Principal-to-principal job work prevents clubbing of clearances for small scale exemption where no related-person control is shown.

Detergent cakes manufactured on a principal-to-principal job-work basis were not liable to be clubbed with the brand owner's clearances for small scale exemption purposes because the record showed no related-person relationship, financial control, or flow back of profits. The units were treated as independent, not as a dummy unit of the brand owner, and the earlier Tribunal ruling on a similar factual matrix was applied. The respondents therefore retained eligibility to the exemption and refund claim, and the Revenue's challenge failed.

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Issues: Whether the clearances of detergent cakes manufactured by the respondents on job-work basis for the brand owner were liable to be clubbed with the brand owner's other clearances for determining eligibility to small scale exemption and refund under the relevant exemption notifications.

Analysis: The arrangement was held to be a principal-to-principal conversion arrangement and not one showing that the respondents were a dummy unit of the brand owner. The record disclosed no related-person relationship, no financial tie-up, and no flow back of profits. The respondents were independent units and the earlier Tribunal decision on the same brand owner and similar factual matrix was held applicable.

Conclusion: The clearances of the respondents were not required to be clubbed with the brand owner's clearances, and the respondents remained entitled to the exemption and refund claim.

Final Conclusion: The Revenue's challenge failed, and the orders granting relief to the respondents were sustained.

Ratio Decidendi: Where manufacture is undertaken on a principal-to-principal job-work basis without evidence of related-person status, financial control, or flow back of profits, the job worker cannot be treated as a dummy unit for clubbing of clearances under small scale exemption notifications.

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