Exemption notification for State Government factories prevents clubbing of clearances, preserving the benefit for eligible manufacturers.

Notification No. 8/2003-CE provides that, where specified goods are manufactured in a factory belonging to or maintained by a State Government or other listed public body, only the clearances from that factory are to be considered for exemption. On that basis, clearances from a factory of the Water Resources Department of a State Government could not be clubbed with other clearances as argued by the Revenue. The respondents were therefore entitled to the exemption benefit, and the Revenue's challenge failed.

---

---

Issues: Whether the respondents were entitled to the benefit of Notification No. 8/2003-CE dated 01.03.2003 and whether the clearances from a factory belonging to or maintained by the State Government could be clubbed with other clearances for the purpose of the exemption.

Analysis: The Notification contained a specific clause that, where the specified goods are manufactured in a factory belonging to or maintained by the Central Government, a State Government, a State Industries Corporation, a State Small Industries Corporation or the Khadi and Village Industries Commission, the value of excisable goods cleared from such factory alone is to be taken into account. Since the goods were manufactured in a factory of the Water Resources Department of the State Government, the clearances from that factory could not be clubbed on the basis urged by the Revenue.

Conclusion: The respondents were entitled to the benefit of the exemption notification and the Revenue's appeal failed.

---