Clubbing of clearances upheld where family-run units were found to be dummy entities with common resources and financial interlinking.

Clearances from family-run units were held liable to be clubbed where the units operated from the same premises, were controlled by the same family set-up, and resources showed common machinery, common workers, diverted raw materials, shared banking transactions, and interlinked accounts. On these facts, the Tribunal found sufficient evidence of mutuality of interest and flow back of funds, concluding that the other units were dummy units created to suppress clearances and evade central excise duty. The clubbing of clearances was therefore upheld, along with the duty demand and penalties.

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Issues: Whether the clearances of the appellant and the other family-run units were liable to be clubbed on the footing that the other units were dummy units and whether the duty demand and penalties based on such clubbing were sustainable.

Analysis: The units were found to be operating from the same premises and to be controlled by the same family set-up. The record showed common use of machinery and workers, shared or diverted raw materials, common handling of bank transactions, and accounts of one unit being reflected in another. The appellant did not satisfactorily explain the specific allegations relating to common use of resources, diversion of materials, and financial interlinking. On these facts, the Tribunal held that there was sufficient evidence of mutuality of interest and flow back of funds, supporting the conclusion that the other units were only dummy units created to suppress clearances and evade central excise duty.

Conclusion: The clubbing of clearances was justified, the duty demand and penalties were upheld, and the appeal was dismissed.

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