Deeming fiction in exemption notification applies only when statutory preconditions are met, not for mere remnants of dismantled machinery.

Explanation II to Notification No. 42/98 was treated as applicable only where a hot air stenter was factually present and capable of triggering the deeming fiction. On the recorded facts, the stenter had been installed, then sealed at the assessee's request, and later substantially dismantled, with only part of the machinery remaining in the factory during the relevant period. The commentary states that the mere physical presence of remnants was insufficient to satisfy the notification's preconditions, so duty liability could not be fastened on that basis.

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Issues: Whether Explanation II to Notification No. 42/98 dated 10-12-98 applied so as to fasten duty liability on the assessee on the ground that a hot air stenter had been installed in the factory, notwithstanding that it was sealed and substantially dismantled during the relevant period.

Analysis: The decisive question was whether the factory had, during the relevant period, a hot air stenter capable of attracting the deeming fiction in Explanation II. The factual findings recorded showed that the stenter was installed in November 1998, sealed on the assessee's request on 1-2-1999, and thereafter the assessee informed the Department that it intended to dismantle the machine and restart production under the old schedule. The seal was not removed despite repeated requests, and by the time the notice period was in question, only a portion of the stenter remained in the factory. On these facts, the deeming provision could not be applied merely because some part of the stenter was physically present in the premises.

Conclusion: Explanation II did not apply on the facts and no duty liability could be fastened on that basis. The Revenue's challenge failed.

Ratio Decidendi: A deeming provision in a notification applies only when its factual preconditions are satisfied; mere physical remnants of installed machinery, after sealing and substantial dismantling, are insufficient to attract the levy.

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