SSI exemption clubbing turns on actual supervision and control, not mere supply of materials or brand specifications.

Clearances from an independent job-worker's factory are not to be clubbed with the appellant's clearances for small scale industry exemption unless the assessee exercises supervision and control over the manufacture so that the other unit becomes a mere extension of the assessee. Mere supply of raw materials, brand specifications, or quality control is insufficient by itself to justify aggregation where the manufacturing unit remains independently operated under a contractual arrangement. On the stated facts, the independent unit's goods could not be treated as manufactured by the appellant, and the exemption entitlement had to be examined separately.

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Issues: Whether the clearances from the appellant's factory and from the job-worker factory were required to be clubbed for determining eligibility to the small scale industry exemption under Notification No. 175/86-C.E.

Analysis: The appellant and the other unit were independent limited companies manufacturing in separate factories. The appellant had no control or day-to-day supervision over the manufacturing activity of the other unit, and the work was carried out under an independent contractual arrangement. In the absence of evidence that the appellant exercised supervision and control over the manufacture, the goods manufactured by the other unit could not be treated as being manufactured by the appellant for the purpose of aggregation of clearances. The Tribunal applied the settled principle that mere supply of raw materials, brand specifications, or quality control does not by itself justify clubbing when the manufacturing unit remains independent.

Conclusion: The clearances were not liable to be clubbed, and the appellant was entitled to the exemption benefit independently.

Ratio Decidendi: For SSI exemption, clearances of an independent manufacturing unit are not clubbed with those of another unit unless the assessee is shown to exercise supervision and control over the manufacture so as to make the other unit a mere extension or loan-licensee arrangement.

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