Warranty replacement goods remain dutiable on clearance unless a specific exemption notification applies.

Goods cleared as free replacements during the warranty period remain liable to excise duty at the time of clearance unless a specific exemption notification applies. The warranty or guarantee clause is treated as a commercial arrangement and does not, by itself, confer duty-free status under Section 5A of the Central Excises & Salt Act, 1944. Where no exemption notification covers the replacements and there is no material showing their value was already included in the price list, duty exemption cannot be claimed. Authorities cited on valuation were found inapplicable because the dispute concerned exemption from duty, not valuation.

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Issues: Whether excise duty was payable on goods cleared as free replacements during the warranty period, and whether the absence of an exemption notification under Section 5A of the Central Excises & Salt Act, 1944 entitled the appellant to duty-free clearance.

Analysis: The goods were held to be liable to duty at the time of clearance irrespective of the warranty or guarantee clause. The warranty clause was treated as a usual commercial stipulation and not as a basis for exemption. No exemption notification covered such free replacements, and there was also no material showing that the value of replacements under warranty had been included in the price list. The cited decisions were found inapplicable because they concerned valuation issues and not duty exemption.

Conclusion: The claim for duty-free clearance of replacement goods was rejected and the appeal failed.

Ratio Decidendi: Goods manufactured and cleared as warranty replacements remain dutiable on clearance unless an exemption notification specifically provides otherwise.

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