Factory-made steel storage tanks qualify for excise exemption where they are used within the same factory and are not manufacturing machinery.

Steel tanks fabricated within a sugar factory and intended for use there as storage tanks for molasses were entitled to exemption under Notification No. 118/75. The notification covered goods under Item 68 manufactured in a factory for use in that factory or in another factory of the same manufacturer, and it did not require the goods to be used as a component in the manufacture of the final product. The proviso excluding complete machinery meant for producing or processing goods did not apply, because the tanks were not machinery and did not themselves participate in manufacture. The denial of exemption was therefore unsustainable.

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Issues: Whether steel tanks fabricated in the appellants' factory for storing molasses within the same factory were entitled to exemption under Notification No. 118/75.

Analysis: The notification exempted goods falling under Item 68 of the First Schedule to the Central Excises & Salt Act, 1944 when manufactured in a factory and intended for use in that factory or in another factory of the same manufacturer. The tanks were fabricated within the sugar factory and were intended for use there as storage tanks for molasses, a by-product. The notification did not require that the goods must be used as a component part in the manufacture of the final product. The proviso excluding complete machinery meant for producing or processing goods did not apply, because the tanks were not machinery and did not participate in manufacture.

Conclusion: The denial of exemption was unsustainable, and the tanks were eligible for exemption under Notification No. 118/75.

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