( 1 ) CERTAIN goods are manufactured but not cleared and therefore not assessed to excise duty, when the Act imposing duty of excise comes into force. On such goods whether duty of excise can be levied and collected at the time when the goods are sought to be cleared ? If yes, would the Act be not retrospective? What, then, is the meaning of the term retrospective? These are some of the questions which arise in this petition consequent upon the imposition of additional duties of excise on certain textile articles.

( 2 ) THE Facts and the Controversy : the petitioner Mill Company manufactured cellulosic spun yarn as well as cotton yarn, and cotton fabrics. These products were excisable goods falling under Tariff Item Nos. 18, 18a and 19 respectively of the First schedule to the Central Excise Act, 1944 (hereinafter referred to as "the Act of 1944") as in force at the relevant time. On 3/10/1978 the Additional Duties of Excise (Textiles and Textile articles) Ordinance, 1978 was promulgated which became an Act called the Additional Duties of Excise (Textiles and Textile Articles) Act, 1978. This Act was passed on 6/12/1978, but it was given effect from the date on which the ordinance came into force, i. e. , 4/10/1978. The Ordinance as well as the Act of 1978 provided for levy and collection of additional duty of excise equal to 10% of the total amount of central excise duty chargeable on 9 textile commodities enumerated in schedule to the Act of 1978.

( 3 ) THE petitioner contends that the Act of 1978 would not be applicable to the goods manufactured prior to midnight of Octrober 3/ 4, 1978. Since manufacture is the taxing event, as far as the duty of excise is concerned, no duty of excise can be levied on the goods which were already manufactured when the Act of 1978 came into force. In his submission, whether goods were removed or not from the factorys storeroom or other permissible premises is not material. If the goods were already manufactured at the time when the Act of 1978 came into force, additional duty of excise under the Act of 1978 cannot be levied on such goods.

( 4 ) IN this behalf a letter dated 23/01/1979 has been written by the Deputy Collector, Central Excise, Baroda, addressed to the Mill owners Association, Ahmedabad wherein it is stated that goods fully manufactured before midnight of 3/10/1978 would not attract additional duty of excise. He opined that the fabrics which were in packed condition and which were lying in the godown of the petitioner-Company prior to 3/10/1978 would not attract the additional duty of excise. But the fabrics which were not packed in bales or cases prior to midnight of 3/10/1978 will be subject to the additional levy under the Act of 1978. Hence the petition praying that the fabrics already manufactured but not packed in bales and cases and not cleared before midnight of 3/10/1978 cannot be subjected to the additional duty of excise under the Act of 1978.

( 5 ) LEGISLATIVE Background : for resolving the controversy, the legislative background needs to be examined. The Act of 1944 was enacted with an object to consolidate and amend the law relating to Central duties of excise and to salt. This act is in force since the year 1944. At the relevant time the goods specified in the First Schedule to the Act of 1944 were "excisable goods". There is no dispute with regard to the fact that the product manufactured by the petitioner were excisable goods" within the meaning of the phrase defined in the Act of 1944. The rules called the Central Excise Rules, 1944 framed by the Government under the provisions of Sees. 6, 12 and 37 of the Act of 1944 were also in force at the relevant time.

( 6 ) AS disclosed in the statement of objects and reasons to the Act of 1978, the Government removed the obligation of textile mills to produce "controlled cloth". Thereupon, with a view to minimise the liability of the exchequer consequent on the outgo of subsidy, for the production of "control