SSI exemption and clubbing of clearances require proof of dummy unit status, not mere common management links.

Separate private limited companies manufacturing cement, each with distinct legal existence and factory registration, are treated as separate entities for small scale industry exemption. Their clearances cannot be clubbed for a collective duty demand merely because of common management or related-director links. If the Department alleges that one unit is only a dummy, it must first identify the dummy unit and establish the basis for treating its clearances as those of the real manufacturer, including proof of control, financial flowback, or similar indicia. In the absence of such proof, and consistent with the Board circular recognising separate exemption limits for separate companies, collective clubbing is not justified.

---

---

Issues: Whether the clearances of two separately registered private limited companies manufacturing cement could be clubbed for the purpose of small scale industry exemption, and whether duty could be demanded collectively from both units.

Analysis: The units were separate private limited companies with distinct legal existence and separate factory registrations. The impugned order itself recorded that each company was separate, yet the duty was demanded collectively without first determining the real clearances of each unit. Where the Department suspected that one unit was only a dummy, it was necessary to identify the dummy unit and then club its clearances with the real unit's clearances on that basis. In the absence of such identification, and in view of the Board circular clarifying that separate limited companies are separate entities entitled to separate exemption limits, collective clubbing of their clearances was not justified. The authorities and case law relied upon supported the principle that mere common management or related-director links do not, by themselves, sustain clubbing without proof of dummy nature, financial flowback, or control warranting treatment as one manufacturer.

Conclusion: Clubbing of clearances was not sustainable and the collective duty demand was liable to be set aside in favour of the assessees.

---