Judgment:
1. This is an appeal against the order passed by the Collector of Central Excise (Appeals), New Delhi. Briefly stated, the facts of the case are that by virtue of the amendments made in the Central Excise Tariff Item 27(f) and Section 2(f) of the Central Excises and Salt Act, 1944 by the Finance Bill, 1980 'Lacquering or printing or both of plain containers in relation to Aluminium' became excisable with effect from 19-6-1980. The appellants' case was that printed Aluminium tubes valued at Rs. 1,25,630.14 having been manufactured by them prior to 18-6-1980 were not chargeable to Central Excise duty even though they were cleared after imposition of duty on lacquered or printed Aluminium tubes on 19-6-1980. The Assistant Collector in his order dated 31-3-1983 confirmed a demand of Rs. 55,277.27 of Printed Aluminium Tubes held in stock by the appellants on 18-6-1980. He also rejected the appellants claim for deduction of duty on the plain aluminium tubes used in the manufacture of the printed Aluminium tubes held in stock on 18-6-1980 on the ground that the Notification No. 93/80, dated 19-6-1980 under which such deduction was permissible was in force only upto 31-7-1980 whereas the goods in question were cleared by the appellants after that date. Being aggrieved by the order passed by the Assistant Collector, the appellants filed an appeal before the Collector (Appeals) who in the impugned order held that on account of the amendment of the definition of the term 'manufacture' in Section 2(f) in relation to aluminium to include 'Lacquering or printing or both of plain containers' and also the change in the description of Item No. 27(f) of the Central Excise Tariff by the Finance Bill, 1980 to cover containers made of aluminium lacquered, printed or both, Central Excise duty became leviable from 19-6-1980 onwards in terms of Rule 9A(ii) of the Central Excise Rules, 1944 on all clearances of printed and lacquered aluminium containers including those manufactured upto 18-6-1980. While confirming the Assistant Collector's order in regard to durability of the printed aluminium containers held in. stock on 18-9-1980, the Collector (Appeals) held that the adjustment of duty paid on plain aluminium tubes used in the manufacture of printed tubes in terms of Notification No. 93/80 was admissible to the appellants.
2. On behalf of the appellants, the learned advocate Shri Vijay B.Joshi appeared before us. He stated that the appellants were engaged in the activity of printing and lacquering of plain duty-paid aluminium tubes acquired from other manufacturers. He contended that the amendment of the term 'manufacture' in Section 2(f) in relation to Aluminium and the change in the description of Tariff Item 27(f) by the Finance Bill, 1980 could not be deemed to have retrospective effect. He argued that the activity of lacquering or printing or both of plain aluminium containers having been brought under the Excise net only with effect from 19-6-1980 all manufactured stocks of printed or lacquered aluminium containers held by the appellants could not be deemed as dutiable. He stated that it was well settled that goods manufactured prior to the introduction of the relevant entry in the Tariff have to be deemed as non-dutiable. In support of his contentions he placed reliance on the Supreme Court decision in the case of D.R. Kohli and Ors. v. Atul Products Ltd. 1985 (20) E.L.T. 212 (S.C.) and the Tribunal's decision in the case of Vazir Sultan Tobacco Company Ltd. v.Collector of Central Excise, Hyderabad 3. On behalf of the Revenue, the learned Jr. D.R. Shri S.K. Sharma stated that the activity of lacquering and printing of aluminium tubes having become excisable in terms of Rule 9A(ii) Central Excise was attracted on all clearances of such goods from 19-6-1980 onwards. In support of his argument he cited the decision of the Supreme Court in the case of Wallace Flour Mills Company Ltd. v. Collector of Central Excise, 4. In his rejoinder, Shri Vijay B. Joshi stated that in the case of Wallace Flour Mills Co. Ltd. v. Collector of C. Excise (supra) the Supreme Court had held that on excisable goods which are exempted from duty, even if produced prior to the withdrawal of the exemption duty becomes leviable in terms of Rule 9A depending upon the rate applicable on the date of removal. He contended that the ratio of the Supreme Court decision cited by the learned Jr. D.R. would not apply to the facts of appellants' case in which the printed aluminium tubes in question had been manufactured prior to 19-6-1980 when the process or printing of lacquering of plain Aluminium tubes was not excisable.
5. We have examined the records of the case and considered the submissions made on behalf of the both sides. We find that the short point that arises for consideration in this case is whether Central Excise duty was attracted on lacquered or printed or lacquered and printed aluminium containers manufactured on or prior to 18-6-1980 and cleared thereafter, by virtue of the amendments brought on the Tariff Item 27 of the erstwhile First Schedule to the Central Excises and Salt Act, 1944 and the definition of the term 'manufacture' in Section 2(f) of the Central Excises and Salt Act, 1944 by the Finance Bill, 1980-81 dated 18-6-1980.
