Common factory premises can require clubbing of clearances, defeating separate SSI exemption claims for two units.

Separate Small Scale Industry exemption was unavailable where two entities operated from a common factory premises with shared machinery, workers, capital goods and electricity, and no effective segregation of the units was shown. The exemption notification applied to the aggregate value of clearances from the factory where specified goods were cleared by one or more manufacturers, so the clearances of both units had to be clubbed for determining eligibility within the exemption limit. On those facts, the two units could not claim independent SSI treatment, and the clubbing principle governed the exemption computation.

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Issues: Whether the assessee was entitled to separate Small Scale Industry exemption for two entities when the goods were manufactured from a common factory premises and the clearances were liable to be clubbed for the purpose of the aggregate exemption limit.

Analysis: The premises were found to be common, with manufacturing activity, capital goods, workers and electricity connection being shared, and there was no effective segregation of premises, machinery or labour between the two units. The exemption notification provided that where specified goods are cleared by one or more manufacturers from a factory, the exemption applies to the aggregate value of clearances and not separately for each manufacturer. On the facts found, the clearances of both units were required to be treated together for determining eligibility to the exemption limit.

Conclusion: The assessee was not entitled to separate SSI exemption for the two units and the clubbing of clearances was .

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