Clubbing of clearances and extended limitation upheld where dummy units and suppression of facts were found in excise operations.

Separate registration, premises or common partners were held insufficient to prevent clubbing where the evidence showed that manufacturing activity was effectively controlled from one unit and the other two concerns were created to fragment clearances and claim small-scale exemption through a colourable arrangement. The arrangement was treated as benami or dummy in substance, so the clearances were clubbed in favour of Revenue. The demand was also held not time-barred because the true manufacturing arrangement was not disclosed and the units maintained separate declarations while suppressing material facts, justifying invocation of the extended limitation period for suppression with intent to evade duty. Duty and penalty were sustained.

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Issues: (i) Whether the clearances of the three units were liable to be clubbed on the footing that the other two units were benami or dummy concerns of the main unit. (ii) Whether the demand was barred by limitation and the extended period could be invoked.

Issue (i): Whether the clearances of the three units were liable to be clubbed on the footing that the other two units were benami or dummy concerns of the main unit.

Analysis: Mere separate registration, separate premises, or commonness of partners was held to be insufficient by itself; the decisive factor was the overall evidence as to who controlled the manufacturing activity. On the evidence of inspection, machinery position, statements of the concerned persons, and the manner in which manufacture, testing, painting, labelling, and clearance were arranged, the real manufacturing activity was found to be centred in one unit. The other two concerns were treated as having been created to fragment the main unit and to avail the small-scale exemption by a colourable arrangement.

Conclusion: The clearances were rightly clubbed, and the finding that the other two units were benami or dummy units was upheld in favour of Revenue.

Issue (ii): Whether the demand was barred by limitation and the extended period could be invoked.

Analysis: The Tribunal found that the true nature of the manufacturing arrangement was not disclosed and that the units had adopted different declarations and maintained the appearance of separate entities while suppressing the actual facts. On that basis, the case was treated as one of suppression of facts with intent to evade duty, which justified invocation of the longer limitation period under the central excise law.

Conclusion: The demand was not time-barred and the extended period was validly invoked in favour of Revenue.

Final Conclusion: The impugned order demanding duty and imposing penalty was sustained, and the appeal failed.

Ratio Decidendi: For central excise valuation and exemption purposes, separate legal form will not prevail over the real arrangement where the evidence shows that manufacturing was effectively carried on as one controlled unit and the separation is a colourable device to secure exemption and suppress duty liability.

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