Same factory exemption under central excise law fails where clinker and cement are made in separate licensed premises.

Exemption under Notification No. 124/87-CE was confined to cement manufactured from clinker produced in the same factory. Applying the ordinary statutory meaning of "factory" under central excise law, the two units were treated as separate factories because they occupied distinct premises, were not within the same precincts, and held separate excise licences. Common ownership, common management, or treatment as one establishment under other laws did not change that position. Strict construction of the notification therefore meant the exemption was unavailable where the clinker came from another unit.

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Issues: Whether cement manufactured in one unit could qualify for exemption under Notification No. 124/87-CE when the clinker used for such manufacture was produced in another unit of the same manufacturer situated about 15 kilometres away and not in the same factory.

Analysis: The exemption depended on the condition that cement must be manufactured out of clinker produced in the same factory. The expression "factory" in Section 2(e) of the Central Excises and Salt Act, 1944 was applied in its ordinary statutory sense, meaning the premises and precincts where manufacture takes place. The two units were in separate premises, were not within the same precincts, and had separate central excise licences under Rule 174 of the Central Excise Rules, 1944. The fact that the units were under common ownership, common management, or treated as one establishment for other laws did not alter their character for central excise purposes. The notification had to be construed strictly according to its wording.

Conclusion: The clinker was not manufactured in the same factory as the cement unit, so the exemption under Notification No. 124/87-CE was not available.

Final Conclusion: The appeal failed because the two units were held to be separate factories for central excise purposes, and the exemption condition was not satisfied.

Ratio Decidendi: For exemption notifications that require goods to be produced in the "same factory", the statutory meaning of factory under central excise law governs, and separate premises with separate licences are independent factories even if they belong to the same manufacturer.

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