Clubbed clearances and real manufacturer test sustained duty demand and penalty for fragmented cinema projector manufacture.

Central excise duty and penalty were sustained where manufacturing was found to have been fragmented through inter-connected units and the appellant was treated as the real manufacturer of complete cinema projectors. The evidence, taken as a whole, showed the relationship between the units, the role of the Adalja family, the splitting of the manufacturing activity, and supplies of complete projectors to customers. The finding of inter-connection and clubbing of clearances was not disputed. The contention that another concern was the manufacturer was rejected because installation at customer premises did not alter the appellant's manufacturing status. The duty demand was therefore correctly confirmed, and the penalty was not regarded as excessive.

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Issues: Whether the demand of central excise duty and penalty against the appellant was sustainable on the finding that the manufacturing activity was fragmented through inter-connected units and that the appellant, and not the other concern, was the real manufacturer of the complete cinema projectors.

Analysis: The evidence was examined as a whole, including the relationship between the units, the role of the Adalja family, the manner in which the manufacturing activity was split, and the fact that complete cinema projectors were supplied to customers. The finding of inter-connection and clubbing of clearances was not disputed. The contention that the other concern was the manufacturer was rejected, as installation at customer premises did not make it the manufacturer. The demand was held to be correctly confirmed against the appellant, and the penalty was found not to be excessive in view of the duty confirmed.

Conclusion: The duty demand and penalty against the appellant were upheld.

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