6. It is seen that the Finance Bill, 1980 provided for the substitution of sub-item (f) of Item No. 27 of the Central Excise Tariff to read as 'containers, plain lacquered, or printed or lacquered and printed'. The Bill also provided for the insertion of the following sub-clause in clause (f) in Section 2 of the Central Excises and Salt Act, 1944:- "(viii) in relation to aluminium, includes lacquering or printing or both of plain containers." It follows that prior to the introduction of the Finance Bill, 1980 on 18-6-1980 the process of lacquering or printing of plain aluminium containers did not constitute manufacture.Wallace Flour Mills Company Ltd. v. Collector of Central Excise reported in 1989 (44) E.L.T. 598 the Hon'ble Supreme Court has held that it is well settled by the scheme of the Act as clarified by several decisions that even though taxable event is the manufacture or production of excisable article but the duty can be levied or collected at a later stage for administrative convenience.
The court further held that excisable goods do not become non-excisable goods merely because of the exemption given under a notification and on the basis of Rule 9A the payment of duty is related to the rate prevailing on the date of removal of the goods. Paragraph 3 of the Supreme Court decision is reproduced below :- "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 later stage for administrative convenience. The scheme of the said Act read with the relevant rules framed under the Act particularly Rule 9 A 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."Vazir Sultan Tobacco Company Ltd. v. Collector of Central Excise, Hyderabad (supra) on the basis of a catena of judgments the Tribunal had held that goods which are manufactured prior to imposition of the levy itself cannot be subjected to the levy on the basis of the rates applicable on the date of their removal since manufacture and not removal is the taxable event. The relevant extracts from para 44 of the Tribunal's decision are reproduced below:- "44. Needless to say, I adhere to my views in the aforesaid decision and have to reiterate, in agreement with my learned Brothers in this Reference, that - (a) While excise, indisputably, is a levy upon manufacture, (as decided in a long catena of cases right from the Province of Madras v. Boddu Paidanna and Sons E.C.R. C 84 (Federal Court) and Governor General in Council v. Province of Madras - E.C.R. C 94 (Privy Council) and ending with the case of the Union of India v. Bombay Tyres International Ltd. and Ors. 1983 (14) E.L.T. 1896 and D.R. Kohli v. Atul Products - Appeal No. 2277 of 1970 (Supreme Court), it has to be remembered all the time, that in the method devised for once it is leviable, and the manner of its collection, the rate in force on the date of removal assumed primacy A.I.R. 1967 S.C. 1564 - Orient Mills Ltd. v. Union of India), since Rule 9A specified the date of removal as the date with reference to which the duty payable is to be determined A.I.R. 1972 S.C. 2563 - Assistant Collector of Central Excise, Calcutta v. National Tobacco Co. of India Ltd.).
Manufacture is the point of incidence for the charge to duty, while removal is relevant for its assessment computation and recovery in the scheme of the various provisions of the Central Excises and Salt Act, 1944 and the Central Excise Rules, 1944.
(b) to a similar effect are the provisions in the law relating to the levy of duties of Customs. While import into or export from India, per se, is the eligible event for the levy of Customs (Section 12 of the Customs Act, 1962 = Section 20 of the Sea Customs Act, 1878), the assessment or the quantification of the duty payable is in terms of the rate of duty and tariff valuation in force on the date when a bill of entry or a bill of export, as the case may be, is amongst other specified events, filed. Such an event is wholly unrelatable in point of time with the actual import or export (Sections 15 and 16 of Customs Act, 1962 = Sections 37 and 38 of Sea Customs Act, 1878) 1979 (4) E.L.T. (J 241) - Prakash Cotton Mills v. B. Sen) (c) determination of the applicable rate of duty should not be confused with the charge to the duty itself or its incidence; (d) this being so, the conceivable situations enumerated in para 26 of the learned Senior Vice-President's judgment do not appear to be intractably defying a solution; (i) in the first two cases, once the goods were excisable, it is the rate of duty applicable on removal that governs the assessment and quantification of the duty leviable, since an exemption from duty has a relation to the applicable rate of duty rather than the charge to duty itself; (ii) the third case, relates to the charge to duty and its incidence rather than the assessment on the basis of the determination of the applicable rate. Once the goods were manufactured prior to the imposition of the levy itself, there is no question of subjecting them to the duty on the basis of the rate applicable on the date of their removal. Manufacture and not removal is the taxable event; (iii) the fourth is a variation of the first two - a variation or modification in the tariff entry with or without consequential variation in the applicable rate of duty. Once the goods were, admittedly, excisable having been manufactured prior to the modification, it is the rate of duty applicable on their removal that governs the assessment. A variation in the tariff description or classification has a relation to the rate of duty rather than the charge, to duty, once manufactured was all along subject to a levy under one or the other of the entries in the tariff. It is not a case of manufacture prior to the levy itself...".
9. As observed by us earlier, the processes of lacquering or printing or both of plain aluminium containers was brought within the scope of the definition of the term 'manufacture' in Section 2(f) of the Central Excises and Salt Act, 1944 for the first time on 18-6-1980 by the Finance Bill of 1980. Hence, it has to be held that the printed or lacquered or both printed and lacquered aluminium containers manufactured up to 18-6-1980 by the appellants out of plain duty-paid aluminium containers were not excisable.
10. Since no duty was leviable on the stock of printed and lacquered aluminium containers held in stock by the appellants on 18-6-1980, we hold that in respect of such goods the Collector (Appeals) decision to extend the benefit of Notification No. 93/80 was erroneous.
11. In view of the above discussion, the appeal is allowed. The appellants shall be entitled to the consequential relief after adjustment of the refund, if any, allowed in terms of the impugned order.