Clubbing of unit clearances requires notice to both units before denying small-scale exemption and raising duty demand.

Clubbing the clearances of two separately projected units to deny small-scale exemption required notice to both units before duty could be demanded. Where no show cause notice was issued to the other unit whose clearances were included in the aggregation, the proceedings were defective and could not be sustained. The demand and penalty were set aside as bad in law for want of notice to the other unit.

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Issues: Whether the demand and penalty could be sustained when the clearances of two units were clubbed for denial of small-scale exemption but no show cause notice was issued to the other unit whose clearances were included in the computation.

Analysis: The aggregate value of clearances of the appellant and the other unit was treated as exceeding the exemption threshold under the small-scale industry notifications. The Tribunal applied the settled principle that where duty demand is raised by clubbing the clearances of two separately projected units, both units must be put to notice. Absence of notice to the other unit whose clearances were clubbed rendered the proceedings defective, and the objection was accepted at the threshold without examining the merits.

Conclusion: The demand and penalty were set aside as bad in law for want of notice to the other unit whose clearances had been clubbed.

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