SSI exemption clubbing and job work deeming fiction are limited by statutory conditions and cannot enlarge turnover.

Clubbing of clearances for denial of small-scale industry exemption requires satisfaction of the statutory conditions for aggregation; common partners and inter-firm loan transactions, by themselves, do not establish that one unit is a dummy of another. Separate banking arrangements and independent commercial dealings pointed to distinct units, so clubbing was not justified and SSI benefit remained available. A deeming fiction in the job work notifications operates only for the limited purpose of fastening duty-related responsibility in the prescribed scheme; it cannot be extended to enlarge the supplier's turnover. On the stated facts, those notifications could not be used to add the job worker's clearances.

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Issues: (i) Whether the clearances of an alleged sister concern could be clubbed with the assessee's clearances for denying small-scale industry exemption under Notification No. 9/99 dated 28-2-99; (ii) Whether the deeming provision in the job work notifications could be used to add the job worker's clearances to the assessee's turnover.

Issue (i): Whether the clearances of an alleged sister concern could be clubbed with the assessee's clearances for denying small-scale industry exemption under Notification No. 9/99 dated 28-2-99.

Analysis: The mere fact that two partners were common and that loan transactions existed between the firms did not establish that one unit was a dummy of the other. The record showed separate banking arrangements and independent commercial dealings. The notification required aggregation where there was more than one factory or more than one manufacturer. On the facts found, there was only one factory and one manufacturer for the purpose of the assessee's manufacturing activity, so the basis for clubbing was absent.

Conclusion: Clubbing of the other firm's clearances with the assessee's clearances was not justified, and the assessee was entitled to the SSI benefit.

Issue (ii): Whether the deeming provision in the job work notifications could be used to add the job worker's clearances to the assessee's turnover.

Analysis: The legal fiction in Notifications No. 83/94-C.E. and 84/94-C.E. operated only for fastening liability on the supplier of raw material or semi-finished goods in the prescribed job work scheme. It was a procedural fiction to regulate exemption and responsibility for duty, not a substantive rule for enlarging the supplier's turnover. In any event, the factual conditions for applying those notifications were not satisfied because the alleged supplier was not operating a factory in the relevant sense.

Conclusion: The job work notifications could not be invoked to add the job worker's clearances to the assessee's turnover.

Final Conclusion: The demand founded on clubbing of clearances failed, and the assessee's SSI exemption could not be denied on the stated grounds.

Ratio Decidendi: Clubbing of clearances is permissible only when the statutory conditions for aggregation are met, and a deeming provision in a job work notification cannot be extended beyond its limited purpose to enlarge taxable turnover.

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