Per Shri V.P. Gulati :

The issue in these two appeals relates to the benefit of Notification 71/78 in respect of aerated water manufactured under the brand name of M/s Kali Mark. The appellants after they reached near the aggregate exemption limit available under Notification 71/78 parted with the machinery and the same set of machinery was shifted to another place and with the help of the same workers in the name and style of another concern, manufactured aerated water from that different premises. The notification envisages the benefit upto a limit of Rs. 5 lakhs from a factory, whether run by one or more manufacturers.

2. In the present case, the appellant's plea is that after shifting of the machinery to another premises, by an ostensible sale, the clearance made therefrom should be construed as if made from a different factory and, therefore, the goods manufactured would be eligible upto another value limit of Rs. 5 lakhs. The learned lower authority, however, has held as under:

But in this case during the financial year one unit has stopped production while almost reaching the maximum limit of exemption and started manufacturing the same set of goods in another unit with the same set of workers, same set of machinery and using the earlier premises as godown for keeping the finished products which facts cannot be brushed aside. I therefore, hold that M/s Meenakshi Bottlers is not an independent unit manufacturing aerated waters eligible of separate duty free clearances upto Rs. 5 lakhs as envisaged under Notification No. 71/78. They were only manufacturing the goods for and on behalf of M/s Kali Aerated Water Works.

3. The learned Advocate for the appellants has pleaded, the unit at the first premises was run by one partnership concern and at the other premises by another partnership concern which has purchased the same machinery and utilised the same workers. He has pleaded, the appellants at the two places should be treated as independent and separate set of exemption would be available to the respective partnership concerns, notwithstanding that the same machinery was utilised. He has, therefore pleaded that the learned lower authority was in error in reckoning the production at the two places as if in the same factory. He pleaded, apart from this he has no other plea to make.

4. The learned JDR for the department has pleaded that the notification contemplates limit upto which the goods under the exemption could be cleared has to be with reference to the clearance made from a factory which may be run by one or more manufacturers also. He has further pleaded that some of the workers of M/s Kali Aerated Water Works, who are the original manufacturers continued to be on the pay roll of M/s Kali Aerated Water Works and has urged that only a fiction was created for the purpose of availing the benefit of notification twice over.

5. We have considered the pleas made by both the sides. We observe the unit identified in the notification for the purpose of availment of the exemption is the factory. The factory may be run by different people at different times or it may be owned by different manufacturers at different times in the financial year, but the aggregate value upto which the benefit could be valid as per the notification was Rs. 5 Lakhs.

6. In the present case what the appellants have done is they have removed the machinery from place A to place B showing the sale having taken place and, thereafter, by use of the very same machinery and very same workers, the same product continued to be produced. The point that falls for consideration is whether in a circumstance like this it could be said that after the shifting of the machinery the product which emerged at the premises B was from a different factory. The factory as a concept relates to the installation of a certain set of machinery items at a place for the production and manufacture of certain goods. A factory can be recognised as such by the reason of the use of the m