Clubbing of clearances and assessable value inclusion require substantive evidence of common control and manufacture-related linkage, not mere suspicion.
Clubbing of clearances for small scale exemption requires substantive evidence that two units are not independent, such as common funding, financial flow back, or other proof of a single manufacturing and commercial entity; mere proximity, shared access, or common storage is insufficient. On the stated facts, separate registrations, bank accounts, and independent dealings supported distinct existence, so clubbing was not justified. The value of bought-out or imported items supplied separately from a godown and fitted at the buyer's premises is not includible in the assessable value where those items are merely traded, invoiced separately, and not manufactured or processed as part of the final product. The demand and penalties were therefore unsustainable.
Issues: (i) Whether the clearances of two units were liable to be clubbed for denial of small scale exemption; (ii) Whether the value of bought-out/imported items supplied from a godown and fitted at the buyer's premises was includible in the assessable value of the dental chairs.
Issue (i): Whether the clearances of two units were liable to be clubbed for denial of small scale exemption.
Analysis: Clubbing of clearances requires substantive evidence showing that the units are not independent and that there is common funding, financial flow back, or other material indicating a single manufacturing and commercial entity. Mere proximity of premises, common passage, common storage, or inter-relationship between persons is insufficient. Separate statutory registrations, bank accounts, and independent business dealings support the distinct existence of the units. In the absence of a concrete rebuttal to the findings recorded by the lower appellate authority, the allegation of clubbing cannot be sustained.
Conclusion: The clearances of the two units were not liable to be clubbed, and the finding was in favour of the assessee.
Issue (ii): Whether the value of bought-out/imported items supplied from a godown and fitted at the buyer's premises was includible in the assessable value of the dental chairs.
Analysis: Where goods are merely traded and supplied separately from a godown under commercial invoices, and no manufacturing process is undertaken in relation to those items in the factory premises, their value does not form part of the assessable value of the manufactured final product. Optional accessories and hand-pieces which can be procured separately or fitted by the buyer are not automatically includible merely because they are used with the dental chair. The evidence showed that the disputed items were supplied independently and were not manufactured or processed as part of the dental chair clearance.
Conclusion: The value of the bought-out/imported items was not includible in the assessable value, and the finding was in favour of the assessee.
Final Conclusion: The Revenue failed to dislodge the appellate findings, and the demand of duty and penalties was unsustainable.
Ratio Decidendi: Clubbing of clearances and inclusion of bought-out goods in assessable value can be upheld only on the basis of substantive evidence showing common control, financial flow back, or manufacture-related inclusion of the disputed items; suspicion or proximity alone is insufficient.
TaxTMI 
AI Drafter ✕
TaxTMI 
