Exemption for footwear manufacture upheld where power use stayed within limits and contractor-owned machinery was not counted as assessees use.

Footwear manufacturing could qualify for exemption under Notification No. 88/77-Central Excises where either the worker-based condition or the power-based condition was satisfied. The unit produced evidence, including a State Electricity Board certificate, showing that the power installed and used did not exceed the prescribed limit. A 1/2 H.P. pasting machine located in the factory belonged to an independent contractor and was not shown to be exclusively used by the unit for its own manufacture, so it could not be treated as the assessee's power use for denying relief. On those facts, the statutory conditions for exemption were met.

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Issues: Whether the respondents were entitled to exemption from duty on footwear under Notification No. 88/77-Central Excises dated 09-05-1977, particularly on the basis of the power used in manufacture and the effect of machinery belonging to an independent contractor within the factory .

Analysis: The exemption notification granted full exemption to footwear falling under Tariff Item 36 of the Central Excise Tariff when either the worker-based condition or the power-based condition was satisfied. The respondents produced material showing that the power installed and used in their unit did not exceed the prescribed limit, including a certificate from the Executive Engineer of the State Electricity Board. The 1/2 H.P. pasting machine was found to belong to an independent contractor and was not shown to be exclusively used by the respondents for their manufacture. On these facts, the contractor's machinery could not be treated as power used by the respondents for denying the exemption.

Conclusion: The respondents satisfied the statutory conditions for exemption and were entitled to the benefit of Notification No. 88/77-Central Excises dated 09-05-1977.

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