Exemption under Notification 30/2004-C.E. depends on actual manufacturing activity, not mere presence of disused factory machinery.

Exemption under Notification No. 30/2004-C.E. cannot be refused merely because obsolete machines remain installed in a factory when the assessee has ceased texturising activity and no longer has the facility to manufacture yarn or textured yarn. The relevant enquiry is whether the unit is in fact carrying on the notified manufacturing activity and retaining the prescribed manufacturing facility. Where the record shows that the machines are non-functional, registration has been surrendered, the department has been informed of the change, and the assessee is only procuring yarn and dyeing it, mere physical presence of disused machinery does not defeat the exemption.

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Issues: Whether exemption under Notification No. 30/2004-C.E. dated 09-07-2004 could be denied merely because disused machines remained in the factory, when the assessee had ceased texturising activity and had no facility to manufacture yarn or textured yarn.

Analysis: The assessee had discontinued the use of two machines, surrendered central excise registration, informed the department of its option to avail the notification, and filed the last returns up to the relevant date. The notification denied benefit only to a unit carrying out texturising and having the facility to manufacture yarn. The factual record showed that the machines were not functional, the assessee was procuring yarn from the market and only dyeing it, and there was no material to show that it retained the requisite manufacturing facility. Mere presence of disused machinery in the factory could not, by itself, defeat the exemption.

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

Final Conclusion: The appeal succeeded and the impugned order was set aside, with consequential relief.

Ratio Decidendi: Exemption cannot be denied under a notification that turns on actual manufacturing activity and availability of manufacturing facility merely because obsolete or disused machinery remains installed in the factory, when the factual position shows that the activity has ceased and the statutory conditions are otherwise satisfied.

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