Machinery manufactured and let out on hire

Hello members,

One of my clients carries out the following activity:

1. Manufacture of Hydrolic machinery in the factory and leasing the same on hire basis for a fixed rental.

- In this respect, I am inclined to know whether the machinery (capital goods) manufactured by my client (which is leased out and not sold) is leviable to excise duty?

- The activity of leasing out the machinery is of course, leviable to service tax under the category 'Supply of Tangible Goods Service'. But whether manufacture of the same is leviable to excise duty?

- In case, the law is not clear on the said issue, whether removal of the said machinery from the factory for the purpose of leasing out without payment of excise duty, amount to clandestine removal? 

Regards,

CA Yogesh A.Kulkarni