TMI Blog2017 (6) TMI 411X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 blacksm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s entitled for exemption. 5. Aggrieved by the order of assessment and imposition of penalty, the appellant filed an appeal before the Appellate Assistant Commissioner (CT), Virudhunagar. The First Appellate Authority accepted the stand taken by the appellant and allowed the appeal by order dated 27.2.1997. After about a year, the Joint Commissioner (SMR-II), Chennai issued a show cause notice to the appellant under Section 34 of the Act, calling upon the appellant to show cause as to why the order passed by the Appellate Assistant Commissioner should not be set aside and the order passed by the Assessing Officer be restored. The reason assigned in the show cause notice was that G.O.Ms.No.3131 Revenue Department dated 26.10.1963 was relied upon by the Appellate Assistant Commissioner wherein the Government granted exemption for Madras State Khadi and Village Industries Board and the units attached to it in respect of their sales of all goods produced by the Board and its units and that the appellant assessee had purchased finished goods and sold, which were not considered by the Appellate Assistant Commissioner and there is a violation of the conditions stipulated in the Governm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CTO (Fac.) [reported in (2002) 125 STC 505]. Therefore, question No.2 is answered in favour of the appellant and against the Revenue. 12. Question Nos.1 and 3 are interlinked in the sense that we have to decide as to 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. The undisputed facts are 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. 13. Furthermore, the Assistant Director of Khadi and Village Industries, Virudhunagar had addressed to the Joint Commissioner of Commercial Taxes, when a show cause notice was issued to the appellant under Section 34 of the Act. In the said communication, it was mentioned that Khadi and Village Industries Commission is a quasi body of the Government of India and the Commission is a funding agency and does not have any power over the administrative matters of the society registered by the Tamil Nadu Khadi and Village Industries Board. It was further stated that the Tamil Nadu Khadi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9;village industries' to mean all or any of the industries specified in the schedule and includes any other industry deemed to be specified in the schedule by reason of a Notification issued under Section 3 of the said Act. The schedule so notified lists out the various village industries and one among them is blacksmithy. Section 17 of the Act provides for exemption of a class or category of industries or products. The Notification issued under Section 17 exempts sale of all products of village industries, which would mean that products made of iron, which is essentially a blacksmithy item, would also be entitled for the benefit of exemption. If such is the exemption Notification, which does not qualify the product to cover the sale of products of village industries, the appellant society would be entitled for the benefit of exemption. 17. The Assessing Officer rejected the claim for exemption on the ground that the process involves painting and welding. The Appellate Assistant Commissioner, while testing the correctness of the said finding, took into consideration the dictionary meaning of 'weld' and also the illustrative examples to show that blacksmithy involves ..... X X X X Extracts X X X X X X X X Extracts X X X X
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