In Brief
Two textile units operating in the same compound claimed exemption from excise duty under a notification for cotton fabrics processed without power or steam. Unit 1 performed bleaching and mercerizing; Unit 2 performed power-driven squeezing and stentering; Unit 1 then bailed and packed the final product. The tax authority and initially the Commissioner found the entire operation liable to duty. The appellate tribunal allowed the exemption, treating the units as separate. The Supreme Court reversed, holding that when distinct processes by separate units form an integrated chain producing a final product, they constitute a single continuous manufacture. Use of power at any interlinked stage—here, stentering—disqualifies the exemption. Formal separateness cannot override factual integration of processes.
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