no clarify. Section 5(1) of the Provisional Collection of Taxes Act clearly refers to a situation in which a provision of a Bill providing for the imposition or increase of a duty of Customs or Excise in respect of which a declaration (that it is expedient in the public interest that the provision of the Bill relating to such imposition or increase shall have immediate effect) is made by the Central Government comes into operation as an enactment in an amended form before the expiry of the 75th day after the day on which the Bill containing it was introduced. Section 5(1) applies only to amendments effected to "declared" provisions of such Bills. Quite clearly, an exemption notification issued under Rule 8(1) of the Central Excise Rules cannot and does not amount to an amendment of a "declared" provision of a Finance Bill. We reject the learned Counsel's contentions in this behalf.