Composite excise exemption applies to total duty liability, including regulatory duties, without reassessing assessable value.

An exemption notification granting relief from duty leviable on goods was construed to cover the entire composite excise levy, including regulatory duty and additional regulatory duty, because the notification referred to the duty chargeable on the goods as a whole. The benefit could not be confined to basic duty alone. The Court also held that the exemption had to be worked out by deducting the duty referable to the exempted value from the total duty liability, rather than by first altering the assessable value and then applying the exemption. That approach would distort the notification and duplicate the benefit. The assessees' method was therefore upheld.

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Issues: (i) Whether the regulatory duty and additional regulatory duty formed part of the excise duty leviable for the purpose of the exemption notification; (ii) Whether the exemption under the notification was to be worked out by reducing the duty directly from the total excise liability or by first altering the assessable value and then applying the exemption.

Issue (i): Whether the regulatory duty and additional regulatory duty formed part of the excise duty leviable for the purpose of the exemption notification

Analysis: The exemption notification granted relief from so much of the duty leviable as was equivalent to duty calculated on a specified value per tonne. The Court treated the regulatory duty as forming part of the excise levy, and held that the expression used in the notification covered the entire duty chargeable on the goods. The exemption could not be confined only to basic duty and excluded from the regulatory component when the levy itself was composite.

Conclusion: The regulatory duty and additional regulatory duty were held to be included within the duty leviable for purposes of the exemption notification, in favour of the assessee.

Issue (ii): Whether the exemption under the notification was to be worked out by reducing the duty directly from the total excise liability or by first altering the assessable value and then applying the exemption

Analysis: The Court held that the notification operated on the duty leviable on the goods and not on a notional reassessment of the assessable value after giving effect to the exemption. The Revenue's method was found to apply the exemption twice and to distort the language and object of the notification. The correct method was to determine the total duty liability and then deduct the duty referable to the exempted value specified in the notification, which preserved the benefit intended for manufacturers.

Conclusion: The exemption was to be worked out by deducting the duty on the exempted value from the total duty leviable, in favour of the assessee.

Final Conclusion: The common challenge to the exemption computation failed, and the method adopted by the assessees was upheld as giving effect to the notifications in their true sense.

Ratio Decidendi: An exemption notification granting relief from duty leviable on goods must be construed according to its language as operating on the total duty chargeable on the goods, and not by an additional reassessment of assessable value that nullifies or duplicates the statutory benefit.

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