Cement manufacturing exemption turned on functional independence, with separate facilities and licences supporting eligibility under the notification.

Eligibility for exemption under Notification No. 36/87-C.E. depended on whether the cement unit was a factory that commenced production after 1-4-1986 and was physically and functionally independent of the old unit. The material showed separate limestone crushers, separate kilns, an independent factory licence, a separate power supply agreement, and Development Commissioner recognition as a new stream of production. The conveyor belt ran from the new unit to the old unit, and the absence of a separate railway siding was not decisive because the test was independent manufacture of cement, not the existence of that siding. On these facts, the unit was treated as eligible for exemption and inter-dependence objections were rejected.

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Issues: Whether Chittor Cement Works qualified for exemption under Notification No. 36/87-C.E. as a factory that commenced production after 1-4-1986, and whether the alleged common facilities, including the conveyor belt, separate mine and railway siding, showed dependence on the old unit so as to defeat the exemption.

Analysis: The earlier order had already held that the respondents were to be treated as a factory which commenced production after 1-4-1986, and the remaining question was whether the new unit was physically and functionally independent. The evidence showed that the conveyor belt ran from the new unit to the old unit and not vice versa, independent limestone crushers and separate kilns were available, the unit had a separate licence under the Factories Act, a separate power supply agreement, and recognition by the Development Commissioner as an entirely new stream of production. The absence of a separate railway siding was not material, because the exemption turned on the unit's ability to manufacture cement independently and not on the existence of a railway siding. The materials therefore established that the new unit was not dependent on the old unit for manufacturing cement.

Conclusion: The unit was held eligible for exemption under Notification No. 36/87-C.E. and the objections based on inter-dependence were rejected.

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