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Issues: Whether the clearances of two separately constituted units could be clubbed for denying SSI exemption and confirming duty, interest and penalties, in the absence of corroborative evidence of financial flow back or mutuality of interest.
Analysis: The units were separately located, separately registered and independently equipped for manufacture. The record did not establish that one unit was a dummy of the other or that the common family ownership by itself could justify clubbing. The Tribunal found no reliable evidence of mutuality of interest, financial intertwining or flow back of funds; the loans referred to in the record were shown to be between individuals and the units and were repaid with interest. The Tribunal also noted that the show cause notice did not allege that one unit was a dummy unit. In these circumstances, the legal basis for clubbing clearances under the SSI exemption notification was absent, and the consequential demand, interest and penalties could not survive.
Conclusion: The clearances could not be clubbed, and the SSI exemption under Notification No. 8/2003-CE remained available; the demand, interest and penalties were unsustainable and were set aside.
Final Conclusion: The appeals succeeded and the assessee obtained consequential relief because the two units were held to be independent manufacturers for SSI purposes.
Ratio Decidendi: Separate corporate existence, independent manufacturing infrastructure and absence of proved financial flow back or mutuality of interest preclude clubbing of clearances for SSI exemption purposes.
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