Clubbing of subsidiary clearances with holding company affects small-scale exemption eligibility under excise notification.

Clearances of a subsidiary can be aggregated with those of the holding company for testing eligibility to small-scale industry exemption under Notification No. 175/86-C.E. where the subsidiary forms part of the same commercial arrangement. The stated principle is that production and clearance by the subsidiary may be treated as having been made for and on behalf of the holding company. On that footing, the unit's clearances during the relevant period were required to be clubbed with the holding company's clearances, and the exemption limit was to be applied on the combined basis. The exemption was therefore unavailable.

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Issues: Whether the clearances of a subsidiary company were liable to be clubbed with those of its holding company for determining eligibility to exemption under Notification No. 175/86-C.E. for small scale industry units.

Analysis: The exemption under Notification No. 175/86-C.E. could not be considered in isolation where the subsidiary was held by the assessee as part of the same commercial arrangement. The judgment relied on the principle that production and clearance by a subsidiary may be treated as having been done for and on behalf of the holding company. As the unit in question was admittedly a subsidiary during the relevant period, its clearances were required to be aggregated with those of the holding company for testing the exemption limit.

Conclusion: The clearances were rightly clubbed and the exemption was not available; the issue is decided against the assessee and in favour of Revenue.

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