Clubbing of excise clearances rejected where an independent unit manufactured goods without the supplier's supervision and control.

In central excise, goods manufactured by an independent licensed unit cannot be treated as clearances of the raw-material supplier merely because the raw materials were supplied by that supplier. The actual manufacturer is the person who carries out the manufacturing activity, and clubbing is possible only if the alleged beneficiary is shown to have itself undertaken manufacture under its own supervision and control, such as by hiring the premises and equipment. As no evidence showed that the assessee controlled the outside unit's operations, the unit's clearances could not be added to the assessee's own clearances for Notification No. 85/85, and the exemption limit remained available.

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Issues: Whether the value of goods manufactured by an independent unit for a loan licensee, out of raw materials supplied by the assessee, could be treated as clearances on behalf of the assessee and added to the assessee's own clearances for computing the monetary limit under Notification No. 85/85.

Analysis: The Tribunal applied the settled principle that in central excise law there is no concept of a "clearance on behalf of" another person and that the manufacturer is the person who actually carries out the manufacturing activity. Goods made by an independent licensed manufacturer cannot be shifted to the account of the raw-material supplier unless it is established that the supplier itself was conducting the manufacture under its own supervision and control by hiring the factory premises and equipment. As the Department led no evidence that the assessee had such control over the outside unit's operations, the clearances of that unit could not be clubbed with the assessee's own factory clearances.

Conclusion: The outside unit's clearances could not be added to the assessee's clearances, and the assessee remained within the exemption limit under Notification No. 85/85.

Ratio Decidendi: For central excise exemption purposes, goods manufactured by an independent unit are assessable as the clearances of the actual manufacturer unless the alleged beneficiary is shown to have itself undertaken the manufacturing activity under its own supervision and control.

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