Separate manufacturing units with exempt goods need not be clubbed into one licensed premises for excise control.

Two physically separated manufacturing units producing goods under different tariff items were not required to be treated as one composite licensed premises for excise purposes. The billet unit manufactured fully exempt billets, and the relevant notifications also excluded such exempted manufacturing units from licensing control. Common partners, a broad overlap in premises, internal use of billets in the rolling section, and the absence of separate Factories Act registration did not by themselves destroy the separate identity of the units. The Department could not insist on a combined ground plan or joint licence where the notifications granted exemption and the units remained distinct in substance.

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Issues: Whether an adjoining unit manufacturing fully exempted billets could be compelled to be included in the same ground plan and licensed together with the rolling mill unit manufacturing sheets and circles.

Analysis: The two units were physically separated by a wall and manufactured goods falling under different tariff items. Billets were fully exempt from duty and the relevant notifications also exempted units manufacturing such exempted goods from licensing control. Common partners, common premises in a loose sense, internal consumption of billets in the rolling section, or absence of separate registration under the Factories Act did not by themselves make the two units a composite mill for excise purposes. Separate identity of the units and the availability of exemption under the notifications prevented the Department from insisting on one combined licence.

Conclusion: The demand to treat the billet unit and the rolling mill as one composite licensed premises was not sustainable, and the assessee was entitled to separate treatment.

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