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Issues: Whether inputs removed under exemption can be treated as bearing duty of excise leviable for the purpose of availing benefit under the exemption notification.
Analysis: The notification required that the final products be manufactured from inputs on which duty of excise leviable under the Central Excise Tariff or Customs Tariff had already been paid. The expression "duty leviable" was read as referring to duty payable at the appropriate rate, and the fact that the inputs were cleared under a valid exemption did not mean that no duty had been discharged. Nil duty was treated as duty paid at the applicable rate, and the words in the notification could not be delinked from that statutory context.
Conclusion: Inputs cleared under exemption were held to satisfy the requirement of duty leviable, and the benefit under the notification was available.
Final Conclusion: The common issue was answered in favour of the assessee on the substantive interpretation of the exemption notification, resulting in rejection of the Revenue appeal in one matter and allowance of the assessee's appeal in the other.
Ratio Decidendi: Where an exemption notification requires duty leviable on inputs to have been paid, clearance of inputs under a valid nil-rate exemption can constitute payment of duty at the appropriate rate for satisfying the notification.
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