Clubbing of unit clearances denied SSI exemption where common premises, shared machinery, and evidence of duty evasion were established.

Clearances from the two units were clubbed for SSI exemption purposes because the evidence showed a single operational setup: the units functioned from the same premises, shared machinery and electricity, and lacked proof of separate premises, machinery, raw materials, or employees. The contemporaneous statements of the director and partner, together with surrounding records, supported the finding that the arrangement was structured to keep aggregate clearances within the SSI limit. Allegations of retraction and procedural defects were insufficient to displace the substantive evidence of commonality and duty evasion, so the combined turnover was treated as ineligible for exemption and the duty demand and penalties were sustained.

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Issues: Whether the clearances of the two units were liable to be clubbed for determining eligibility to Small Scale Industry exemption under Notification No. 8/2002-CE dated 01.03.2002, and whether the consequent duty demand and penalties were sustainable.

Analysis: The units were found to have operated from the same premises with only a different door number being used, and the record showed common machinery, a single electricity connection, and no convincing proof of separate premises, separate machinery, separate raw material, or separate employees. The statements of the concerned director and partner, along with the contemporaneous material, supported the conclusion that the arrangement was devised to keep the aggregate clearances within the SSI limit. The objections based on alleged retraction and procedural infirmities were not found sufficient to displace the substantive evidence establishing the commonality of operations and the attempt to evade duty.

Conclusion: The clearances were rightly clubbed, the SSI exemption was unavailable on the combined turnover, and the duty demand and penalties were upheld.

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