Excise exemption does not alter excisable character, so exempted goods count toward later exemption eligibility.

Exemption from excise duty under a Rule 8 notification does not remove goods from the statutory definition of excisable goods in section 2(d) if they remain specified in the First Schedule. The notification only suspends the duty levy; it does not alter the goods' excisable character. On that basis, the value of the exempted rubber chappals could be included when computing the aggregate clearance value for eligibility under a later exemption notification. The writ petition therefore failed, and the Revenue's position was upheld.

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Issues: Whether goods exempted from excise duty under a notification issued under Rule 8 of the Central Excise Rules, 1944 cease to be excisable goods within the meaning of Section 2(d) of the Central Excise and Salt Act, 1944, and whether their value can be taken into account while computing eligibility for exemption under another notification.

Analysis: The definition of excisable goods in Section 2(d) turns on whether goods are specified in the First Schedule as being subject to excise duty. The Court held that exemption granted by notification under Rule 8 only relieves the manufacturer from payment of duty; it does not delete the goods from the First Schedule or alter their character as excisable goods. The words used in the definition are descriptive of the goods and do not mean that duty must actually be levied for the goods to remain excisable. Since the exempted rubber chappals continued to be goods specified in the Schedule, their value could be included in computing the aggregate clearance value for the later exemption notification.

Conclusion: Goods exempted from duty under a Rule 8 notification do not cease to be excisable goods, and their value remains relevant for computing exemption eligibility. The finding is against the petitioner and in favour of the Revenue.

Final Conclusion: The writ petition failed because the exemption notification did not change the excisable character of the goods, with the result that the clearance value of the exempted goods could be counted for the purposes of the second exemption scheme.

Ratio Decidendi: Exemption from excise duty by notification does not alter the statutory character of goods as excisable goods where they remain specified in the First Schedule; it only suspends the levy of duty.

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