Separate legal entity principle bars clubbing of a private limited company's production with other units for exemption limits.

A limited company was treated as a separate legal entity for excise exemption purposes, so its production could not be clubbed with the production of other units merely because of common inter-relationship. Applying the relevant departmental circulars and the 1956 clarification, the Tribunal held that each public or private limited company manufacturing goods was entitled to a separate exemption limit. The earlier finding of inter-relationship between the units was left undisturbed, but the remand was confined to the effect of the circular on the limited company unit.

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Issues: Whether the production of a private limited company could be clubbed with the production of the other units for the purpose of exemption limit.

Analysis: The Tribunal applied the departmental circulars relied on by the parties and read the relevant 1956 clarification as treating limited companies, whether public or private, as separate entities distinct from their shareholders. On that basis, each limited company manufacturing goods was entitled to a separate exemption limit. The earlier finding of inter-relationship between the units was not disturbed, but the remand was confined to the effect of the circular on the limited company unit.

Conclusion: The production of Supreme Washers (P) Ltd. could not be clubbed with the production of LD Industries and LR Industries for assessment purposes.

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