KVIC specification-based exemption cannot be denied where goods are manufactured as directed and supplied to KVIC.

Exemption under Notification No. 198/87 was upheld for Amber Charkhas manufactured strictly in accordance with KVIC specifications and supplied entirely to KVIC. The stated legal principle is that the benefit cannot be denied merely because the supporting certificate does not use a particular descriptive expression, where the goods were made as per the Commission's blueprint and were intended for use by implementing agencies in khadi and village industries development. On those facts, the denial of exemption was not legally sustainable and the assessee was entitled to the notification benefit.

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Issues: Whether the assessee was entitled to exemption under Notification No. 198/87 dated 28-8-87 for Amber Charkhas manufactured as per KVIC specifications and supplied to KVIC.

Analysis: The Amber Charkhas were manufactured strictly in accordance with the specifications of the Khadi and Village Industries Commission and the entire production was supplied to the Commission. The certificate issued by KVIC stated that the appellant had been asked to manufacture Spindle Charkhas for the year 1997-98 and that each charkha was made as per the blueprint and specifications stipulated by the Commission for use by implementing agencies in the development of khadi and village industries. On these facts, the foundation for denying the notification benefit was not sustainable.

Conclusion: The denial of exemption was not legally sustainable and the assessee was entitled to the benefit of the notification.

Ratio Decidendi: Where goods are manufactured strictly in accordance with KVIC specifications and supplied to KVIC, exemption under the notification cannot be denied merely because the certificate does not use a particular descriptive expression.

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