Dummy unit cannot claim small-scale exemption when clearances are split and manufacturing activity is absent.

A unit with no genuine plant, machinery, raw material stock or manufacturing activity was treated as a dummy or benami concern used with a related family-controlled entity to split clearances and wrongly claim small-scale industry exemption. Statements and records showed that production facilities and operations were at the other premises, while purchase and manufacture documents in the alleged unit's name were found fabricated. On that evidence, the exemption denial was upheld and the duty demand and penalties were sustained against both concerns.

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Issues: Whether the second concern was only a benami or dummy unit of the first concern so as to avail small-scale industry exemption by splitting clearances, and whether the duty and penalties confirmed against both units were sustainable.

Analysis: The investigation showed that the alleged manufacturing unit had no effective plant, machinery, raw material stock, or manufacturing operations, while the records and equipment necessary for production were found at the other premises. Statements recorded in the course of investigation supported the conclusion that the two concerns were family-controlled entities acting in concert. The documents showing purchases and manufacture in the name of the alleged unit were treated as fabricated, and the unit was found to be a conduit used to divide clearances and wrongly claim exemption.

Conclusion: The finding that the unit was a dummy concern and that the exemption had been wrongly availed was upheld, and the duty demand and penalties were sustained against the appellants.

Final Conclusion: The appeals failed on merits, and the orders confirming liability against both concerns were maintained.

Ratio Decidendi: A concern that has no genuine manufacturing activity and is shown by evidence to be a dummy or benami unit used to split clearances cannot claim small-scale industry exemption, and the resulting duty and penalty confirmations are sustainable.

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