Clubbing of clearances for a single apparel factory kept the exemption to one aggregate limit despite a of manufacturers

Where a ready-to-wear apparel factory was operated at different times by different manufacturers, Notification No. 150/71-C.E. applied the nil-rate clearance limit to the factory as a single unit. The record showed that the premises remained one licensed and approved factory, the altered premises were not separately approved, no separate licence was granted for the leased portion, and the same machinery was used throughout. On those facts, the clearances were required to be clubbed, and the exemption was confined to one aggregate limit for the factory rather than separate limits for each appellant.

---

---

Issues: Whether the two appellants were entitled to separate benefit of duty-free clearances up to Rs. 5 lakhs each under Notification No. 150/71-C.E. dated 26-7-1971, or whether the clearances had to be clubbed as arising from one factory run at different times by different manufacturers.

Analysis: The notification limited nil-rate clearances to Rs. 5 lakhs where a factory producing ready-to-wear apparel was run at different times of a financial year by different manufacturers. The factual materials showed that the premises had originally been a single licensed and approved factory, the alteration of the licensed premises into a separate unit had not been approved, the second appellant was not granted a separate licence for the leased portion, and the same machinery was used by both appellants. These circumstances established that the factory remained one throughout the relevant year, even though manufacture was carried on by the appellants during different periods.

Conclusion: The benefit of exemption was available only to a total aggregate of Rs. 5 lakhs for the factory, and not separately to each appellant; the demand based on clubbing of clearances was upheld.

---