SSI clubbing requires proof of common funding and financial flowback; shared management or premises alone is insufficient.

Clubbing of clearances for SSI exemption is not permissible merely because two units share management, labour or premises. The decisive requirement is evidence of common funding and financial flowback; in their absence, aggregation of clearances cannot be used to deny small scale exemption or sustain duty demand. A prior finding that the alleged dummy-unit allegation did not survive also supported rejection of the clubbing theory, and unit registration was treated as irrelevant to the SSI benefit issue. On this basis, the departmental challenge to the dropping of demand failed.

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Issues: Whether the clearances of two units could be clubbed for denying small scale exemption and confirming duty in the absence of any allegation or proof of common funding and financial flowback.

Analysis: The demand was founded on the allegation that one unit was created as a dummy of the other and that the clearances should therefore be aggregated for the purpose of the SSI notification. However, no common funding or financial flowback was alleged in the show-cause notice. The finding relied on by the Tribunal is that, even where two units share common features such as management, labour or premises, clubbing is not permissible without evidence of common funding and financial flowback. The record also contained a prior appellate finding that the alleged dummy-unit allegation against one of the units did not survive, and that finding was not shown to have been challenged. The distinction based on registration of the units was held irrelevant for the SSI benefit issue.

Conclusion: Clubbing of clearances was not justified and the departmental challenge to the order dropping the demand failed.

Final Conclusion: The demand and penalties were left undisturbed in favour of the assessee and the departmental appeal was rejected.

Ratio Decidendi: Clubbing of clearances of two units for SSI purposes is impermissible in the absence of evidence of common funding and financial flowback, even if the units have operational commonalities such as shared management, labour, or premises.

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