Factory definition under exemption notification must follow the competent authority's certificate absent contrary evidence

An exemption notification that adopts the Factories Act meaning of "factory" required excise authorities to accept certificates issued by the competent authority under that Act. On that basis, the unit and related units were treated as outside the statutory definition of factory, and workers engaged only in repairing work were not counted as workers. In the absence of tangible contrary evidence, the departmental demand based on alleged factory status could not be sustained, and the extended-period demand failed because the notification benefit applied.

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Issues: Whether the benefit of Notification No. 46/81-CE was available to the respondents and, consequently, whether the demand based on treatment of the unit as a factory could be sustained.

Analysis: The Tribunal noted that the exemption notification adopted the meaning of "factory" under the Factories Act. It relied on certificates issued by the competent authority under that enactment certifying that the appellant unit and the other concerned units did not fall within the definition of factory. It further held that the excise authorities were not expected to go behind such certificates. The earlier order had also found that persons engaged in repairing work could not be counted as workers and that the departmental case lacked tangible evidence.

Conclusion: The respondents were entitled to the notification benefit and the demand based on the alleged factory status could not be sustained. The appeal was against the assessee.

Final Conclusion: Once the unit was found not to be a factory within the meaning adopted by the notification, the basis for the extended-period demand fell away and the revenue appeal failed.

Ratio Decidendi: Where an exemption notification adopts the meaning of factory under another enactment, the excise authorities should accept the certificate of the competent authority under that enactment and cannot disregard it in the absence of tangible contrary evidence.

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