JUDGMENT

Sen, J.-This appeal raises the question as to the scope and effect of the Explanation to Section 4(4)(d)(ii) of the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act ). The Explanation was added to clarify what would be the amount of duty which had to be deducted from the wholesale price for arriving at the assessable value of goods. The Delhi High Court in the case of I.T.C. Limited & Anr. v. Union of India1, took the view that by virtue of the Explanation only that amount of duty which was actually paid by the assessee after giving effect to various exemption notifications would qualify for deduction.

2. The contention of the appellant is that during the period in dispute, duty of excise was leviable under the Act at the rates specified in the First Schedule to the Act. Under Rule 8 of the Central Excise Rules, 1944 (hereinafter referred to as the Rules ) the Central Government had power to issue notifications for exempting the amount of duty of excise leviable on goods to the extent mentioned in such notifications. The Central Government had issued a series of notifications under which exemption was granted from levy of duty of excise. The language