Ms. Sunanda Bhandare, J. ( 1 ) THE petitioner is engaged in the businessof processing of wool tops and blended wool tops by admixture with duty paidsynthetic fibre. During the course of routine inspection by the Central Exciseinspection Group on 15. 9. 1977 the petitioner s accounts maintained at thechandigarh factory were scrutinised and as a sequel to the inspection, responddent No. 4 issued a show cause notice dated 27. 10. 1977. In the said show causenotice it was alleged that in the course of inspection it was detected that thepetitioner had wilfully supressed facts and misdeclared. the contents in regardto the percentage of wool so as to evade duty on wool tops under Tariff Itemno. 43 and thereby declared the goods as duty paid. The petitioner was, therefore, required to show cause why penalty should not be imposed for contravention of Rule 9 (1), 52a, 53, 173g and 173f of the Central Excise Rules, 1944 (hereinafter referred to as the Rules ). The petitioner submitted a reply denyingthe allegations made in the show cause notice. No action was taken by therespondent for some time, however later on fresh show cause notice dated15. 11. 1977 was issued to the petitioner alleging that the petitioner had notaccounted for dutiable goods in RGI and had removed excisable goods withoutpayment of Central Excise Duty and without complying with the. othercentral Excise formalities. The petitioner, was, therefore, again required toshow cause why penalty should not be imposed upon the petitioner underrule 9 (2) and 173q and why the duty amounting to Rs. 39,771. 99 should notbe charged to the petitioner for contravention of Rule 9 (1), 52a, 53, 173g,173f read with Section 173 of the Rules. The petitioner replied to the showcause notice vide letter dt. 25. 11. 1977 and 20. 1. 1979 and denied their liability. Oral hearing was also given to the petitioner by respondent No. 2. Respondent No. 2 by order dated 23. 3. 1980 held that the stage for payment of duty ofcentral Excise on blended wool tops having more than 50% wool content waswhen the goods were cleared from the factory after giving to the petitionerallowance of duty of Central Excise paid on wool tops having 100% wool content. Being aggrieved by the said order dated 23. 3. 1980 of respondent No. 2,the petitioner preferred an appeal to the Board of Central Excise. Being aggrieved by the said order dated 23. 3. 1980 of respondent No. 2,the petitioner preferred an appeal to the Board of Central Excise. The Boardof Central Excise set aside the order of respondent No. 2 and observed thattaxable event in the case of duty of Excise is the manufacture of good andcharging Section is Section 3 of the Act. Rule 9 of the Rules only extends anoption or concession to an assessee to discharge the duty liability on a deferred basis at the time of removal. Thus, when the petitioner discharged theduty liability on the goods at the initial production stage when the topscame into existence, the duty cannot be levied again on the blendedwool tops produced from such duty paid wool tops. Thereafter, the Government of India in the exercise of powers under Section 36 (2) of the Centralexcise and Salt Act, 1944 (hereinafter referred to as the Act) issueda show cause notice dated 5. 9. 1981 to the petitioner as to why the orderof Board of Central Excise should not be set aside. The petitioner submitted its reply on 5. 10. 1981 and submitted that Rule 9 of the Rules couldnot over-ride the statutory provisions under the Act and as provided underthe Act, the liability to pay duty arose at the first stage of manufacture. However the Central Government set aside the order of the Board of Centralexcise and restored the order of Collector of Customs, Chandigarh. Thecentral Government held that though Section 3 is the charging section, themanner of collection is prescribed in the Rules and the Central Excise has to bepaid when goods are removed. The Central Government further relied onrule 51 A of the Rules and observed that in an integrated factory, duty hasnecessarily to be paid after blendig. Being aggrieved by this decision of thecentral Government, the petitionner has filed the present writ petition underarticle 226 of the Constitution of India, ( 2 ) IT was submitted by the learned Counsel for the petitioner that thetaxable event in the case of duties of Excise is the manufacture or productionof goods and that even excisable goods taken for captive consumption withinthe factory premises are liable to duty of excise at the first stage of manufacture. Learned Counsel relied on the circular issued by the Ministry on30. 6. Learned Counsel relied on the circular issued by the Ministry on30. 6. 1976 and the trade notice issued by the Collectorate of Bangalore in-support of his submission that since the petitioner had paid duty at the firststage of manufacture and since blended wool tops also fall under the sametariff no duty was payable at the later stage. Learned Counsel relied on J. K. Spinning and Weaving Mills Ltd. and Another v. Union of India and Others, 1987 (32)E. L. T. 234, Union of India and Others v. Delhi Cloth and General Mills Co.