Exempt excise goods excluded from slab computation for central duty where the charging provision does not require inclusion.

Goods exempted from excise duty under a valid statutory notification are treated as outside the levy scheme for the relevant purpose, so their quantity cannot be included when computing the aggregate quantity of paints for slab-based central excise duty. Reading the charging provision and exemption scheme together, the court reasoned that neither Section 3 nor Item 14 required exempt goods to be counted once the exemption under Rule 8(1) applied. The exemption notification had the same force as if incorporated into the Act, and the excluded goods ceased to be excisable for slab determination. The assessee was therefore entitled to relief.

---

---

Issues: Whether the quantity of an excisable product exempted from duty under a notification could be included for computing the aggregate quantity of paints for determining the slab rate of central excise duty.

Analysis: The relevant scheme of levy and exemption had to be read together. Even assuming the product fell within Item 14 of the First Schedule to the Central Excises and Salt Act, 1944, once it stood exempted under Rule 8(1) of the Central Excise Rules, 1944, there was nothing in Section 3 or Item 14 indicating that the quantity of exempted goods should still be counted for slab determination. An exemption notification issued under statutory power has the same force as if incorporated in the Act, and exempted goods are treated as taken out of the Schedule and cease to be excisable goods for the relevant purpose.

Conclusion: The exempt product could not be included in the quantity of paints used for fixing the slab rate of excise duty, and the assessee was entitled to relief.

Final Conclusion: The exclusion of the exempted product from slab computation was upheld, the impugned excise orders were quashed, and refund was directed.

Ratio Decidendi: Goods exempted from excise duty by a valid notification under the statute are excluded from the levy scheme for determining slab-based excise liability, unless the charging provision expressly requires their inclusion.

---