Exemption under Notification No. 30/2004-C.E. cannot be denied merely because unused machinery is present in the factory.

Notification No. 30/2004-C.E. was construed as denying exemption only where the manufacturer had factory facilities for manufacture of yarns or textured yarn. On the recorded facts, the texturising machines were unused and disconnected from power, and the appellant was not shown to possess the relevant manufacturing facility. Mere physical presence of machinery was therefore insufficient to deny the benefit, and the departmental reading of the notification was held to be misplaced. The appellant was consequently found entitled to waiver of pre-deposit and stay of recovery pending disposal of the appeal.

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Issues: Whether the appellant was liable to pre-deposit duty and penalty on the ground that the benefit of Notification No. 30/2004-C.E. dated 9-7-2004 was unavailable because texturising machines were present in the factory, though allegedly unused and without power connection.

Analysis: The notification was read as granting benefit where the manufacturer did not have facilities in the factory for manufacture of yarns or textured yarn. On the facts recorded, the machinery relied upon by the department was unused and disconnected from power, and the appellant was not shown to have the relevant manufacturing facility. Mere presence of such machinery was held insufficient to deny the exemption. The departmental view was found to rest on a misreading of the notification.

Conclusion: The appellant was held entitled to waiver of pre-deposit and stay of recovery pending disposal of the appeal.

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