Clubbing of clearances requires proof of dummy units and lack of independent existence; mere family links are insufficient.

Clearances of multiple units could not be clubbed for SSI exemption purposes unless the Revenue proved that one unit was the real entity and the others were mere dummies or shams with no independent existence. Separate excise, income-tax and sales tax registrations, together with independent manufacturing capability, supported distinct treatment of the units. Mere family connection, common business advantage, or inter-unit financial dealings was insufficient without proof of mutuality of interest and financial flow-back showing lack of independence. On that basis, the demand for clubbing failed and denial of SSI exemption was not sustainable.

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Issues: Whether the clearances of the nine units could be clubbed and SSI exemption denied on the footing that they were dummy or interdependent units with mutuality of interest and financial flow-back.

Analysis: The record showed that the units had separate excise, income-tax and sales tax registrations and independent manufacturing capability. The finding of clubbing could be sustained only if the Revenue established that one unit was the real unit and the others were mere dummies or shams. Mere family relationship, common business benefit, or inter-unit financial transactions, without proof that the units lacked independent existence, was insufficient to justify clubbing. The Board's clarification issued under Section 37B of the Central Excise Act, 1944 and the principles applied in the remand proceedings supported separate treatment of genuinely independent units. Since the adjudicating authority's final finding was that the charges did not sustain and the units were not dummies, the demand for clubbing could not stand.

Conclusion: The clearances could not be clubbed and the denial of SSI exemption was not justified; the Revenue's appeal failed.

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