Strict construction of exemption notifications bars concessional duty for a modernised cement plant treated as an old factory.

A concessional cement duty exemption under Notification No. 124/87-C.E. applied only to cement manufactured in a factory that commenced production during the specified period. Conversion of an existing cement plant from the wet process to the dry process was treated as modernisation and expansion of the old unit, not the setting up of a physically separate and identifiable new factory. The record showed continuity of the original factory, with no new excise or factory licence and no independent new unit coming into existence. The claim for exemption therefore failed because the assessee had not proved that the plant fell within the strict terms of the notification.

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Issues: Whether the conversion of an existing cement factory from the wet process to the dry process constituted a new factory that had commenced production during the specified period so as to qualify for concessional duty under Notification No. 124/87-C.E.

Analysis: The exemption applied only to cement manufactured in a factory which had commenced production between 1 January 1982 and 31 March 1986. The existing unit had been in operation long before that period, and the switch from wet process to dry process was found to be only modernisation and expansion of the old plant, not the setting up of a physically separate and identifiable new factory. The notification had to be construed strictly, and the assessee had to establish clear coverage within its terms. The record showed continuation of the old factory, no new excise or factory licence, and no new independent unit coming into existence.

Conclusion: The appellants were not entitled to the exemption, as the old factory had merely been modernised and had not become a new factory within the meaning of the notification.

Ratio Decidendi: An exemption confined to a factory that commenced production during a specified period cannot be extended to an existing unit merely because it underwent modernisation or substantial expansion; the claimant must prove the existence of a genuinely new and distinct factory.

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