Use-based excise exemption denied where a leased unit was not treated as the manufacturer's own factory.

Use-based excise exemption under Notification No. 201/87-C.E. was confined to printing frames used in the factory of production or in another factory of the same manufacturer. A leased unit did not qualify as the appellants' own factory where only specified machines were taken on lease, the unit remained a separately incorporated company with its own accounts and liabilities, and ownership of the machinery stayed with that unit. Mere lease of selected machinery was insufficient to treat the other premises as the appellants' factory. The exemption was therefore unavailable, and the demand, redemption fine, and penalty were sustained.

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Issues: Whether the appellants were entitled to exemption under Notification No. 201/87-C.E. for printing frames used in another unit on the footing that the leased unit was their own factory.

Analysis: Notification No. 201/87-C.E. granted exemption to printing frames used within the factory of production or in any other factory of the same manufacturer, with a special procedure where the goods were used in a factory of a different manufacturer. The evidence showed that the user unit was a separately incorporated company with its own accounts, depreciation claims, and employee liabilities. The lease agreement covered only specified machines and not the whole factory, and ownership of the machines remained with the user unit. Mere lease of selected machinery did not make the lessee the owner of the other factory or convert that factory into the appellants' factory.

Conclusion: The appellants were not entitled to the exemption, and the demand, redemption fine, and penalty were upheld.

Final Conclusion: The appeal failed because the exemption was confined to use in the appellants' own factory or another factory of the same manufacturer, which was not established on the facts.

Ratio Decidendi: A factory in which only specified machinery is taken on lease does not become the lessee's factory for the purpose of a use-based excise exemption confined to the factory of production or another factory of the same manufacturer.

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