Factory boundary for excise removal: goods leaving the premises before the cut-off time do not attract the time-based penalty.

For a time-based restriction on removal of excisable goods, the controlling question is whether the goods remained within the factory premises or precincts after the prohibited hour. The Court treated "factory" as the area where manufacturing activity is carried on or ordinarily carried on, and held that goods which had already moved beyond those precincts before 5 p.m. were no longer within the factory. Mere stoppage of vehicles in an open space outside the manufacturing premises did not amount to retention in the factory, so Rule 224(2) was not contravened and the penalty was set aside.

---

---

Issues: Whether the sugar bags were removed from the factory after 5 p.m. so as to attract Rule 224(2) of the Central Excise Rules, and whether the place where the vehicles were stopped still formed part of the factory within the meaning of the definition clause.

Analysis: The goods had left the warehouse before 5 p.m. and had also moved out of the factory premises before that time. The definition of "factory" in Section 2(c) of the Central Excise and Salt Act, 1944 requires the premises or precincts to be those where manufacture or a connected manufacturing process is carried on or ordinarily carried on. The vehicles were stopped only in an /open space outside the premises or precincts where manufacturing activity was taking place, so the goods could not be treated as remaining within the factory after 5 p.m.

Conclusion: Rule 224(2) was not contravened, and the penalty was unlawful.

Final Conclusion: The levy of penalty was held to be without authority of law and the penalty order was quashed, with directions for refund of any amount already paid.

Ratio Decidendi: For the purpose of a time-based restriction on removal of excisable goods, goods cease to be within the factory once they have moved beyond the premises or precincts where manufacturing activity is carried on, and mere passage through an open area outside those precincts does not amount to removal from the factory after the prohibited time.

---