Exemption on certified village industries supplies upheld where the seller produced the required certificate and no forgery or collusion was proved.

Corrugated boxes supplied to a certified village industries institution were treated as goods connected with the manufacture of village industries products for exemption under the notification. Once the seller produced the prescribed certificate from the certified institution, the exemption could not be denied unless the certificate was shown to be forged or obtained by collusion; any issue of misuse would lie against the purchaser in the appropriate case. On that basis, the Tribunal's grant of exemption was found to be legally unobjectionable, and the revenue challenge failed.

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Issues: Whether corrugated boxes supplied to an institution certified by the Khadi and Village Industries authorities were goods connected with the manufacture of village industries products so as to qualify for exemption under the notification, and whether the seller could be denied the exemption in the absence of proof that the certificate was forged or obtained by collusion.

Analysis: The notification exempted purchases of goods connected with the manufacture of village industries products when the seller furnished the prescribed certificate from the certified institution. The Tribunal had found that the goods fell within the notification and that the certificate was neither found to be non-genuine nor shown to have been obtained by collusion. It was held that, once the statutory certificate is produced, exemption cannot be denied to the seller unless the certificate is proved forged or collusive, and any contrary action would lie against the purchaser in the appropriate case. Applying that principle, the order granting exemption suffered from no illegality or impropriety.

Conclusion: The exemption was rightly allowed and the revision was without merit.

Final Conclusion: The revenue challenge failed, and the order of the Tribunal quashing the assessment made under section 10-B was sustained.

Ratio Decidendi: Where a seller produces the certificate required by an exemption notification, the exemption cannot be denied unless the certificate is shown to be forged or obtained by collusion.

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