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Issues: (i) Whether the clearances of the two units could be clubbed so as to deny the benefit of Notification No. 175/86 and sustain the duty demand and penalty. (ii) Whether the remand order directing de novo adjudication was liable to be set aside and the fresh adjudication upheld.
Issue (i): Whether the clearances of the two units could be clubbed so as to deny the benefit of Notification No. 175/86 and sustain the duty demand and penalty.
Analysis: The adjudicating authority, after complying with the remand and considering the cross-examination of the witness as well as the remaining material, recorded a reasoned finding that the two concerns were separate and distinct entities. The material on record did not establish that one unit was merely a floated or dummy unit of the other, nor was there sufficient evidence of common financial control, absence of infrastructure, or other determinative factors warranting clubbing. The Tribunal found that the Revenue had not identified any substantial infirmity in that appreciation of evidence and that the grounds raised were either vague or unsupported by specific contrary material. The independent existence of the unit was also not displaced by the fact relied upon by the Revenue regarding seized goods, registration changes, or retracted statements.
Conclusion: The demand based on clubbing of clearances was not sustainable and the assessee was entitled to the benefit of Notification No. 175/86; the Revenue's challenge failed.
Issue (ii): Whether the remand order directing de novo adjudication was liable to be set aside and the fresh adjudication upheld.
Analysis: The earlier remand had attained finality, and the subsequent adjudication was carried out in compliance with the direction to examine the effect of cross-examination and the evidence afresh. On the facts, the fresh order was treated as a proper de novo determination and not as a mechanical exercise. In the connected matter, the Tribunal found no merit in the Commissioner (Appeals)'s view that the original order lacked reasons or that another remand was warranted, because the fresh adjudication was already reasoned and self-contained. The Tribunal therefore preferred finality and substantive adjudication over further remand.
Conclusion: The Revenue's request to disturb the de novo adjudication was rejected, while the assessee's challenge to the further remand was accepted.
Final Conclusion: The Revenue's appeal was dismissed and the assessee's appeal was allowed, resulting in acceptance of the separate-existence finding and rejection of the proposed clubbing-based demand.
Ratio Decidendi: Clubbing of clearances requires cogent evidence showing that the units are not independent and that one is a mere facade or floated unit; where the fresh adjudication on remand is reasoned and supported by the record, it should not be disturbed absent a demonstrable legal or factual infirmity.
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