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Issues: Whether the duty demand raised on the principal unit for clearances shown in the name of the alleged separate unit could be sustained when the record showed the existence of a distinct unit and the show cause notice was not effectively pursued against the alleged dummy unit.
Analysis: The record showed that the appellant had leased a demarcated portion of the premises to the other concern under a written rent agreement, that the other concern had obtained independent registrations and certificates from several statutory authorities, and that its manufacture and clearances were supported by invoices and other documentary material. The demand itself proceeded on the basis that the clearances in the name of the other concern were to be treated as those of the appellant, which was in substance a clubbing case. The statement relied upon by the department was treated as insufficient to displace the contemporaneous documentary evidence, and the absence of a sustainable basis to fasten the entire liability on the principal unit was held to be fatal to the demand.
Conclusion: The demand could not be sustained against the appellant, and the impugned order was set aside.
Final Conclusion: The appeal succeeded on merits and the assessee obtained complete relief from the duty demand and consequential penalties.
Ratio Decidendi: Where contemporaneous documentary evidence establishes the existence and independent functioning of a separate unit, a duty demand cannot be sustained against the principal unit merely on the basis of contrary oral statements and an unsubstantiated clubbing theory.
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