Exemption eligibility depends on the relevant factory's facilities, not proximity or common utilities between separate units.

An exemption under Notification No. 5/98-C.E. was available to a separate factory used for dyeing yarn because the notification turned only on whether that factory lacked facilities for producing single yarn. The unit had separate Central Excise registration and there was no dispute that it did not have such production facilities, so eligibility had to be assessed by reference to that unit alone. Factors such as proximity to another unit and common utilities were irrelevant to the notification's condition. The exemption was therefore available and denial of the benefit was unsustainable.

---

---

Issues: Whether the assessee was entitled to the benefit of Notification No. 5/98-C.E. dated 02.06.1998 for dyeing of yarn carried out in a separate unit.

Analysis: The notification extended exemption to a factory, subject only to the condition that the factory should not have facilities for producing single yarn. The record showed that the unit in question was a separate factory with separate Central Excise registration, and there was no dispute that it had no facility for producing single yarn. The factors relied upon in the impugned order, such as proximity of the units and common utilities, were held to be irrelevant to the notification's eligibility condition.

Conclusion: The assessee was entitled to the exemption and the denial of the benefit was unsustainable.

Final Conclusion: The appeal succeeded and the impugned order was set aside, granting the exemption benefit to the assessee.

Ratio Decidendi: Where an exemption notification applies to a factory and the sole limiting condition is absence of facilities for producing a specified product, eligibility must be determined by the existence of such facilities in the relevant factory and not by extraneous considerations such as common utilities or physical proximity between units.

---