SSI exemption and clubbing of clearances cannot rest on subsidiary status alone; liability must attach to the correct manufacturer.

SSI exemption could not be denied and clearances could not be clubbed merely because one unit was a subsidiary company, where the relevant notifications did not expressly create such a clubbing condition. Separately incorporated units could not be treated as a single assessee on subsidiary status alone. Even on an assumption of mutuality of interest, any manufacturer-level liability had to be fastened on the holding company said to operate the factories, not on the subsidiary against whom duty was demanded. The demand, consequential penalties and confiscation against the subsidiary were therefore unsustainable, and the impugned order was set aside.

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Issues: Whether the benefit of SSI exemption could be denied and clearances clubbed merely because the appellant was a subsidiary company, and whether the duty demand could be sustained against the subsidiary instead of the holding company.

Analysis: The applicable SSI notifications in force during the dispute did not contain a condition comparable to the one considered in the cited precedent under a different notification. Mere subsidiary status did not justify clubbing of clearances where the units were separately incorporated. Even assuming mutuality of interest, the reasoning indicated that any manufacturer-level liability would attach to the holding company that allegedly operated the two factories, not to the subsidiary against whom the demand was raised.

Conclusion: The denial of SSI exemption and the duty demand against the subsidiary were not sustainable.

Final Conclusion: The impugned order was set aside and the appeal was allowed, with the demand and consequential penalties and confiscation against the appellant failing.

Ratio Decidendi: Under SSI exemption notifications that do not expressly provide for clubbing on the basis of subsidiary status, clearances cannot be clubbed merely because one unit is a subsidiary of another; any liability must be fixed on the correct manufacturer.

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