ORIENT PAPER MILLS LTD. vs UNION OF INDIA

The Supreme Court held that under the Central Excise Act, specifically Section 4 and the Central Excise Rules 1944, the critical time for determining the applicable rate of excise duty is either the payment of duty or the removal of goods from the factory. The Court found that since the payment of duty and the clearance of goods occurred before the new rate came into effect, the demand for enhanced duty was erroneous. Furthermore, the Excise authorities' refusal to recognize the new railway siding as part of the factory supported the conclusion that the goods were not in the factory at the time of the rate change.