Rural area definition governs SSI exemption where village records and local tax evidence support eligibility despite brand-name use.

Eligibility for Small Scale Industry exemption under Notification No. 8/2003-C.E. turned on whether the unit was located in a rural area, even though another person's brand name was used. The notification defined "rural area" by reference to village records and excluded municipal, cantonment, notified urban and similar local limits. The unit was shown in Bhugaon village, with property tax paid to the Gram Panchayat and the local statutory framework supporting village status outside municipal limits. The reference to the village under the Urban Land Ceiling Act did not override the notification's definition, and Revenue produced no contrary evidence. On that basis, the exemption was available and the demand was not sustainable.

---

---

Issues: Whether the respondent was entitled to Small Scale Industry exemption under Notification No. 8/2003-C.E. dated 01.03.2003 notwithstanding use of another person's brand name, on the ground that its unit was located in a rural area.

Analysis: The relevant notification defined "rural area" by reference to a village as reflected in land revenue records, excluding areas within municipal bodies, cantonments, notified urban areas, and similar local limits. The respondent's unit was shown to be in Bhugaon village, and the records indicated payment of property tax to the local Gram Panchayat under Section 129(1) of the Bombay Village Panchayat Act, 1958. The statutory scheme under Section 2 of that Act extended to villages outside municipal and cantonment limits, which supported the finding that the unit was situated in a rural area. The fact that the village was referred to under the Urban Land Ceiling Act did not displace the specific definition of "rural area" in the exemption notification. No contrary evidence was produced by Revenue to rebut the factual finding that the unit fell within the notified rural area.

Conclusion: The respondent was eligible for the SSI exemption, and the demand was not sustainable.

---