Statutory exemption for rural co-operative units upheld where registration was never cancelled and substantive conditions were met.

A registered co-operative society manufacturing specified goods in a rural area remained eligible for exemption under Notification No. 88/1988-CE because the notification did not require the society's registration to be confined to the same rural location as the unit. The registration certificate's reference to Patna Municipal Corporation limits did not negate eligibility where the competent authority had not cancelled or withdrawn the certificate, the unit was established in the village with permission, and the Bihar State Khadi and Village Industries Board had recognised the unit. The denial of exemption, duty demand, and penalty were therefore unsustainable and were set aside.

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Issues: Whether the appellant was entitled to exemption under Notification No. 88/1988-CE dated 01.03.1988 when it was a registered co-operative society and the manufacturing unit was located in a rural area, despite the society's registration certificate referring to Patna Municipal Corporation limits.

Analysis: The unit's location in a rural area and the manufacture of specified goods were not in dispute. The only controversy was whether the society's registration could be treated as inapplicable because the certificate mentioned an area of operation within Patna Municipal Corporation limits. The registering authority clarified that the appellant remained duly registered as a co-operative society and noted the establishment of the manufacturing unit in the village with due permission. The Notification required a registered co-operative society manufacturing specified goods in a rural area, but did not require that the society's registration itself be confined to the same area where the unit was situated. The certificate had not been cancelled or withdrawn by the competent authority, and the unit was also recognized by the Bihar State Khadi and Village Industries Board.

Conclusion: The appellant satisfied the conditions of the exemption notification and was entitled to the benefit of exemption.

Final Conclusion: The impugned order denying exemption and confirming duty and penalty was unsustainable and was set aside, with the appeal allowed.

Ratio Decidendi: Where a competent authority has not cancelled or withdrawn the registration or recognition certificate, the assessee remains entitled to the statutory exemption if the notification's substantive conditions are otherwise fulfilled.

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