SSI exemption and clubbing of clearances hinge on independent manufacture and use of the same factory during the relevant period.

SSI exemption under Notification No. 8/2003-C.E. was available where the appellant began manufacturing in a leased factory and its clearances during the relevant period stayed within the SSI limit. Clubbing of clearances under clause (vi) of para 2 was not justified because the earlier manufacturer had stopped manufacturing in the premises and had only cleared stock on payment of duty, with no record showing both manufacturers clearing goods from the same factory during the relevant period. On that basis, the appellant was treated as an independent manufacturer and the duty demand was set aside.

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Issues: Whether the appellant was entitled to SSI exemption and whether the clearances of the appellant and the earlier manufacturer could be clubbed under clause (vi) of para 2 of Notification No. 8/2003-C.E. dated 01.03.2003.

Analysis: The appellant commenced manufacturing in the leased factory from 10.11.2006 and the clearances made by it during the relevant period remained within the SSI limit. The earlier manufacturer had ceased manufacturing in the premises and had cleared only stock after paying duty. The record did not show that both manufacturers were clearing goods from the same factory during the relevant period. In these circumstances, the appellant was to be treated as an independent manufacturer and the condition for clubbing of clearances under the notification was not attracted.

Conclusion: The denial of SSI exemption was unsustainable and the duty demand could not be upheld; the appeal succeeds in favour of the assessee.

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