Worker count under factory exemption provisions includes production and supervisory staff, defeating eligibility for notification benefit.

Exemption under Notification No. 46/81 depended on whether the factory employed not more than 10 workers during the relevant period. The controlling concept of "worker" was read with the Factories Act and covered persons engaged in the manufacturing process, including supervision and production-related roles, not merely manual labour. On the record, personnel described as Supervisor and Production Executive were treated as part of the worker count because the documents showed involvement in production activity. The explanation that they were only office staff was rejected, and the evidence on overtime and reduced manpower did not displace the department's case. The duty demand and penalty were upheld.

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Issues: Whether the appellants were entitled to exemption under Notification No. 46/81 on the basis that they had not employed more than 10 workers during the relevant period, and whether the duty demand and penalty were sustainable.

Analysis: The determining question was whether persons shown in the production records as Supervisor and Production Executive, and other personnel connected with production activity, could be excluded from the count of workers. The notification adopted the factory-based concept from the Factories Act, so the expression "worker" had to be read with reference to persons engaged in the manufacturing process and not confined to manual labour alone. The documentary record, including production reports and related papers, showed that the named persons had a role in production and supervision, and their explanation that they were merely office staff was not accepted. The evidence regarding overtime and manpower reduction also did not displace the department's case. The classification argument under Item 17(4) was not gone into, as it had not been raised before the adjudicating authority and, in any event, the earlier Tribunal view remained against the appellants.

Conclusion: The appellants were rightly held to have employed more than 9 workers during the relevant period and were not entitled to exemption under Notification No. 46/81; the duty demand and penalty were upheld.

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