Internal inconsistency in excise exemption reasoning led to setting aside a demand and penalty against a non-existent unit.

An excise demand and penalty against a unit treated as non-existent could not stand where the same reasoning also clubbed its clearances with another unit and denied exemption on the basis that the second unit lacked independent existence. That internal inconsistency made the order unsustainable on its stated premise. The impugned order was set aside and the matter was remanded for fresh adjudication in accordance with law.

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Issues: Whether an order demanding excise duty from, and imposing penalty on, a concern treated as non-existent while simultaneously clubbing its clearances with another unit could be sustained.

Analysis: The denial of exemption to one unit was founded on the premise that the other unit had no independent existence and that its clearances were ately those of the former. That premise could not coexist with a demand of duty and imposition of penalty on the allegedly non-existent unit. The order was therefore internally contradictory and could not be supported on that basis.

Conclusion: The impugned order was set aside and the matter was remanded for fresh adjudication in accordance with law.

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