Excise valuation must deduct only effective duty after exemption notifications, not unreduced tariff duty.

The amended Explanation to Section 4(4)(d)(ii) of the Central Excises and Salt Act requires assessable value to be reduced only by the excise duty actually payable after giving full effect to any applicable exemption notification. The retrospective amendment, introduced by the Finance Act 1982, integrates exemption notifications into the valuation exercise and replaces the earlier two-stage method that deducted the full tariff duty before applying the notification. The operative effect is that the deductible amount is the effective duty in force after exemption, not the unreduced duty initially leviable under the tariff.

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Issues: Whether, after the insertion of the Explanation to Section 4(4)(d)(ii) of the Central Excises and Salt Act, 1944, the duty deductible from the wholesale price is the effective duty actually payable after giving effect to exemption notifications, or the higher duty initially leviable under the tariff before such exemption.

Analysis: The Explanation introduced by the Finance Act, 1982, with retrospective effect, integrates exemption notifications into the computation of value under Section 4(4)(d)(ii). The provision requires exclusion from assessable value only of the amount of duty of excise actually payable, and the Explanation clarifies that where an exemption notification is in force, the duty payable is the duty computed with reference to the statutory rate as reduced so as to give full and complete effect to the exemption. The Court held that the earlier two-stage method of first deducting the full tariff duty and then applying the notification no longer survives after the amendment, because the statute now mandates computation of the effective duty after taking the notification into account.

Conclusion: The deductible amount is only the effective duty of excise payable after applying the exemption notification, not the unreduced tariff duty leviable in the first instance.

Ratio Decidendi: Under Section 4(4)(d)(ii), as amended with retrospective effect, assessable value must be computed by deducting only the effective duty actually payable after giving full effect to any applicable exemption notification.

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