# Karnataka Cement Pipe Factory v. Supdt. of Central Excise

- **Citation:** [1989] Supp. 1 S.C.R. 311
- **Court:** Supreme Court of India
- **Decided:** 1989-09-28
- **Case number:** CIVIL.APPELLATE JURISDICTION: Civil Appeal No. 3544 of 1989
- **Bench:** Sabyasachi Mukharji Ani> B.C. Ray
- **Source:** https://unisonlegal.in/judgment/supreme-court-of-india/karnataka-cement-pipe-factory-v-supdt-of-central-excise-10464
- **Pages:** 4

## Headnote

Central Excises and Salt Act 1944/Central Excise Rules, 1944, Sections 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 clearance. The Assistant Collector of Central Excise, the Collector of Centrat 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 conG
venience to the date of removal of go<ids from the factory. Rule 9A of the
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]
B
c
D
(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]
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
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.
Rajiv Dutta, Nimish Kothare and K.K. Patel for the Appellant.

## Text

"f
J,t
WALLACE FLOUR MILLS COMPANY LTD.
V.
A
..
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, Sections 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 clearance. The Assistant Collector of Central Excise, the Collector of Centrat 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 conG
venience to the date of removal of go<ids from the factory. Rule 9A of the
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]
B
c
D
(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]
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
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.
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 Heading 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 ques0
ti on were excisable though exempted from the duty. There was an
appeal from the said order of the Assistant Collector before the Collector 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 quesJ
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 submitted 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.
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
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
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.
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
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.
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,
A
B
c
D
E
F
G
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
B
. in their factory, a stock of the said products which were duly
manufactured, according to Shri Dutta, packed and ready for sale
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 Cooperative 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.