Fibre recovery plant used for re-use was not treated as machinery producing goods, so the exemption applied.

Notification No. 118/75-C.E. exempted goods manufactured in a factory and intended for use in the same factory, but excluded complete machinery meant for producing or processing goods. A fibre recovery plant used only to extract fibre particles from effluent water for re-use did not bring into existence a new and distinct article, and the recovered fibre and waste water were not shown to be goods in the excise sense. The plant was therefore not complete machinery for producing or processing goods within the exclusion clause, and the assessee remained entitled to the exemption.

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Issues: Whether the fibre recovery plant was a complete machinery meant for producing or processing any goods and therefore excluded from exemption under Notification No. 118/75-C.E.

Analysis: The notification exempted goods manufactured in a factory and intended for use in the same factory, but excluded complete machinery manufactured in a factory and meant for producing or processing any goods. The plant was designed only to retrieve fibre particles from effluent water for re-use. Retrieving lost fibre from waste water did not bring into existence a new and distinct article, nor did it amount to manufacture or processing of goods. Waste water and the recovered fibre were not shown to be goods in the relevant excise sense, as they did not ordinarily come to market for sale. On that basis, the machinery was not one meant for producing or processing goods within the exclusion clause of the notification.

Conclusion: The assessee was entitled to exemption under Notification No. 118/75-C.E.; the plant did not fall within the exclusion for complete machinery meant for producing or processing goods.

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