Clubbing of clearances requires proof of common control or financial interlinking; separate registered units were treated as independent.

Separate and independently registered manufacturing units cannot have their clearances clubbed unless there is cogent evidence of common control, financial interlinking, or mutual dependence showing they function as one unit. Here, the appellate authority found that the two concerns were distinct units, that no flow of funds or common financial control was shown, and that the Revenue produced no positive material to rebut those findings. On that basis, clubbing of clearances was not legally sustainable, and the demand of duty and consequential penalties could not be upheld.

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Issues: Whether the clearances of two separately registered units belonging to brothers could be clubbed and whether the demand of duty and penalties could be sustained in the absence of evidence of interdependence or flow of funds.

Analysis: The appellate authority found that the two concerns were separate and independent units, each duly registered with the Central Excise department. It recorded that there was no flow of funds between them, no material showing common financial control, and no sufficient evidence to support the allegation of mutual dependence. The Revenue did not produce any positive evidence to rebut these findings. In such circumstances, the legal basis for treating the two units as one and the same for clubbing of clearances was absent.

Conclusion: The clearances could not be clubbed, and the demand of duty and the consequential penalties were unsustainable.

Final Conclusion: The appeal failed and the order granting relief to the assessee was maintained.

Ratio Decidendi: Separate and independently registered manufacturing units cannot have their clearances clubbed in the absence of cogent evidence of common control, financial interlinking, or other material showing that they function as one unit.

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