Factory-based use of self-manufactured capital goods qualified for excise exemption under the notification.

Capital goods manufactured by an assessee during setting up of a cement plant and used within the same premises were treated as eligible for exemption under Notification No. 67/95-C.E. The applicable test was whether the premises qualified as a "factory" under Section 2(e) of the Central Excise Act; once excisable goods were being manufactured there, that requirement was satisfied. Because the goods were manufactured and used within the same factory premises, the notification conditions were met. The interpretation was also consistent with the assessee's earlier case, and the denial of exemption was held unsustainable.

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Issues: Whether capital goods manufactured by the assessee in the course of setting up its cement plant and used within the same premises were entitled to exemption under Notification No. 67/95-C.E., and whether the premises could be treated as a factory for that purpose.

Analysis: The notification exempts capital goods manufactured in a factory and used within the factory of production. The Court held that once excisable goods were being manufactured on the premises, the definition of "factory" in Section 2(e) of the Central Excise Act was satisfied. The assessee's goods were capital goods manufactured and used within the same factory premises, and the conditions of the notification were therefore met. The earlier decision in the assessee's own case was also relied upon as supporting the same interpretation.

Conclusion: The assessee was entitled to the benefit of Notification No. 67/95-C.E., and the denial of exemption was unsustainable.

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