JUDGMENT

Sen, J.-The only point that falls for determination in this appeal is whether the benefit of exemption given to footwear can be claimed by the manufacturer even where the wholesale price of the footwear exceeds the limit of the exemption specified in the notification. There can be no dispute that if the assessable value calculated according to Section 4 of the Central Excise and Salt Act, comes upto or below the limit set by the notification, the assessee will be entitled to the benefit of the notification.

2. The notification which was originally issued under sub-rule (1) of Rule 8 of Central Excise Rules, 1944 exempted footwear the value of which did not exceed Rs. 5/- per pair from the whole of the duty of excise leviable thereon. The exemption limit of Rs. 5/- per pair has been enhanced from time to time and at the material time, for the purpose of this case, the exemption was limited to footwear the value of which was upto Rs. 60/- per pair.

3. Mr. Shanti Bhushan on behalf of the respondent has contended that if excise duty was payable on these shoes, the amount of excise duty had to be deducted from the wholesale price in order to determine the assessable value of the shoes which was less than the limit set by the exemption notification. If this is not allowed, the Department will claim excise duty even on shoes which would otherwise qualify for benefit of exemption notification because of the lower value. To illustrate this point, Mr. Shanti Bhushan has argued that when the exemption notification was limited to Rs. 60/- per pair of shoes, there would be no difficulty in cases where the wholesale price was upto Rs. 60 or less. There can be no dispute that in respect of these types of shoes, no excise duty will be leviable. If the shoes were priced at Rs. 60/- and above, the excise duty will be levied. But, if the wholesale price was at Rs. 62/- or Rs. 66/-, in such a case, after deduction of excise duty at the rate of 10%, the value of the goods will be in the range of Rs. 56.36 to Rs. 60.00. Mr. Shanti Bhushan has contended that even in such cases when by deducting excise duty payable on goods, the value has been arrived at the price of Rs. 60/- or less, the question of levying excise duty will not arise. To demonstrate his argument, he has given a chart:-

Wholesale Price Rate Deduction Value after discounts of on account as per

etc. Duty of duty Section 4

Rs.56.00 10% Rs.5.09 Rs.50.91

Rs.58.00 10% Rs.5.27 Rs.52.73

Rs.60.00 10% Rs.5.45 Rs.54.55

Rs.62.00 10% Rs.5.64 Rs.56.36

Rs.64.00 10% Rs.5.82 Rs.58.18

Rs.66.00 10% Rs.6.00 Rs.60.00

Rs.68.00 10% Rs.6.18 Rs.61.82

Rs.70.00 10% Rs.6.36 Rs.63.64

Rs.72.00 10% Rs.6.55 Rs.65.45

4. It was argued that in respect of the first three items of which the wholesale price (after trade discount etc.) was Rs.56.00, Rs.58.00 or Rs.60.00, there was no controversy that these were exempted. There was also no controversy in respect of the last three items of which the wholesale price (after trade discount etc.) was Rs.68.00, Rs.70.00 or Rs.72.00. The controversy is restricted to the items in the second category, where the wholesale price after trade discount etc. was in the range of Rs.62.00, Rs.64.00 or Rs.66.00. In these cases, if the excise duty element was taken away, the value will become Rs.60.00 or less. Applying rules of valuation laid down in Section 4 of the Act, no duty was payable even on shoes under this catergory.

5. Mr. Shanti Bhushan has contended that if excise duty is payable on these shoes, then the duty element has to be deducted from the wholesale price in order to ascertain the assessable value under Section 4. Once excise duty at the rate of 10% is taken o