SSI exemption clubbing fails absent proof that one concern is a dummy or camouflage of the other.

Clearances of a proprietary concern and a partnership firm could not be clubbed to deny small scale industry exemption where both units maintained separate income-tax files, sales tax registrations and bank accounts. A proprietor's role as a partner in another concern did not, by itself, negate separate legal identity. Clubbing was permissible only on proof that one unit was a dummy or camouflage for the other, and no such allegation was made in the show cause notice or supported by evidence of common manufacture or sham arrangement. The denial of exemption was therefore unsustainable.

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Issues: Whether the clearances of a proprietary concern and a partnership firm could be clubbed for the purpose of denying small scale industry exemption, and whether such clubbing could be sustained without evidence that one concern was a dummy or camouflage of the other.

Analysis: The proprietary concern and the partnership firm were treated as distinct entities with separate income-tax files, sales tax registrations and bank accounts. A proprietor's participation as a partner in another concern did not, by itself, destroy the separate identity of the two units. Clubbing of turnovers could be justified only on proof that one unit was merely a dummy or fac ade for the other. No such allegation was made in the show cause notice and no evidence was produced to establish common manufacture in the sense required for clubbing. The decisions relied upon by the Revenue were distinguished on facts because those cases involved evidence of common control and sham arrangements.

Conclusion: The clearances of the two concerns could not be clubbed, and the denial of the exemption was unsustainable; the appeal succeeded.

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