Separate premises cannot be clubbed as one factory; blended coffee-chicory made without a statutory factory setup was not dutiable.

Separate premises cannot be clubbed as one factory unless they form an integrated manufacturing unit carrying on a single manufacturing process across the locations. Applying the definition of factory under Section 2(m) of the Factories Act, the tribunal held that the industrial estate unit and the sales units were distinct premises and could not be treated as one factory for excise purposes. It further held that blended coffee-chicory mixture was not liable to Central Excise duty because no individual premises had the statutory minimum number of workers required to constitute a factory, so manufacture did not occur in a dutiable factory.

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Issues: (i) Whether the factory in the industrial estate and the four sales units at different locations could be treated as one factory by clubbing the workers employed in all the units for the purpose of excise liability; (ii) Whether blended coffee-chicory mixture manufactured in any of the units was liable to Central Excise duty when none of the individual places had the statutory minimum number of workers.

Issue (i): Whether the factory in the industrial estate and the four sales units at different locations could be treated as one factory by clubbing the workers employed in all the units for the purpose of excise liability.

Analysis: The relevant test under Section 2(m) of the Factories Act is whether a manufacturing process is carried on in a premises, including its precincts, with the prescribed minimum number of workers. The different locations were separated from each other and the blending activity, if any, was not shown to be an integrated manufacturing process spread over different premises so as to make them one factory. The authorities cited on connected manufacturing operations at different places were distinguished because those cases involved parts of a single manufacturing process which could not be complete without work at both places.

Conclusion: The units could not be clubbed together as one factory for excise purposes.

Issue (ii): Whether blended coffee-chicory mixture manufactured in any of the units was liable to Central Excise duty when none of the individual places had the statutory minimum number of workers.

Analysis: Even assuming that coffee and chicory were blended at one or more of the units, each location had fewer than ten workers and therefore did not satisfy the definition of factory under Section 2(m) of the Factories Act. Though the blend was an excisable product, duty could arise only if manufacture took place in a factory within the meaning of the Act. Since no individual place met that requirement, the resultant product was not dutiable.

Conclusion: The blended product was not liable to Central Excise duty.

Final Conclusion: The duty demand and consequential confiscation and penalties could not be sustained because the blending activity, though excisable in nature, was carried on in premises that did not constitute a factory under the governing definition.

Ratio Decidendi: For excise levy tied to manufacture in a factory, separate premises cannot be clubbed as one factory unless they form an interconnected manufacturing unit; where no individual premises satisfies the statutory definition of factory, the product is not dutiable merely because the activity is otherwise excisable.

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