Clubbing of manufacturing units requires proof of financial intermingling; separate registration and accounts supported independent status.

Clearances of two manufacturing units could not be clubbed to deny exemption under Notification No. 1/93 where each unit was separately registered, maintained separate accounts, and was treated as an independent concern by excise, income-tax, sales tax and banking records. Although both units operated from the same premises, separate entrances and a distinct operational set-up supported their independence. The familial link between the proprietor of one unit and a partner in the other was insufficient to show that the concerns were ively one. Clubbing requires evidence of financial intermingling or mutual dependence, and absent such proof the units were entitled to separate treatment.

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Issues: Whether the clearances of the two manufacturing units could be clubbed for the purpose of denying exemption under Notification No. 1/93 dated 28-2-93.

Analysis: The units were separately registered under central excise law and were also shown as independent concerns before the income-tax, sales tax and banking authorities. Their accounts were separately maintained, and the evidence showed that although both units functioned from the same premises, they had separate entrances and distinct operational set-up. The mere fact that the father of the proprietor of one unit was a partner in the other unit was held insufficient to establish that the two concerns were really one. Clubbing is justified only where there is evidence of financial intermingling or mutual dependence, and no such evidence was produced.

Conclusion: The clearances could not be clubbed, and the two units were entitled to be treated as separate independent entities. The appeal was allowed in favour of the assessee.

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