Clubbing partnership firm looms for excise levy fails where common partnership alone does not make the firms one person.

Rule 96-J levy could not be computed by clubbing the looms of two distinct partnership firms merely because one partner was common to both. The governing test was whether the looms were worked by or on behalf of the same person; separate firms were not the same person where neither was a partner in the other and the statute did not so provide. On that reasoning, aggregation of the looms was impermissible and the consequential detention orders based on the combined levy could not stand. The writ petitions challenging the demand and detention were allowed, while the connected request for a licence was left to be pursued before the authorities according to law.

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Issues: Whether, for levy under Rule 96-J of the Central Excise Rules, the looms of two separate partnership firms could be clubbed merely because one partner was common to both firms, and whether the detention orders based on such aggregated levy were sustainable.

Analysis: Rule 96-J fixed the duty rate by reference to the number of powerlooms worked by or on behalf of the same person in the manufacture of cotton fabrics. The legal test was whether the production and ownership could be attributed to the same person within the meaning of the rule. A partner's interest in more than one firm did not make the two firms the same person for levy purposes, particularly where the firms were distinct and neither was a partner in the other. The reasoning adopted by the Supreme Court in a similar rule, which was in pari materia, negatived the aggregation of looms merely because one individual was a partner in both firms. On that principle, the departmental attempt to club the looms of the two concerns could not be sustained.

Conclusion: The levy based on combining the looms of the two partnership firms was illegal, and the consequential detention orders could not stand.

Final Conclusion: The writ petitions challenging the demand and detention were allowed, while the request for a licence in the connected matter was left to be pursued before the authorities according to law.

Ratio Decidendi: For a duty regime keyed to units worked by or on behalf of the same person, distinct partnership firms cannot be clubbed for levy merely because one partner is common to both; the firms remain separate entities unless the statute expressly treats them otherwise.

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