Dummy unit findings justified clubbing clearances and denial of SSI exemption where business control and finances were interlinked.

Common management, shared control, interlinked finances, common personnel, and flow-back of funds supported treating the appellant unit as a dummy concern of the sister unit. On those facts, the authorities were justified in clubbing clearances and denying small scale industry exemption under Notification No. 9/2000-CE. The record also supported the consequential duty demand, interest, and penalty because the units were not operating as independent businesses and their invoices, payments, and operations were intermingled.

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Issues: Whether the appellant unit was a dummy of the sister concern so as to justify clubbing of clearances and denial of small scale industry exemption under Notification No. 9/2000-CE, and whether the demand, interest and penalty were sustainable.

Analysis: The records showed common management, common logo, maintenance of accounts in the premises of the sister concern, common personnel handling the affairs of both units, unsecured loans without conditions, and repeated financial assistance and fund flow between the units. The evidence also indicated intermingling of invoices, payments, and business operations, which supported the finding that the two concerns were not functioning as independent units. On these facts, the authorities below were justified in treating the appellant as a dummy unit and in denying the benefit of SSI exemption. The consequential demand and penalty were also supported by the record.

Conclusion: The denial of SSI exemption and the consequential duty demand and penalty were upheld against the appellant.

Ratio Decidendi: Where two units exhibit common management, shared business control, interlinked finances, and financial flow-back showing mutuality of interest, their clearances may be clubbed and SSI exemption denied on the footing that the purportedly separate unit is only a dummy unit.

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