Conditional exemption turns on unit-specific recognition; a manufacturing site outside the recognised centres cannot claim the benefit.

Exemption under Notification No. 88/88-C.E. was available only where goods were manufactured in a rural area by an institution specifically recognised by the Khadi and Village Industries Commission or a similar body. The rural-area condition was not in dispute, but the petitioner's unit at Iyava, Sanand was not included in the location-specific centres covered by the recognition certificate. The certificate was treated as conditional and unit-specific, and concurrent findings of the adjudicating authority and Tribunal held that the recognition did not extend to that unit. The exemption claim therefore failed, and the duty demand and confiscation were upheld.

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Issues: Whether the petitioner was entitled to exemption under Notification No. 88/88-C.E. on the basis of recognition by the Khadi and Village Industries Commission, notwithstanding that the manufacturing unit at Iyava, Sanand was not specifically included in the recognised centres.

Analysis: The exemption notification required satisfaction of two conditions: the goods had to be manufactured in a rural area and by an institution recognised by the Khadi and Village Industries Commission or a similar specified body. The rural-area condition was not disputed. The controversy turned on whether the petitioner's unit at Iyava, Sanand was covered by the KVIC recognition. The certificate relied upon by the petitioner was found to grant recognition conditionally, with location-specific manufacturing centres listed in an annexure, and Iyava, Sanand was not included. The adjudicating authority and the Tribunal recorded concurrent findings that the recognition was not blanket but unit-specific. No material was shown to dislodge those findings.

Conclusion: The petitioner did not satisfy the recognition condition for the specific manufacturing unit and was not entitled to the exemption. The challenge to the duty demand and confiscation therefore failed.

Ratio Decidendi: Where an exemption notification is conditional upon manufacture by a recognised institution, the benefit cannot be claimed for a unit that is not covered by the specific recognition granted by the competent authority.

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