Clubbing of clearances does not shift combined duty liability to one unit; duty must be discharged separately by each licensed unit.

Clearances of separately licensed manufacturing units owned by the same manufacturer could be clubbed for exemption assessment under Notification No. 175/86, but clubbing did not permit fastening the combined duty liability on one unit alone. Each unit remained required to discharge its own duty liability separately, including by using the Modvat credit available in its own RG 23 Part I/II records, and the duty had to be quantified unit-wise. The demand was unsustainable because it treated one unit as liable for both units' duty. The appellant's contention that duty must be worked out and discharged separately for each unit was accepted, and the order was set aside.

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Issues: Whether the clearances of two separately licensed manufacturing units owned by the same manufacturer could be clubbed for the purpose of Notification No. 175/86, and whether the duty liability of each unit had to be discharged separately from the credit available to that unit.

Analysis: The units were independently licensed and manufactured excisable goods at different locations. The aggregate clearances were liable to be clubbed for the purpose of the small-scale exemption under Notification No. 175/86. However, clubbing of clearances did not mean that one unit must discharge the duty liability of both units. Each unit remained entitled to discharge its own duty liability in accordance with law, including by utilizing the Modvat credit available in its own RG 23 Part I/II records, and the duty had to be quantified separately for each unit.

Conclusion: The duty demand could not be sustained on the basis that one unit should bear the entire liability of both units. The appellant's plea for separate discharge of duty by the respective units was accepted.

Final Conclusion: The order under challenge was set aside and the appeal was allowed because the duty liability of each separately licensed unit had to be worked out and discharged separately, even though the clearances were clubbed for exemption purposes.

Ratio Decidendi: Clubbing of clearances for exemption assessment does not authorise fastening the combined duty liability on one unit alone; where units are separately licensed, duty must be determined and discharged unit-wise from the respective credit available to each unit.

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