Clubbing of clearances requires objective proof of lack of independence; related duty demands failed on unsupported assumptions.

Separate manufacturing units cannot have their clearances clubbed, with consequential duty, interest, penalty and confiscation, unless objective findings establish that the units lack independence; common family connection, shared management or multiple entities created over time is insufficient by itself. The Tribunal also rejected assumptions about colourable device and found the remand order lacked independent, unbiased reconsideration. In addition, a differential duty demand on sales routed through an intermediary was unsustainable because the record did not show that the transactions were anything other than principal-to-principal sales or that the pricing basis justified revaluation. The adjudication was therefore held unsustainable in entirety.

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Issues: (i) Whether the clearances of the appellant and the connected units could be clubbed and the duty demand, interest, penalty and confiscation sustained; (ii) Whether the differential duty demand on sales routed through Universal Sales Corporation was sustainable.

Issue (i): Whether the clearances of the appellant and the connected units could be clubbed and the duty demand, interest, penalty and confiscation sustained.

Analysis: The appellant and the connected concerns were shown to be separate units with different constitutions, premises and operating periods. The impugned order proceeded on assumptions of common control and colourable device, but the reasoning was found to be built on the same infirmities as the earlier quashed order and did not reflect an independent and unbiased reconsideration on remand. The Tribunal held that mere common family connection, common directors or partners, or the fact that several small business entities were created and closed over time, was not enough to justify clubbing in the absence of proper, objective findings showing that the units were not independent. The reliance on perceived relatedness and on presumptions about the ability of a woman entrepreneur was rejected as demonstrating bias and non-application of mind. Once the clubbing basis failed, the consequential demand, interest, penalty and confiscation could not survive.

Conclusion: The clubbing of clearances and the consequential duty demand, interest, penalty and confiscation were not sustainable and were set aside in favour of the assessee.

Issue (ii): Whether the differential duty demand on sales routed through Universal Sales Corporation was sustainable.

Analysis: The demand was not supported by any specific finding that the sales were not on principal-to-principal basis or that the prices charged to the intermediary were higher than those charged to comparable independent buyers. The record did not establish a factual basis for revaluation or for treating the routing of sales through the trading concern as a ground for additional duty. In the absence of a clear evidentiary foundation, the demand could not be upheld.

Conclusion: The differential duty demand on sales through Universal Sales Corporation was not sustainable and was set aside in favour of the assessee.

Final Conclusion: The order of adjudication was found unsustainable in its entirety, and the appeal succeeded with all consequential liabilities falling away.

Ratio Decidendi: Separate manufacturing units cannot have their clearances clubbed, and related duty consequences imposed, merely because they share family ownership or common management; such a conclusion requires objective, unbiased findings establishing lack of independence and cannot rest on conjecture or colourable assumptions.

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