Exemption notification must reduce duty on actual assessable value, not create a higher excise burden through recalculation.

An exemption notification granting relief for manufacturers using duty-paid unmanufactured tobacco had to be applied by first computing excise duty on the actual assessable value under Section 4 of the Central Excises and Salt Act, 1944, and then deducting the notified relief. The notification could not be construed to reduce the excise component first and recalculate duty on an artificially enhanced assessable value, because that would defeat the purpose of the concession and create a heavier burden than the duty otherwise leviable. The impugned demand was therefore unsustainable, and the petitioners were entitled to the exemption in the manner claimed.

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Issues: Whether an exemption notification under the Central Excise Rules could be construed so as to increase the assessable value and thereby impose a higher excise liability on the manufacturer instead of granting the intended relief.

Analysis: The notification was issued to grant a concession to manufacturers using duty-paid unmanufactured tobacco. The proper approach was to compute excise duty on the existing assessable value under Section 4 of the Central Excises and Salt Act, 1944, and then deduct the relief contemplated by the notification. The respondents' method, by reducing the excise component first and then recalculating duty on an artificially enhanced assessable value, would make the sale price notionally exceed the actual sale price and would defeat the object of the exemption. A notification granting relief cannot be interpreted so as to create a heavier burden than existed before.

Conclusion: The impugned demand was unsustainable and the petitioners were entitled to the exemption in the manner claimed, not to a higher duty liability.

Ratio Decidendi: An exemption notification granting specified duty relief must be applied by computing duty on the actual assessable value and deducting the notified relief; it cannot be read to increase the assessable value or impose a greater excise burden than the duty otherwise leviable.

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