Proprietary interest in partnership firms can trigger shared excise exemption, limiting full benefit across multiple processing factories.

An excise exemption proviso limiting the first 20,000 sq. metres benefit where a person has proprietary interest in more than one processing factory was held to apply to partnership holdings. A partner's interest in a firm was treated as proprietary interest for the notification, so the exemption had to be shared proportionately between factories where the same person had an interest in more than one qualifying unit. The argument that the proviso covered only direct individual ownership and not partnership interests was rejected because the wording of the notification was broad enough to include such interests. The petitioners' claim for separate full exemption therefore failed.

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Issues: Whether the proviso to the excise exemption notification requiring sharing of the first 20,000 sq. metres exemption where a person has proprietary interest in more than one processing factory applied when the common interest arose through partnership holdings.

Analysis: The exemption under the notification was available to processing factories, but the proviso restricted the benefit where a person had proprietary interest in more than one such factory and the aggregate clearances exceeded the stipulated limit. A partner in a partnership firm was treated as having proprietary interest in the firm. Where the same partner had an interest in more than one processing factory, the language of the proviso required the exemption to be shared proportionately among those factories. The contention that the proviso was confined only to direct individual ownership and did not extend to partnership interests was rejected as unsupported by the wording of the notification.

Conclusion: The proviso applied to the petitioners, and the claim for separate full exemption failed.

Final Conclusion: The writ petitions were not sustainable because the exemption benefit had to be apportioned between the factories in view of the common proprietary interest of the partners.

Ratio Decidendi: For the purposes of an exemption proviso framed in terms of proprietary interest, a partner's interest in a partnership firm constitutes proprietary interest, and the exemption may be restricted and shared where the same person has such interest in more than one qualifying factory.

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