Clubbing of clearances for SSI exemption failed where separate units operated independently and no evidence proved clandestine removal.

Separate manufacturing units cannot be clubbed to deny SSI exemption unless the Revenue produces reliable corroborative evidence of common control, clandestine manufacture, unrecorded clearances, flow-back, or other material showing that one unit was merely invoicing through another exempt unit. On the facts, the units were found independently functioning with machinery and stock present, while the allegations rested mainly on third-party statements and presumptions. The clubbing theory failed for want of supporting evidence, so the duty demand, penalties, and confiscation-related consequences were unsustainable.

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Issues: Whether the clearances of the appellant units could be clubbed so as to deny SSI exemption and sustain the duty demand on the allegation of clandestine removal and invoicing through another exempt unit.

Analysis: The demand was founded on the premise that one manufacturing unit was clearing goods in the name of another unit enjoying area-based exemption, and on related allegations concerning seized goods, packing material, and alleged movement of raw materials. The records showed that the units were separate, functioning independently, and were found operational during physical verification with machinery and stock present. The Revenue did not produce corroborative evidence of clandestine manufacture, unrecorded clearances, flow-back, excess consumption, or any reliable material to support clubbing. The demands based on third-party statements and presumptions were not sustained in the absence of supporting evidence.

Conclusion: The clearances could not be clubbed, SSI exemption could not be denied, and the duty demands, penalties, and confiscation-related consequences were unsustainable.

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