The question is if the goods are cleared from the factory now will they pay duty though at the time of their manufacture they were exempted? It has been one of the most litigated subjects.
Those who claim that the rate of duty will be one when the goods were manufactured, depend on the theory that in the central excise the taxable event being the act of manufacture the rate of duty should be as prevailing when the goods were manufactured.
This view was taken by the Madhya Pradesh High Court in the Union of India vs Kirloskar Brothers case, (1978) ELT (J 690).
