SSI exemption clubbing fails where units remain independently registered, separately run, and lacking clear financial flowback.

Separate registration, distinct manufacturing premises, independent machinery, electricity and bank accounts, and separate statutory records were treated as strong evidence that the units were independent for SSI exemption purposes. Common family control, shared management, inter-unit transactions, or occasional payment transfers were held insufficient by themselves to prove mutuality of interest or financial flowback. A trading concern could not be clubbed with manufacturing units without clear evidence that the units were not independent or that one was a dummy unit. On that basis, clubbing of clearances was rejected and the denial of SSI exemption, with duty, interest and penalties, was set aside.

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Issues: Whether the clearances of the appellant units could be clubbed for denying SSI exemption and demanding duty, interest and penalty.

Analysis: The units were found to be separately located, separately registered, maintaining separate accounts, having their own machinery, electricity connections, bank accounts and statutory registrations. Common family control, common managerial involvement, some inter-unit financial dealings, or occasional receipt and transfer of payments did not by themselves establish mutuality of interest or financial flowback sufficient to treat the units as one. A trading concern could not be clubbed with manufacturing units. The precedents relied upon by the Revenue were distinguished, while the principle emerging from the cited authorities was that clubbing requires clear evidence that the units are not independent and that one is a dummy or that there is substantive financial intertwining.

Conclusion: The clearances could not be clubbed, the denial of SSI exemption was unsustainable, and the demand of duty, interest and penalties was set aside.

Final Conclusion: The appeals succeeded and the impugned order was annulled, with consequential relief.

Ratio Decidendi: Separate registration, independent manufacturing infrastructure, and absence of conclusive financial flowback or mutuality of interest are necessary to sustain clubbing of clearances for SSI exemption purposes.

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