B. P. Jeevan Reddy, J. - (1.) Sub-section (1) of Section 37 of the Finance Act, 1978, levied a special duty of excise equal of five percent of the amount of excise duty chargeable on goods. The levy came into effect on and from March 1, 1978 and was to remain in force till March 31, 1979. Sub-section (3) provided that the said levy shall be in addition to the duites of excise chargeable on such. goods under the law in force. Sub-section (4) provided that the provisions of the Central Excise Act and the rules made thereunder shall apply, as far as may be, in relation to the levy and collection of the special duties of excise levied under the said section. The question in this batch of appeals is whether the goods manufactured prior to March 1, 1978 but removed on or after March 1, 1978 are liable to pay the special duty of excise. Section 37 reads as follows:"(1) In the case of goods chargeable with duty of excise under the Central Excise Act as amended from time to time, read with any notification for the time being in force issued by the Central Goverment in relation to the duty so chargeable there shall be levied and collected a special duty of excise equal to five percent of the amount so chargeable on such goods. (2) Sub-section (1) shall cease to have effect after the 31st day of March, 1979, except as respects things done or omitted to be done before such cesser and section 6 of the General Clauses Act, 1897 (10 of 1897) shall apply upon such cesser as if the said sub-section had then been repeated by a Central Act. (3) The special duty of excise referred to in sub-section (1) shall be in addition to any duties of excise chargeable on such goods under the Central Excise Act or any other law for the time being in force. (4) The provisions of the Central Excise Act and the rules made thereunder, including those relating to refunds and exemption 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 goods as they apply in relation to the levy and collection of the duties of excise on such goods under that Act or those rules, as the case may be."
(2.) It is not necessary to refer to the facts of the several appeals before us. It would be enough if we state the facts in Civil Appeal No. 3199 of 1986. The respondent, M/s. Vazir Sultan Tobacco Company Limited, is engaged in the manufacture of cigarettes. The appeal relates to the levy of special excise duty on cigarettes removed by the respondent between March 1, 1978 and March, 12, 1978. The respondent's case was and is that though cleared on or after March 1, 1978, they were manufactured prior to the said date. It contended that inasmuch as the special duty of excise like any other duties of excise is upon the manufacture or production of excisable articles and not upon removal, no duty is levible upon the said cigarettes. The authorities rejected the contention and levied the duty. Subsequently, the respondent filed an application for refund agitating the very same issue, which too was rejected by the Assistant Collector. An appeal before the Collector (Appeals) proved fruitless. The respondent then carried the matter by way of further appeal to the Tribunal. The matter was heard by the Special Branch of the Tribunal. They allowed the appeal under the impugned order upholding the contention of the respondent.
(3.) Sri Joseph Vellapally, learned counsel for the Revenue, assailed the correctness of the view taken by the Tribunal on several grounds. He submitted that Section 37 evolved a simple formula, viz., wherever central excise duty is payable on certain goods, special excise duty shall also be payable at the rate of five percent of the central excise duty. Counsel submitted that the levy and collection of the central excise duties is governed by Section 3 of the Central Excises and Salt Act, 1944 read with Rules 9,9A and 9B of the Central Excise Rules. According to these Rules, the levy and collection is at the stage of clearance of the goods from the factory or warehouse, as the case may be. Both for the purpose of rate and valuation, one has to look to the date of removal and it is the said date which determines the levy, the rate and the valuation. He submitted that the question at issue in these appeals is concluded by the decision of this Court in Wallace Flour Mills Company v. Collector of Central Excise, (1989) 44 ELT 598. The fact that duties of excise are levied upon the production or manufacture of goods, the learned counsel contended, does not detract from the clear position emerging from the provisions of the Act and the Rules.;