Factory-based exemption limits require aggregation of clearances by multiple manufacturers using the same premises.

Where an exemption notification limits clearances by reference to a factory, clearances from the same premises by two manufacturers in the same financial year must be aggregated if the notification does not define "factory" differently. Applying the ordinary meaning of factory as the place where manufacture is carried on, the combined clearances were treated as one for the prescribed ceiling. As the aggregate exceeded the limit, the exemption could not extend to the excess clearances, and the Revenue's contention on the demand issue succeeded. The matter was remanded only for consideration of the limitation plea.

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Issues: Whether the benefit of Notification 175/86 was available when the same factory had been used by two separate manufacturers during the financial year and the aggregate clearances exceeded the prescribed ceiling.

Analysis: Paragraph 2 of Notification 175/86 restricts the aggregate value of clearances of specified goods from any factory by one or more manufacturers in a financial year. The term "factory" is not defined in the notification and was construed according to its ordinary meaning as the premises where manufacture takes place. On that construction, clearances from the same factory by both manufacturers had to be clubbed for the purpose of applying the monetary limit. Once the combined clearances exceeded the ceiling, the exemption could not continue to apply to the excess clearances.

Conclusion: The assessee was not entitled to the notification benefit for clearances exceeding the prescribed limit, and the Revenue's appeal succeeded on this point.

Final Conclusion: The demand issue was decided in favour of the Revenue, but the matter was sent back for consideration of the limitation plea.

Ratio Decidendi: For exemption notifications limiting clearances by reference to a factory, clearances from the same premises by multiple manufacturers are to be aggregated according to the ordinary meaning of "factory" unless the notification defines the term differently.

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