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2. Messrs. Dadajee Dhackjee and Company Private Ltd., the petitioners carry on business, inter alia, of sale and servicing inclusive of repairs of motor cars and manufacture, sale and servicing of electric storage batteries and air-conditioning plants. In the year 1955 Central Excise duty was imposed on electric batteries and parts thereof with effect from March 1, 1955, under the Central Excises and Salt Act, 1944 (hereinafter referred to as the Act) by the Finance Act of 1955. By a Notification dated April 18, 1955 issued by the Government of India, Ministry of Finance, (Revenue Division) in exercise of the powers conferred by sub-rule (1) of Rule 8 of the Central Excise Rules, 1944, the Central Government exempted electric batteries produced in any factory in which not more than five worker are working or were working on any day of the preceding 12 months from the whole of the excise duty leviable thereon under the Act. In this Notification there was an Explanation in relation to the expression "worker", but it is unnecessary for the present purpose to refer thereto. After the said Notification, a Trade Notice bearing No. 52(MP) Batteries/58 was issued on May 2, 1958 by the Collector of Central Excise, Bombay. It is inter alia stated in this notice that in accordance with this Government of India's orders the term "worker" used inter alia in the Notification dated APril 18, 1955 should be interpreted in the light of definition of "worker" given in section 2(1) of the Factories Act, 1948, namely:-

"Workers' means a person employed, directly or through any agency, whether for wages or not in any manufacturing process or in cleaning any part of the machinery or premises used for a manufacturing process, or in any other kind of work incidental to, or connected with the manufacturing process, or the subject of the manufacturing process."

3. In or about January 1959, the petitioners started the business of manufacturing and assembling batteries and continued the same till July24, 1964. Right up to this date no action whatsoever was taken by the officers of the Excise Department for levy or collection of excise duty. On July 25, 1964 the premises of the petitioner company were searched and inspected and about 116 batteries were seized therefrom. On july 27, 1961 the petitioner company made an application for license or permission to continue its business upon agreeing to pay duty under protest. By the letter dated July 29, 1964 the Assistant Collector of Central Excise, Bombay intimated to the petitioner company that the value of the 116 batteries that were seized was Rs. 12,560 and excise duty amounting to Rs. 1,884 was payable in respect thereof. On August 3, 1964 the petitioner company wrote a letter to the Assistant Collector of Central Excise, Bombay. setting out their case in relation to the action taken by the Authorities. Ultimately after certain correspondence, on October 17, 1964 a show cause notice was issued on behalf of the Collector of Central Excise, Bombay to show cause why penalty should not be imposed on the petitioner company under rules 9(2), 52A(5), 210 and 226 of the Central Excise Rules, 1944 and why a central excise duty at the appropriate rate should not be charged from the petitioner company on 4,448 batteries manufactured and cleared by it without payment of duty. Pursuant to the said show cause notice after proper enquiry on APril 3, 1965 an order was passed by the Deputy Collector of Central Excise, Bombay, the respondent No. 1, directing the petitioner company to pay duty at appropriate rate on all the batteries so far assembled and cleared since the date they started assembling electric storage batteries on receipt of demand from the Central Excise Officer concerned and further ordered that 116 electric storage batteries seized earlier should be released to them on recovery of the appropriate Central Excise duty leviable there3on. On May 11, 1965 the petitioner company filed a petition to challenge the validity of this order dated April 3, 1965 and the demand notice dated July 2, 1965.

6. The Excise Authorities and the Union of India being aggrieved by the order passed by the learned Judge have come in appeal to this Court.

7. Mr. Dalal on behalf of the appellants contended that while calculating the number of workers employed in the factory the learned Judge was in error in restricting the number of workers who were engaged or employed in the manufacturing process in relation to production or manufacture of electric batteries. His submission was that the learned Judge rightly took the view that the entire promises constituted factory within the meaning of the Act and having regard to the provisions of the Trade Notice dated May 2, 1958, all workers employed in any manufacturing process whether in relation to production and manufacture of electric batteries or otherwise, have to be taken into account for the purpose of deciding whether the petitioner company is entitled to exemption under the Notification dated April 18, 1955. His submission was that admittedly apart from the business of assembling electric batteries, the petitioners company was carrying on the business in the same premises of repairs of motor cars and of recharging batteries brought by customers from outside; that each one of these processes constituted manufacturing process within the meaning of Act read with the Notification and the Trade Notice and that admittedly the total number of workers employed in all these manufacturing processes exceeded five; that the petitioner company was liable to pay excise duty in respect of electric batteries even though the only goods manufactured by them constituted electric batteries.

9. There is no controversy so far as the facts in the present case are concerned. In Shree Pant Bhavan the petitioner company is carrying on the business of assembling batteries, of repairs of motor cars and of re-charging batteries brought by customers from outside. The battery assembling section of the petitioner company is located in one part of the motor serving department. It has its approach through the motor servicing hall. It is effectively partitioned up to the roof and is provided with a separate entrance door with locking arrangement. All processes of assembling batteries whether incidental or ancillary to their completion are carried on within the said section. Full assembled and charged batteries are removed direct from the said section for delivery to the customers. No other excisable or non- excisable article is manufactured within the said section. It is an admitted position that the section where the petitioner company assembled batteries was quite independent and self- contained in all respects; that the work in the petitioners' other premises, namely, repairs of motor cars and re-charging of batteries brought by customers was in no way whatsoever connected with the section in which batteries were assembled by them: that the batteries brought by customers for repairs and re-charging were never taken inside the assembling section nor were the batteries from the assembling section taken inside the assembling section nor were the batteries from the assembling section taken into the motor servicing department for any operation; that the amperage for charging batteries inside the battery assembling section was different from the amperage for charging the batteries brought for repairs or re-charging in the motor- servicing department.