Dummy unit test requires control over production and finances; common management alone does not justify clubbing clearances.

Separate incorporation, independent registrations, licences, machinery, employees and balance sheets supported distinct legal and business identities. Common management or a shared director was held insufficient by itself to treat one manufacturer as a dummy unit of another; clubbing of clearances required evidence of control over both production and finances, which was not shown on the record. The finding of dummy status was set aside, and the consequential denial of small scale industry exemption, duty demand and penalties on the company and its director were also set aside.

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Issues: Whether Asclepius Pharmaceuticals Pvt. Ltd. was a dummy unit of A.C. Pharmaceuticals Pvt. Ltd. so as to justify clubbing of clearances, denial of small scale industry exemption, and consequent duty and penalty demands.

Analysis: The two companies were separately incorporated and maintained distinct legal and business identities, including separate registrations, licences, machinery, employees, and balance sheets. Mere common management or participation of the same director was held insufficient to establish dummy status. To treat one unit as a dummy of another, there must be control over both production and finances, which was not established on the record.

Conclusion: The finding that Asclepius Pharmaceuticals Pvt. Ltd. was a dummy of A.C. Pharmaceuticals Pvt. Ltd. was set aside, as were the demand of duty, the denial of SSI exemption, and the penalties imposed on the appellant company and its director.

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