Clubbing of independent units for SSI exemption is not allowed absent common control, financial flowback, or sham splitting of activity.

Clearances of separate manufacturing units could not be clubbed for SSI exemption where each unit was independently registered, used its own raw materials, carried out separate manufacture, and sold directly to its own customers. In the absence of evidence of common control, financial flowback, inter-unit movement of finished goods, or a sham arrangement to split activity and evade duty, each unit had to be treated on its own status for Notification No. 175/86-C.E. The Revenue's challenge was rejected.

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Issues: Whether the clearances of the eight units could be clubbed for the purpose of availing the exemption under Notification No. 175/86-C.E. dated 01.03.1986.

Analysis: The units were separately registered and the record showed that each unit had its own raw materials, independent manufacture, direct sales to its own customers, and separate registration with the excise and other authorities. There was no material to show common control, financial flowback, inter-unit movement of finished goods, or that the manufacturing activity had been split up as a facade to evade duty. The factual finding that the units were independent was not effectively rebutted.

Conclusion: The clearances could not be clubbed and the exemption dispute had to be decided on the basis of each unit's independent status. The Revenue's appeal was rejected.

Ratio Decidendi: Clubbing of clearances for SSI exemption is not permissible in the absence of evidence of common control, financial flowback, interdependence, or a contrived arrangement to evade duty, where the units are independently established and separately functioning.

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