Captive consumption exemption depends on the statutory meaning of factory, not separate excise registrations.

Notification No. 67/95-C.E. was available where molasses manufactured in one unit was used to make chemicals in another unit located in the same factory premises. The statutory definition of "factory" under Section 2(e) covered the whole premises, so separate central excise registrations under Rule 174 did not, by themselves, create different factories. The exemption could not be denied merely because the units were separately registered when the excisable goods were used within the same factory for captive consumption. Authorities cited on the meaning of "industrial unit" or on different factual settings were distinguished as inapplicable.

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Issues: Whether the benefit of Notification No. 67/95-C.E. was available when molasses manufactured in one unit was used in the manufacture of chemicals in another unit situated in the same factory premises, notwithstanding separate central excise registrations.

Analysis: The definition of "factory" under Section 2(e) of the Central Excise Act covers the whole premises, including precincts, in any part of which excisable goods are manufactured. Since all three units were located in the same premises, the mere fact that they had separate registrations under Rule 174 of the Central Excise Rules did not make them different factories. The exemption was therefore not to be denied on the ground of separate registrations. The authorities relied on by the Revenue were distinguished as they dealt with the expression "industrial unit" or different factual settings, whereas the present case turned on the statutory meaning of "factory".

Conclusion: The benefit of Notification No. 67/95-C.E. was available to the assessee, as the excisable goods were used within the factory of manufacture.

Final Conclusion: The appeals succeeded and the exemption claim was upheld on the basis that all the units constituted one factory for the purpose of captive use of excisable goods.

Ratio Decidendi: For the purpose of exemption based on captive consumption, separate excise registrations do not determine the number of factories where the units are situated in the same premises; the statutory definition of factory under Section 2(e) is ative.

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