Clubbing of industrial clearances requires proof of mutual business interest or financial flow-back; notice quashed for lack of basis.

Clubbing of clearances to deny small-scale exemption requires material showing mutuality of business interest, common funding or financial flow-back; mere proximity of units, family relationship or some common operational features is insufficient. On the face of the notice and record, the petitioner's unit had separate registration, a separately approved rental arrangement, an excise licence, its own bank account, electricity arrangements and regular RT-12 returns. As the proposed clubbing lacked jurisdictional basis and supporting material, the show cause notice was quashed and the petitioner was held entitled to exemption in accordance with law.

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Issues: Whether the show cause notice proposing to club the clearances of two nearby industrial units and deny the petitioner's small-scale exemption was liable to be quashed for want of jurisdiction and material.

Analysis: The petitioner's unit had separate registration, a separately approved rental arrangement, excise licence, bank account, electricity arrangements and regular RT-12 returns. The proposed clubbing rested mainly on proximity of the units, family relationship and some common operational features. The decisive requirement for clubbing clearances was held to be material showing mutuality of business interest, common funding or financial flow-back, which was absent on the face of the notice and record. In these circumstances, the Court held that there was no basis to compel the petitioner to undergo further proceedings before the excise authority, notwithstanding the availability of statutory remedies.

Conclusion: The show cause notice was without jurisdiction and was quashed; the petitioner was held entitled to exemption in accordance with law.

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