Factory-specific excise exemption failed where gases were consumed in a different unit from the one producing them.

Item 68 goods were exempt under Notification No. 58/75 only when used as intermediate goods or component parts in the same factory of production. Because the fertiliser plant and steel plant were registered as separate factories, and the rich gas, synthesis gas, coke oven gas and nitrogen gas were consumed in a different factory from the one producing them, the statutory condition was not met. The definition of "factory" under section 2(m) of the Factories Act, 1948 governed the notification, and a separate industrial licence did not change that position. The claimed exemption was therefore unavailable and the demands were sustained.

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Issues: Whether rich gas, synthesis gas, coke oven gas and nitrogen gas were eligible for exemption under the relevant excise notification when the goods were used in a different factory from the one in which they were produced.

Analysis: The exemption under Notification No. 58/75, as amended, applied only to Item 68 goods used in the factory of production as intermediate goods or component parts of other goods. The term "factory" had the meaning assigned by Section 2(m) of the Factories Act, 1948, because Item 68 itself incorporated that definition. Since the fertiliser plant and the steel plant were registered as separate factories and the goods were admittedly consumed in a factory other than the one producing them, the condition in the notification was not satisfied. The separate industrial licence did not alter the legal position under the tariff item and notification.

Conclusion: The goods were not entitled to the claimed exemption, and the demands were upheld.

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