Exemption at manufacture protects goods from later excise duty despite withdrawal of the exemption notification.

Excise duty could not be levied on goods that were fully exempt on the date of manufacture, even though the exemption notification was later withdrawn before removal from the factory. The goods had been manufactured from drawn waste and had already acquired exemption at manufacture, so the subsequent rescission of the notification did not change their duty-free status. The issue whether transfer from a bonded storeroom to a duty-paid storeroom amounted to removal for duty purposes was therefore left undecided. Duty was not leviable on the goods, and the assessee succeeded.

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Issues: Whether excise duty could be levied on goods which were fully exempt when manufactured, merely because the exemption notification was rescinded before their actual removal from the factory.

Analysis: The goods were found to have been manufactured out of drawn waste and to have been covered by the exemption notification when manufactured. The subsequent withdrawal of the notification did not alter the legal position where the goods had already earned exemption at the time of manufacture. In these circumstances, the question whether clearance from a bonded storeroom to a duty-paid storeroom amounted to removal for the purpose of duty liability did not require decision.

Conclusion: Duty was not leviable on the impugned goods, and the assessee succeeded.

Ratio Decidendi: Where excisable goods are fully exempt on the date of manufacture, later withdrawal of the exemption does not attract duty on their subsequent removal.

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