Clubbing of clearances and clandestine removal require concrete evidence, not family ties or uncorroborated statements.

Clubbing of clearances to deny small-scale exemption requires evidence of mutuality of interest or financial interdependence; separate registration, distinct locations, and independent resources weigh against aggregation. Mere family relationship or occasional assistance between proprietors is insufficient. The article also notes that clandestine manufacture and removal allegations must be proved with positive corroborative evidence, such as material on production, diversion, buyers, employees, raw material flow, or power consumption. Invoice descriptions, ledger entries, and retracted statements alone do not establish duty evasion or justify confiscation and related demands.

---

---

Issues: (i) whether the clearances of the different units were liable to be clubbed so as to deny small scale exemption and sustain the demand and penalties raised against the assessee; (ii) whether the confiscation and duty demands based on alleged clandestine manufacture and clearance of air-conditioners were sustainable.

Issue (i): whether the clearances of the different units were liable to be clubbed so as to deny small scale exemption and sustain the demand and penalties raised against the assessee.

Analysis: The units were separately registered, located at different places, and operated with their own financial resources. Mere relationship between the proprietors as husband and wife, or occasional assistance by one in the affairs of the other, did not by itself establish that the units were a facade or that their clearances had to be clubbed. The record did not show mutuality of interest or financial inter-twining sufficient to justify clubbing. In addition, the proposed clubbing could not be sustained where other units whose clearances were sought to be aggregated were not put to notice.

Conclusion: The clubbing of clearances was not justified and the resulting duty demand and connected penalties were unsustainable.

Issue (ii): whether the confiscation and duty demands based on alleged clandestine manufacture and clearance of air-conditioners were sustainable.

Analysis: Allegations of clandestine removal must rest on positive and tangible evidence, not on conjecture or suspicion. The disputed goods were not proved to be air-conditioners removed without duty payment merely because of invoice descriptions or ledger entries. The evidence regarding manufacture, diversion of compressors, and alleged removals was not sufficiently corroborated by buyers, employees, raw material flows, power consumption, or other independent material. The retracted statements relied upon by the Revenue were not enough, by themselves, to discharge the burden of proof in the absence of reliable supporting evidence.

Conclusion: The confiscation and duty demands based on alleged clandestine removal were not sustainable to the extent rejected by the majority, while the final order upheld only the portions specifically sustained in the majority disposition.

Final Conclusion: The appeals were disposed of by allowing the assessee's challenge substantially on the clubbing issue and on several confiscation and demand components, while sustaining only the portions of duty, penalty, and confiscation expressly confirmed in the majority final order.

Ratio Decidendi: Clubbing of clearances requires evidence of mutuality of interest or substantive interdependence beyond family relationship or occasional assistance, and clandestine excise demands must be supported by positive corroborative evidence, not mere suspicion or uncorroborated statements.

---