Exemption notification under delegated excise power can extinguish leviability, keeping rayon tyre cord fabrics outside the sales tax exemption entry.

Rayon tyre cord fabrics were treated as outside entry 41 of Schedule A because the exemption notification issued under rule 8(1) gave them full exemption from the additional duty of excise, and section 3(3) made that exemption part of the statutory levy scheme. Once the whole duty was exempted under valid delegated power, no additional duty remained leviable during the currency of the notification, so the exclusion in entry 41 did not apply. The goods therefore fell under entry 10A of Schedule C and were taxable.

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Issues: Whether rayon tyre cord fabrics were exempt from sales tax under entry 41 of Schedule A to the Bombay Sales Tax Act, 1959, and whether the exemption notification under rule 8(1) of the Central Excise Rules, 1944, prevented the additional duty of excise from being leviable so as to exclude the goods from the exemption entry.

Analysis: Entry 41 of Schedule A excluded rayon or artificial silk tyre cord fabrics on which additional duty of excise was not leviable or was not levied under the Additional Duties of Excise (Goods of Special Importance) Act, 1957. Section 3(1) of that Act provided for levy and collection of additional duty, while section 3(3) made the Central Excises and Salt Act, 1944 and the rules made thereunder, including exemption provisions, applicable to such levy and collection. The notification issued under rule 8(1) exempted rayon tyre cord fabrics from the whole of the additional duty. Such exemption had statutory force and operated as part of the levy scheme itself. Once the whole of the duty was exempted under the statutory rule-making power, no additional duty remained leviable during the subsistence of that exemption.

Conclusion: The goods did not fall within entry 41 of Schedule A and were not exempt from tax; they fell under entry 10A of Schedule C and were taxable. The answers to the questions were against the assessee and in favour of the Revenue.

Ratio Decidendi: A valid exemption notification issued under delegated statutory power, where the parent enactment makes such exemptions applicable to levy and collection, has the same effect as if incorporated in the Act and may extinguish leviability itself.

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