Per C.N.B. Nair :

Notification No. 281/86-CE dated 24.4.1986 granted exemption from central excise duty in respect of goods manufactured in a workshop within a factory. The scope and ambit of this notification is the subject-matter in these appeals. These appeals have come before this Larger Bench on reference from Division Benches on account of differences of opinion. We read the said notification for convenience of discussion :-

"Exemption to all excisable goods produced and used within the same factory or other factory of same manufacturer for repairs or maintenance of machinery. - In exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government hereby exempts all excisable goods manufactured in a workshop within a factory and intended for use in the said factory or in any other factory of the same manufacturer, for repairs or maintenance of machinery installed therein, from the whole of the duty of excise leviable thereon which is specified in the Schedule to the Central Excise Tariff Act, 1985 (5 of 1986):

Provided that where such use is in a factory of a manufacturer, different from his factory where the goods have been manufactured, the exemption contained in this notification shall be allowable subject to the observance of the procedure set out in Chapter X of the Central Excise Rules, 1944."

2. It is clear from the notification that the exemption is in respect of goods manufactured "in a workshop within a factory" and intended for use in the said factory or in any other factory of the same manufacturer for repairs or maintenance of machinery installed therein. Brief facts in the case of the appellants may be stated in order to appreciate whether the appellants meet these requirements.

2.1 Appellant, M/s. The Tata Iron & Steel Company Limited (TISCO) in Appeal No. E/2968/88-B is a registered company with its headquarters at Mumbai. It has a factory at Jamshedpur in Bihar which manufactures iron and steel products. It has another factory at Kharagpur in West Bengal which manufactures bearings. Iron and steel and bearings are two divisions of TISCO. Some of the bearings manufactured at Kharagpur get used in the repairs or maintenance of machinery installed in other factories of TISCO. The claim is that the bearings so used are exempt under Notification No. 281/86.

2.2 The appellant, M/s. ICL Foundries Ltd. in E/R-749 & 750/95-Mad is a manufacturer of rough machine cast articles of iron and steel from their factory at Nandambakkam in Tamil Nadu. They send part of such rough castings manufactured by them to the cement factories of M/s. India Cements Ltd. who are stated to be a sister company of theirs. The rough castings received in M/s. India Cements Ltd. are stated to be used in the repairs and maintenance of the machinery installed in their cement factory. The appellants claim exemption for the rough castings under Notification No. 281/86.

2.3 Thus, the appellants have no case that the goods on which exemption is claimed by them are separately produced in a workshop within a factory. They have also no case that any portion of the goods manufactured by them in the factories where manufacturing process is undertaken go to the repair of any machinery installed there. The produces are used only in the repair of the machinery installed in other factories belonging to them.

3. The claim of both the appellants is on the ground that in the absence of any definition of 'workshop' in the notification, the ordinary meaning of workshop should be applied. Reliance has been placed on the definition of 'factory' in Section 2 (e) of the Central Excise Act and the meaning given to the word 'workshop' in various dictionaries. It has been submitted that since there could be no restriction placed on the meaning of 'workshop' based on size etc., it has to be taken to mean co-extensive with factory. It was pointed out by the learned counsel representing TISCO that this position has been acc