Commercial production, not trial runs, determines excise exemption eligibility for newly set up cement factories.

The exemption notification for newly set up cement factories was held to use "production" in the sense of commercial production, not mere trial runs. Whether a unit had crossed into commercial production depended on the surrounding facts, and the record showed substantial cement manufacture and sales in 1981, excise compliance, and duty payment on that output. As the 1981 and 1982 production figures showed no material distinction indicating trial production only, the excise authorities' view that commercial production had commenced in 1981 was not unreasonable, and the petitioner was treated as not entitled to the exemption.

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Issues: Whether the expression "production" in the exemption notification meant commercial production, and whether the petitioner had commenced commercial production before 1 January 1982 so as to be entitled to the excise exemption.

Analysis: The notification was issued to extend relief to newly set up cement factories, and the term "production" had to be read as commercial production rather than mere trial production. Whether a factory had crossed from trial runs to commercial production depended on the surrounding facts. On the record, the petitioner had manufactured and sold substantial quantities of cement in 1981, had maintained excise records, and had paid duty on that production. The production figures for 1981 and 1982 did not show any material distinction suggesting that 1981 output was only trial production. The conclusion of the excise authorities that commercial production had commenced in 1981 was therefore not shown to be unreasonable.

Conclusion: The petitioner had commenced commercial production in 1981 and was not entitled to the exemption; the issue was decided against the petitioner.

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