Payment of excise duty before removal of excisable goods [Sub-rule (1)]:

No excisable goods shall be removed from the place of manufacture or from warehouse, when the goods are stored in warehouse without payment of duty whether for

•  consumption, or
•  export, or
•  manufacture of any other commodity in or outside the place of manufacture

until the excise duty leviable thereon has been paid in such manner as provided in rule 8 or under any other law.

The liability to pay excise duty has been casted on every person:-

•  who produces or manufactures any excisable goods, or
•  who stores such goods in a warehouse

Transfer in ownership and possession does not amount to removal of goods: When stock that is lying in the factory is transferred to new owners without any physical removal of goods from the factory, no duty can be imposed. In other words, mere change in ownership and possession of the goods will not amount to removal of the same as removal means physical shifting of goods [Indorama Synthetics (I) Ltd. v. CCE 2005 (190) E.L.T. 193 (Tri. – Mumbai)]

Removal of goods is not the taxable event for levy of duty: In Collector v. Vazir Sultan Tobacco Co. Ltd. 1996 (83) E.L.T. 3, the Supreme Court held that the taxable event in Central Excise is the manufacture or production of goods and not the removal of goods. Section 3 cannot shift levy of excise duty from the stage of manufacture to the stage of removal. It has only shifted the stage of collection