Small scale exemption and clubbing of clearances depend on common manufacture across factories, not separate registrations or premises.

Small scale industry exemption under Notification No. 7/97-CE was available only where aggregate clearances from all factories of the same manufacturer stayed within the prescribed limit. On the facts stated, the assessee ran two factories, one for cloth and the other for Polymer Vinyl Acetate and adhesives, and the common balance sheet showed both units belonged to the same manufacturer. Separate entrances, staff, or excise registrations did not prevent clubbing because the notification required aggregation of clearances from all factories of the manufacturer. Earlier decisions relied on by the assessee were distinguished, while the principle in Gammon Far Chems was applied to support clubbing of clearances.

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Issues: Whether the appellant was entitled to small scale industry exemption under Notification No. 7/97-CE dated 01.03.1997, or whether the clearances from its two factories were liable to be clubbed for determining the aggregate turnover limit.

Analysis: The exemption notification applied only where the aggregate value of clearances of all excisable goods from one or more factories, or from a factory by one or more manufacturers, did not exceed the prescribed limit in the preceding financial year. The appellant admittedly had two factories, one manufacturing cloth and the other manufacturing Polymer Vinyl Acetate and adhesives. The decisive factor was not separate entrances, separate staff, or separate excise registrations, but the fact that both units belonged to the same manufacturer, as reflected by the common balance sheet. Since the notification required aggregation of clearances from all factories of the manufacturer, the clearances of both units had to be clubbed. The cited decisions relied on by the appellant were distinguished, while the principle in Gammon Far Chems was found applicable.

Conclusion: The appellant was not entitled to the exemption and the duty demand was rightly upheld; the question of law was answered against the assessee and in favour of the Revenue.

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