-Ltd. andothers, 1977 E. L. T. (J199), South Bihar Sugar Mills Ltd. and Another Etc. v. Union of lndia and Another Etc. , l978, E. L. T. (J336) and Collector of Centralexcise, Bombay v. Kiran Spinning Mills 1988 (34) E. L. T. 5 in support of hiscontention. ( 3 ) ON the other hand, it was submitted by the learned Counsel forthe respondent that though Section 3 of the Act is the charging Section, it doesnot decide the time at which the duty of excise is to be paid by a manufacturer. This section merely provides that the Excise Duty shall be leviable and collected in such manner as may prescrible, and the manner of collection has beenprescribed in Rule 9 of the Rules. Thus, the petitioner was required to payexcise on blended wool tops at the stage of the removal of the goods from thefactory premises. Learned Counsel further submitted that the trade noticeissued by the Collectora. te of Bangalore did not have a binding effect as far aschandigarh was concerned and the Central Government was right in disregarding the said trade notice. It was further submitted that the petitioner oughtto have made the necessary declaration under Rule 51a because the petitionerwas specifically prohibited from retaining such duty paid goods inside thefactory under Rule 51a. Thus, it was not open to the petitioner to contendthat since they had paid duty on 100% wool tops which were later on blendedthey were not liable to pay, duty on blended wool tops. ( 4 ) WE are unable to accept the contention of the learned Counsel forthe respondent. Under Sec. 3 (1) of the Act, the instance of excise duty is onthe manufacture or production of goods. The Supreme Court in J. . ( 4 ) WE are unable to accept the contention of the learned Counsel forthe respondent. Under Sec. 3 (1) of the Act, the instance of excise duty is onthe manufacture or production of goods. The Supreme Court in J. . K Spinningand Weaving Mills case (supra) while dealing with the question of collection ofduty leviable on production of a commodity at an intermediate stage of anintegrated process of manufacture of another commodity, held as follows : "the taxing event for excise duty under Sec. 3 of the Centralexcise Act is the production or manufacture of goods and notremoval. The Explanation added to Rules 9 and 49 by notificationno20/82-C. E, cotemplated the collection of duty levied on production of a commodity, at an intermediate stage of an integratedprocess of manufacture of another commodity by deeming such production or manufacture of the commodity at an intermediate stageto the removal. This deeming provisions are quite consistent withsection 3 of the Act. Moreover, Rule 9 (1) does not require the Collector to specify the place where the excisable goods are produced,cured or manufactured. The words "which may be specified by the. Collector in this behalf" occurring in Rule 9 (1) of the Rules do notqualify the words "any place where they are. produced, cured ormanufactured", but relate to or qualify the words "any premisesappurtenant thereto". In other words, if the place of removal isnot the place where the goods are produced, cured or manufactured,but any premises appurtenant to such place, in that case, the Collector has to specify such premises for the purpose of collection ofexcise duty. Accordingly, the amendment to Rules 9 and 49 bynotification No. 20/82-C. E. are legal and valid. "thus, the petitioner was obliged to pay duty at the stage of manufacture of100% wool tops and had no option but to pay the duty at that stage. The blending of more than 50/o of wool with synthetic yarn does not result inmanufacture of any new commodity or a different article. Therefore, there isno question of paying any duty at that stage once duty was paid at the firststage of manufacture of 100/o wool tops. The word "manufacture" has beendefined in the Act and is generally understood to mean as bringing intoexistence a new substance. Therefore, there isno question of paying any duty at that stage once duty was paid at the firststage of manufacture of 100/o wool tops. The word "manufacture" has beendefined in the Act and is generally understood to mean as bringing intoexistence a new substance. The Supreme Court in Delhi Cloth and General Mills scase (supra) has held that the mere processing of goods is not liable to Exciseduty and the word "manufacture" used as a verb is generally understood tomean as "bringing into existence a new substance". Undoubtedly, if the petitioner had not made the necessary declaration as required under Rule 51 A, theconsequences of violation of that Rule would follow, however that is not thequestion for consideration before us today nor is the question of retention ofgoods in the factory premises after manufacture of 100%, wool tops is a subjectof the show cause notice. In fact it is not urged and considered either beforethe Collector or the Central Board of Excise and Custom. The only question,therefore, which falls for our consideration is the stage at which Exciseduty was payable. We find in the impugned order the Central Governmenthas upheld the order of Collector on the ground that in an integrated factory,duty has necessarily to be paid after blending. To our mind, this reasoningis incorrect and contrary to the judgment of the Supreme Court in J. K. Spinning and Weaving Mills Limited case (supra ). In our view, since the petitionerhad discharged the liability on the 100% woolen tops when they were manufactured, no further duty was leviable on blended wool tops at the stage ofclearance particularly because the classification remained unchanged. ( 5 ) IN the circumstances, the writ petition is allowed. The order ofthe Central Government dated 20/07/1982 is quashed. However, therewill be no order as to costs.