Excise duty on non-factory production under Tariff Item 68 was negatived where units were not factories under the Factories Act.

Goods assembled in units that were not factories within the meaning of the Factories Act were treated as outside the charge of central excise duty under Tariff Item 68 on the facts found. The Board recorded that the assessee and its sister concern were not factories, and held that the exemption position had been misunderstood below. The impugned orders were therefore misconceived, the liability to duty was negatived, and the appeal was allowed in favour of the assessee.

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Issues: Whether goods assembled in units not constituting factories within the meaning of the Factories Act were liable to central excise duty under Tariff Item 68, and whether the exemption notification applied to such production.

Analysis: The Board noted that it was undisputed that the assessee and its sister concern were not factories within the meaning of the Factories Act. On that footing, their production did not attract duty under Tariff Item 68. The Board held that the Additional Collector had proceeded on an incorrect understanding of the exemption position and that the orders were misconceived.

Conclusion: The liability to duty was negatived, and the appeal was allowed in favour of the assessee.

Final Conclusion: Production carried on in units that were not factories was not liable to central excise duty under Tariff Item 68 on the facts found, and the impugned orders were set aside.

Ratio Decidendi: Where the goods are produced in units that are not factories within the meaning of the Factories Act, Tariff Item 68 does not fasten excise duty on such production on the facts found.

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