Statutory exemption certificate binds revenue authorities, preventing independent reassessment of eligibility once the designated authority has certified it.

An exemption notification requiring a certificate from the Khadi and Village Industries Commission made production of that certificate the ative condition for relief. Once the competent authority issued and recognised the certificate, the revenue authorities could not independently re-examine whether the unit was a village industry, in a rural area, or had received the requisite assistance, because those matters were for the designated authority alone. Later production of the certificate did not defeat entitlement where the earlier certificate was treated as valid and supported by the Commission's clarification. The claimed exemption was therefore upheld and the denial of exemption was unsustainable.

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Issues: Whether the assessee was entitled to exemption under Notification No. 198/87-C.E. on production of a certificate issued by the Khadi and Village Industries Commission, and whether the revenue authorities could independently examine the assessee's eligibility for that exemption.

Analysis: The notification made production of a certificate from the Khadi and Village Industries Commission a condition for exemption. The certificate having been produced, the question whether the unit was a village industry, whether it was located in a rural area, and whether it received the requisite assistance was a matter for the Commission and not for the Commissioner to reassess independently. The clarification issued by the Commission supported the assessee's claim, and the fact that the certificate was produced later did not, in the circumstances, negate entitlement where the earlier State Board certificate was treated as valid and the Commission had recognised it. Revenue could not sit in judgment over the validity or correctness of the certificate once issued by the competent authority.

Conclusion: The assessee was eligible for exemption under Notification No. 198/87-C.E., and the denial of exemption was unsustainable.

Final Conclusion: The appeals were allowed with consequential relief, and the duty demand and penalties did not survive.

Ratio Decidendi: Where an exemption notification expressly requires a certificate from a designated statutory authority, production of that certificate binds the revenue authorities on the matters certified, and they cannot independently re-adjudicate the assessee's eligibility for the exemption.

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