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Issues Involved:
1. Whether goods exempted from Excise Duty under a notification issued u/r 8 of the Central Excise Rules, 1944, cease to be excisable goods within the meaning of Section 2(d) of the Central Excise and Salt Act, 1944. Summary: Issue 1: Definition and Exemption of Excisable Goods The petitioner, engaged in manufacturing rubber chappals and transmission rubber beltings, contended that goods exempted from Excise Duty under Rule 8 cease to be excisable goods. The Central Government had issued notifications exempting certain goods from Excise Duty, including footwear valued not exceeding Rs. 30 per pair and goods with aggregate clearances not exceeding Rs. 5 lacs (later raised to Rs. 7.5 lacs). Issue 2: Show Cause Notice and Licensing Requirements The petitioner was served a show cause notice for manufacturing and clearing excisable goods without obtaining an L-4 license and without paying Central Excise Duty, as the aggregate value of clearances exceeded Rs. 20 lacs during the financial years 1979-80, 1980-81, and 1981-82. The respondents argued that the value of rubber chappals should be included in computing the aggregate value of clearances for determining the exemption eligibility. Issue 3: Legal Precedents and Divergence of Opinions The court noted a divergence of opinions among various High Courts. The Madhya Pradesh and Allahabad High Courts held that excisable goods cease to be excisable after total exemption from duty. However, the Patna, Delhi, Karnataka, Andhra Pradesh, and Madras High Courts, along with the CEGAT, held that exempted goods remain excisable. Issue 4: Interpretation of 'Excisable Goods' The court examined the definition of "excisable goods" u/s 2(d) and concluded that goods specified in the First Schedule remain excisable even if exempted from duty. The exemption does not alter their status as excisable goods, and they remain liable to excise duty unless explicitly removed from the Schedule by Parliament. Conclusion: The court dismissed the petition, holding that rubber chappals did not cease to be excisable goods due to the exemption granted u/r 8. The petitioner's contention was rejected, and the show cause notice and demand for duty were upheld. The petition was dismissed with costs.
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