2017 (7) TMI 757 - AT - Central Excise

Status of the appellant as a registered co-operative society - Benefit of N/N. 88/1988-CE dated 01.03.1988 - Revenue entertained a view that the appellant is a registered co-operative society with the restricted validity of Patna Corporation area. As such they have no recognition as co-operative society in Sabajpura village where the excise unit is located, so exemption denied - Held that - The jurisdictional Central Excise officer has taken up this issue specifically with the Registrar of Co-operative Societies, Patna. In response the Assistant Registrar vide his letter dated 16.05.2006 clarified that the registration is given as co-operative society when the members of such society reside within the jurisdiction of Patna Municipal Corporation. As such we note that the registering authority justified the registration and also noted the starting of manufacturing facility in the village after due permission from the B.D.O. of Danapur. It is clear that the appellants continue to be a co-operative society duly registered by the competent authority. They will be co-operative society for the purpose of the present Notification as the said Notification did not prescribe that registration of the society also should be in the area where the unit is located - In the present case a registered co-operative society is having the unit in rural area and manufacturing specified goods in terms of the said Notification. The facts and circumstances of the case regarding claim of exemption Notification, was brought to the notice of the Assistant Registrar, Patna Circle by the jurisdictional Superintendent of Central Excise vide his letter dated 31.03.2006. In fact the Superintendent specifically alleged that the society clearly violates the area of operation mentioned in the registration and as such requested for action taken for de-registration of the said society. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Claim of exemption under Notification 88/1988-CE for a manufacturing unit located in a rural area by a registered co-operative society.

Detailed Analysis:

Issue 1: Eligibility for exemption under Notification 88/1988-CE
The dispute revolves around the eligibility of the appellant for exemption under Notification 88/1988-CE, which grants full exemption from excise duty on specified goods manufactured in rural areas by registered co-operative societies. The Revenue contended that the appellant, a registered co-operative society under the Bihar Self-Supporting Co-operative Societies Act, was not recognized in the village where the manufacturing unit was located, leading to denial of exemption and imposition of duty demand and penalty.

Analysis: The appellant fulfilled the three basic conditions for exemption under the said Notification, including the unit's location in a rural area, operation by a registered co-operative society, and manufacturing of listed products. The Revenue's objection was based on the registration certificate's endorsement limiting the society's operation to Patna Municipal Corporation limits. However, the Assistant Registrar clarified that the registration was valid for the society within the corporation limits, allowing for a village industry in a neighboring village. Additionally, the unit was recognized by the Khadi and Village Industries Board, Bihar, supporting the claim for exemption.

Issue 2: Status of the appellant as a registered co-operative society
The Revenue argued that the appellant's status as a registered co-operative society did not extend to the location of the manufacturing unit, which was outside the corporation limits of Patna, thus rendering them ineligible for exemption under the Notification.

Analysis: The jurisdictional Central Excise officer raised the issue with the Registrar of Co-operative Societies, Patna, who clarified that the registration was valid for a co-operative society when members resided within the corporation limits. Despite the Revenue's request for de-registration based on the alleged violation of the area of operation, the Assistant Registrar reaffirmed the legality of the registration, emphasizing that the society could operate a unit in a rural area.

Precedents and Legal Interpretation
The Tribunal referred to previous cases like Yellamma Dasappa v. Commissioner of Customs and R.A. Cement Pvt. Ltd. v. Commissioner of C.Ex., highlighting that certificates issued by competent authorities remain valid unless canceled. The Tribunal differentiated the present case from the decision of Hon'ble Gujarat High Court in Gujarat Khadi Pratishtan v. Union of India, emphasizing the recognition of the unit by the Bihar State Khadi and Village Industries Board.

Conclusion: The Tribunal found the impugned order not legally sustainable, setting it aside and allowing the appeal based on the appellant's fulfillment of the conditions for exemption under Notification 88/1988-CE, despite the Revenue's objections regarding the registration's geographical limitations.

This detailed analysis addresses the issues involved in the legal judgment comprehensively, providing a thorough understanding of the case and the Tribunal's decision.