Small scale exemption clearances cannot be clubbed with a separate manufacturer's factory clearances, though job-work clearances count in aggregate turnover.

For small scale exemption under Notification No. 175/86-C.E., the assessee's aggregate clearances had to include goods manufactured by it on behalf of a loan licencee, because it remained the manufacturer despite the other brand owner. However, the loan licencee's clearances from its own factory could not be clubbed with the assessee's clearances in the absence of a finding that both were the same manufacturer for the notification. The assessee had already accounted for the job-work clearances in its own turnover, so the exemption remained available.

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Issues: Whether the clearances of the loan licencee from its own factory could be clubbed with the clearances manufactured on its behalf by the assessee for deciding eligibility to the small scale exemption under Notification No. 175/86-C.E.

Analysis: The exemption depended on the aggregate clearances of the manufacturer, and the goods manufactured by the assessee for the loan licencee had to be included in the assessee's own aggregate clearances because the assessee did not cease to be the manufacturer merely because the goods bore another's brand name. At the same time, the clearances of the loan licencee from its own factory could not be clubbed with the assessee's clearances in the absence of any finding that both were the same manufacturer for the purpose of the notification. The assessee had already taken into account the goods manufactured for the loan licencee while computing its own eligibility.

Conclusion: The value of clearances of the loan licencee from its own factory was not liable to be clubbed with the assessee's clearances, and the assessee was entitled to the small scale exemption.

Final Conclusion: The Revenue's challenge failed because the appellate authority correctly excluded the loan licencee's own factory clearances from the assessee's aggregate turnover while applying the exemption notification.

Ratio Decidendi: For small scale exemption, clearances of a separate manufacturer cannot be clubbed with the assessee's clearances, though goods manufactured by the assessee on behalf of another brand owner remain part of the assessee's aggregate clearances.

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