Exemption does not change excisable status, allowing clubbing of factory clearances under a later notification.

Goods exempted by an earlier notification do not cease to be excisable goods, because Section 2(d) describes goods specified in the First Schedule and does not depend on actual levy of duty in a particular case. Section 3 remains the charging provision, while Rule 8(1) only exempts duty to the extent stated in the notification. On that basis, the exemption granted to the Goa unit did not remove its clearances from the excisable goods base for applying Notification No. 176/1977, and clubbing clearances from both factories was valid.

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Issues: Whether goods exempted from duty under one notification cease to be excisable goods for the purpose of applying a later exemption notification and determining liability on clubbed clearances from more than one factory.

Analysis: The definition of "excisable goods" under Section 2(d) is descriptive of goods specified in the First Schedule and does not depend upon the actual levy of duty in a given case. Section 3 is the charging provision, while Rule 8(1) authorises exemption from the whole or part of the duty leviable on excisable goods. An exemption granted by notification does not alter the character of the goods as excisable goods; it only relieves them from payment of duty to the extent stated in the notification. The earlier exemption for the Goa unit therefore did not take those goods out of the category of excisable goods for the purpose of Notification No. 176/1977.

Conclusion: The clearances from the Goa factory remained part of the excisable goods base, and the proposed clubbing of clearances from both factories for applying Notification No. 176/1977 was valid. The challenge failed.

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