Clubbing of clearances requires proof of financial interdependence; separate units retained independent exemption benefits.
Clearances of two separately registered manufacturing units could not be clubbed merely because they operated from the same premises and had a common partnership. The appellate authority found no evidence of common funding, financial flow-back, mutuality of business interest, or profit movement between the units, and separate income tax and sales tax registrations supported their independent existence. Mere common ownership structure was insufficient to treat one unit as a dummy of the other. On that basis, both units remained entitled separately to the exemption under Notification No. 8/2003, and the Revenue's challenge failed.
Issues: Whether the clearances of two separately registered units could be clubbed on the ground that one was a dummy of the other, and whether the benefit of exemption under Notification No. 8/2003 dated 01.03.2003 was available separately to both units.
Analysis: The demand had been confirmed by treating the two units as one, but the appellate authority found that the units operated from the same premises without evidence of common funding, financial flow-back, or mutuality of business interest. The record showed separate income tax and sales tax registrations, and there was no material to establish that either unit financed the other or that profits or sale proceeds moved between them. Mere common partnership was held insufficient to prove that one unit was a dummy of the other. The Revenue did not produce any contrary evidence to disturb these findings.
Conclusion: The clearances of the two units could not be clubbed, and both were entitled separately to the benefit of the exemption notification. The Revenue's appeal failed.
Final Conclusion: The dismissal of the Revenue's challenge left intact the finding that the two units were separate and independent for exemption purposes.
Ratio Decidendi: Clubbing of clearances cannot be sustained without evidence of financial inter-twining, common funding, or flow-back of funds showing that the units are not separate and independent entities.
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AI Drafter ✕
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