Small scale exemption can be denied when separate units operate under substantial control of one principal concern.

Small scale exemption may be denied where ostensibly separate units are shown by evidence to function under the substantial control of a principal concern. Here, factual findings on unsecured loans, proximate location, management and marketing control, cylinder procurement, and the pricing gap between purchase and sale of bottled gas supported the view that the units lacked independent business identity. The incorporation papers and denial of mutuality of interest or cash flowback were insufficient without documentary rebuttal of those findings. Earlier proceedings involving the same main concern were treated as relevant to the common factual pattern, and the exemption denial and duty demand were sustained on merits.

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Issues: Whether the units were independent entities entitled to small scale exemption, or whether they were front companies under the control of the main appellant so as to justify denial of exemption and confirmation of duty demand.

Analysis: The lower authorities recorded factual findings regarding unsecured loans, common or proximate location of the units, control over management and marketing, procurement of cylinders, and the difference between purchase price and sale price of bottled gas. The appellants relied mainly on incorporation documents and denied mutuality of interest or cash flowback, but did not produce documentary evidence to dislodge the recorded findings. The earlier proceedings involving the same main appellant were found relevant on the common factual pattern, and the cited decisions were held not to assist the appellants on the facts of the present case.

Conclusion: The finding that Appellants 2 to 4 were front companies under the control of Appellant No. 1 was upheld, and the denial of exemption and duty demand were sustained.

Final Conclusion: The appeals failed on merits because the factual findings of common control and lack of independent business identity were not shown to be perverse or unsupported by evidence.

Ratio Decidendi: A claim to small scale exemption can be denied where the evidence shows that ostensibly separate units are under the substantial and overriding control of a principal concern and the contrary is not rebutted by credible documentary proof.

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