Actual manufacture and facade unit: clearances were attributed to the true manufacturer, sustaining duty, interest, and penalty.

Clearances of C.I. castings were treated as the appellant's own clearances where the goods were actually manufactured by it but shown under another unit's bills to stay within the SSI exemption limit. A proprietor's unretracted statement admitted this arrangement, and surrounding facts showed the other unit had no manufacturing facilities, was non-operational, and had no raw materials or records, while its sale bills were recovered from the appellant's premises. On that basis, the other unit was found to be a mere facade, and the demand of duty and interest, together with the penalty, was sustained.

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Issues: Whether the clearances of C.I. castings manufactured by the appellant but shown under the bills of another unit were rightly attributable to the appellant, justifying demand of duty, interest, and penalty.

Analysis: The recorded statement of the proprietor admitted that the goods were manufactured by the appellant and cleared under the name of the other unit to remain within the SSI exemption limit. That statement was not retracted. The other unit had no manufacturing facilities, its factory was non-operational, and no records or raw material were found there. Sale bills of that unit were recovered from the appellant's premises, and the surrounding facts corroborated that the appellant was using the other unit's name only as a facade. The reasoning that the dispute was not one of clubbing of clearances, but of correctly computing the appellant's own clearances when the goods were actually manufactured by it, was upheld.

Conclusion: The duty demand and interest were sustained, and the penalty of Rs. 1 lakh was maintained; the appeal failed.

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