Exemption notification scope limited to the manufacturing unit cleared from, defeating aggregation of two premises and the duty demand.

Exemption under Notification No. 77/83 depended on the capital investment in the industrial unit where the cleared goods were manufactured, so the relevant inquiry was confined to that unit. The Department failed to show that two premises were in substance one unit, and Rule 56B permissions supported removal of semi-finished goods for further processing at another premises without duty. It also did not prove that aggregate investment crossed the prescribed limit. The broader definition of manufacture in Section 2(f) could not override the specific wording of the exemption notification, so the exemption remained available and the demand failed.

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Issues: Whether the exemption under Notification No. 77/83 was to be denied by aggregating the capital investment in plant and machinery of two separate units on the footing that the processing carried out at the second unit formed part of manufacture.

Analysis: The exemption proviso referred to the capital investment in the industrial unit in which the goods under clearance were manufactured. The relevant inquiry was therefore confined to the unit from which clearance was made. The Department did not establish that the two units were one and the same, and permission under Rule 56B of the Central Excise Rules, 1944 indicated removal of semi-finished goods to another premises for further process without payment of duty. The Department also failed to prove that, even on aggregation, the total investment exceeded the prescribed limit. The definition of manufacture in Section 2(f) of the Central Excises and Salt Act, 1944 could not override the specific wording of the exemption notification.

Conclusion: The exemption was admissible and the demand could not be sustained.

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