Value-based excise exemption cannot be denied by clubbing clearances of independent manufacturers without proof of dummy unit status.

Clearances by independent outside manufacturers could not be added to the respondent's clearances for eligibility under Notification No. 77/85-C.E. because the record showed no evidence that those units were dummy units or hired labour for the respondent. Mere supply of raw materials, or invoicing arrangements, was insufficient to justify clubbing their turnover with the respondent's value of clearances. The exemption therefore remained available on that basis.

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Issues: Whether, for computing the aggregate value of clearances under Notification No. 77/85-C.E., the value of goods manufactured by independent units to whom raw materials were supplied could be clubbed with the respondent's clearances so as to deny the exemption.

Analysis: The record contained no evidence that the outside manufacturers were dummy units of the respondent or that they functioned as hired labour for the respondent. In the absence of such evidence, the units that actually manufactured the goods were to be treated as independent units. Clearances by such independent units could not be added to the respondent's clearances merely because raw materials were supplied in some cases or because the goods were invoiced in a particular manner.

Conclusion: The clearances of the independent units could not be clubbed with the respondent's clearances for determining eligibility under Notification No. 77/85-C.E.; the exemption could not be denied on that basis.

Final Conclusion: The appeal failed and the order granting the benefit of exemption was upheld.

Ratio Decidendi: In the absence of evidence that outside manufacturers are dummy or hired labour units, their clearances cannot be clubbed with those of the assessee for computing eligibility to a value-based excise exemption.

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