Worker-count exemption fails where contractor labour is included and the 49-worker limit is exceeded on any day in the prior year.

Persons engaged through contractors, including helpers used in the manufacturing process, must be counted as workers where the definition of "worker" under the Factories Act extends to employment direct or through any agency. On that basis, the factory's workforce exceeded the prescribed limit and the exemption claim was defeated. For Notification No. 54/75, the worker threshold applied by reference to any day within the preceding 12 months; if the factory had 49 or more workers on even one such day, the exemption was unavailable for the following year. A later bifurcation of the unit did not change the relevance of the earlier worker strength.

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Issues: (i) Whether persons engaged through contractors and their helpers could be counted as workers for determining eligibility to exemption under the notification; (ii) Whether the exemption under Notification No. 54/75 continued to be available for the subsequent year where the factory had had 49 or more workers on a day within the preceding 12 months.

Issue (i): Whether persons engaged through contractors and their helpers could be counted as workers for determining eligibility to exemption under the notification.

Analysis: The term "worker" under Section 2(1) of the Factories Act, 1948 covers a person employed directly or through any agency in any manufacturing process or work incidental to or connected with it. Since the helpers engaged through contractors were admittedly involved in the manufacture of the wooden cases and wooden articles, they fell within the statutory definition and had to be included while counting the number of workers employed in the factory.

Conclusion: The workers engaged through contractors were rightly counted, and the finding that the factory had more than 49 workers prior to 17-11-1975 was upheld against the assessee.

Issue (ii): Whether the exemption under Notification No. 54/75 continued to be available for the subsequent year where the factory had had 49 or more workers on a day within the preceding 12 months.

Analysis: The notification granted exemption only to goods produced in a factory where not more than 49 workers were working or were working with the aid of power on any day of the preceding 12 months. The wording made the worker threshold cumulative for the relevant preceding period, and the presence of more than 49 workers on even a single day within that period disqualified the unit from exemption for the following year. The change in bifurcation of the unit from 17-11-1975 did not alter the relevance of the worker strength for the preceding 12 months.

Conclusion: The exemption was not available for the period 18-11-1975 to 17-11-1976, and duty was leviable against the assessee.

Final Conclusion: The revision application failed, and the order confirming duty liability under the tariff entry was maintained.

Ratio Decidendi: For a worker-based exemption notification, all persons employed directly or through any agency in the manufacturing process must be counted, and the exemption is lost if the prescribed worker limit is exceeded on any day within the stipulated preceding period.

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