Separate legal identity and show cause consistency defeat clubbing, clandestine removal, and extended limitation claims against the assessee.

Separate SSI and Central Excise registrations, independent books, audited accounts, purchases, sales, labour and supervisors, and distinct locations supported recognition of the four units as separate entities; mere common control was insufficient to treat them as dummy units, so the clubbing case, clandestine removal demand, confiscation and related penalties could not survive. The demand was also vulnerable because the show cause notice and confirmed demand were inconsistent, and the department already knew the relevant facts from earlier proceedings, negating suppression and extended limitation. On that basis, the demand, interest and penalty were held unsustainable and the adjudication order was set aside.

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Issues: (i) Whether the four units could be clubbed and the duty demand, penalties and confiscation sustained on the basis of alleged dummy nature, common control and clandestine removals. (ii) Whether the demand was vitiated by inconsistency between the show cause notice and the confirmed demand, and whether the proceedings were barred by limitation.

Issue (i): Whether the four units could be clubbed and the duty demand, penalties and confiscation sustained on the basis of alleged dummy nature, common control and clandestine removals.

Analysis: The units had separate SSI and Central Excise registrations, separate audited accounts, separate books, separate purchases and sales, separate labour and supervisors, and were geographically distinct. Mere common control by one person did not by itself establish that the concerns were non-existent dummy units. The finding of clubbing was also inconsistent with the department's own treatment of separate clearances and separate duty demands in respect of the other units. The alleged clandestine removals and related confiscation and penalty orders could not survive once the foundational case for clubbing and duty demand failed.

Conclusion: The finding of clubbing, the clandestine removal demand, confiscation and the connected penalties were not sustainable and were set aside in favour of the assessee.

Issue (ii): Whether the demand was vitiated by inconsistency between the show cause notice and the confirmed demand, and whether the proceedings were barred by limitation.

Analysis: The show cause notice proceeded on one footing while the adjudication confirmed a substantially different and higher demand. The notice and the confirmed demand were therefore in conflict. In addition, the department had prior knowledge of the units and the relevant facts from earlier proceedings, yet no effective clubbing notice was issued at that stage. On these facts, suppression could not be sustained and limitation operated against the demand. Once the demand failed, the penalty under Section 11AC and the interest demand also could not survive.

Conclusion: The demand was not maintainable, was barred by limitation, and the consequential penalty and interest were also unsustainable in favour of the assessee.

Final Conclusion: The order of adjudication was set aside in its entirety and the appeals were allowed, with all duty demands, confiscation, redemption fine, interest and penalties failing to survive.

Ratio Decidendi: Separate legal identity supported by independent registrations, accounts and operations cannot be displaced merely by common control, and a demand cannot be sustained when it travels beyond the scope of the show cause notice or is issued after the relevant facts were already within departmental knowledge so that suppression and extended limitation are not established.

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