Clubbing of clearances requires concrete evidence of sham units or financial flow back; vague allegations cannot sustain duty or penalty.

Clubbing of clearances and related duty liability can be sustained only on concrete evidence showing real unity of manufacture, financial flow back, or sham entities. Unsupported allegations of fragmentation, common management, shared machinery, labour, power or raw materials were insufficient, and vague show cause notices could not support the conclusions reached. The adjudication order was also defective because it did not identify from which unit or person duty was recoverable while imposing penalty on all units. The impugned orders were set aside and the matter was remitted for de novo adjudication after effective opportunity to the appellants.

---

---

Issues: Whether the clubbing of clearances of the four units and the consequent demand of duty and penalty could be sustained in the absence of concrete evidence and with an demand order.

Analysis: The allegations of fragmentation of the business, common management, mutual financial and commercial interest, sharing of machinery, labour, power and raw materials, and real ownership by one person were not supported by any documentary or other cogent evidence. The show cause notices were vague and did not disclose the evidentiary basis for the conclusions drawn. The adjudication order also failed to specify from which unit or person the duty was recoverable, even while imposing penalty on all the units. In proceedings for clubbing of clearances, the burden lay on the department to establish with evidence that the units were only paper entities or that there was real financial flow back and common manufacture warranting clubbing.

Conclusion: The demand of duty and imposition of penalty could not be sustained on the record as it stood, and the matter required fresh adjudication after giving effective opportunity to the appellants.

Final Conclusion: The impugned orders were set aside and the matter was remitted to the original authority for de novo decision in accordance with law.

Ratio Decidendi: Clubbing of clearances and related duty liability can be upheld only on the basis of concrete evidence showing real unity of manufacture, financial flow back, or sham entities; vague allegations and unsupported findings are insufficient.

---