Open yard as factory and integral engine value included in assessable value; exemption claims failed for lack of proof.

An open yard used for boat-building was treated as a factory because the statutory term "premises" was wide enough to include open land. The exemption notifications tied to worker strength and use of power were denied because the assessee failed to prove eligibility, and the recorded evidence showed 100 workers engaged in manufacture. The value of customer-supplied engines was included in assessable value because the boats were incomplete without engines and the engines formed an integral part of the finished mechanised boats, not a separate job-work item.

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Issues: (i) whether an open yard used for boat-building could be treated as a factory for the purposes of excisability; (ii) whether the assessee was entitled to exemption under the notifications relating to the number of workers and use of power; and (iii) whether the value of the engine supplied by customers was excludible from assessable value on the footing that its installation was merely job work.

Issue (i): whether an open yard used for boat-building could be treated as a factory for the purposes of excisability.

Analysis: The expression "premises" in the definition of factory was treated as wide enough to include open land and not merely enclosed buildings. On that construction, an open yard used for manufacture could answer the description of a factory.

Conclusion: The open yard was rightly treated as a factory; this issue was decided against the assessee.

Issue (ii): whether the assessee was entitled to exemption under the notifications relating to the number of workers and use of power.

Analysis: A statement recorded from the manager showed that 100 workers were engaged in the manufacture of the boats. The assessee failed to discharge the burden of proving eligibility to the exemption. In view of that finding, the separate controversy about workers in the saw mill and the precise use of power became immaterial.

Conclusion: The exemption was not available; this issue was decided against the assessee.

Issue (iii): whether the value of the engine supplied by customers was excludible from assessable value on the footing that its installation was merely job work.

Analysis: The boats were of special design and were incomplete without the engine. The engine was therefore an integral part of the finished mechanised boat and not a mere accessory. What was delivered to the customer was a completed manufactured boat, not a separate engine installation service.

Conclusion: The engine value was includible in the assessable value and the job-work contention failed; this issue was decided against the assessee.

Final Conclusion: The revision failed on all substantial grounds because the open yard was a factory, the exemption conditions were not proved, and the engine formed part of the excisable finished goods.

Ratio Decidendi: An open yard may constitute a factory for excise purposes where the statutory definition of premises is broad enough, exemption notifications must be strictly proved by the claimant, and components that are integral to the manufactured article are includible in assessable value.

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