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2017 (6) TMI 411 - MADRAS HIGH COURTExemption in terms of Notification issued under Section 17 of the Act - The claim for exemption was rejected by the Assessing Officer on the ground that the society was not authorized to effect sales of E.B. line materials and RTS grills to the Tamil Nadu Electricity Board - levy of penalty u/s 12(3)(b) of the Act - whether the appellant, a cooperative society engaged in industrial activity, is entitled to claim exemption on the product sold by it to the Tamil Nadu Electricity Board? - Held that: - the appellant industry is registered under the Tamil Nadu Khadi and Village Industries Board and to the said effect, a certificate has been issued by the Assistant Director on 09.12.1996 - it is not in dispute that the appellant is one of the institutions certified by the Khadi and Village Industries Board and this stand has been reiterated by the Assistant Director to the Joint Commissioner vide letter dated 06.12.2004. It is important to note that in the said letter, the Khadi and Village Industries Board specifically certified that the society, which is a unit of the Board, is authorized to purchase finished goods from the members of the society and sell the same for the benefit of its members. This aspect of the matter was not considered by the Joint Commissioner while passing the impugned order. Merely because the product supplied by the society, which is being utilized by the Electricity Board for the purpose of supporting high voltage electrical cables, cannot make the product to fall outside the classification of blacksmithy product. The own use of the product is of no consequence to consider a claim for exemption of product, which was sold by the appellant society. Rejection also on the ground that the process involves painting and welding - Held that: - ainting and welding would be necessary to make the finished product. But, the essential character of the product does not change from that of a blacksmithy product. The products, which were sold by the appellant society to the Tamil Nadu Electricity Board, are essentially blacksmithy products and are entitled for exemption in terms of the Notification issued under Section 17 of the Act - appeal allowed - decided in favor of appellant.
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