Exemption notifications cannot be denied for procedural lapses when substantive conditions are met and binding circulars apply.

Where the substantive conditions of an exemption notification are satisfied, procedural requirements such as physical customs supervision or customs bond compliance do not defeat the exemption. An alternative claim under Notification No. 13/81-Cus. could be raised during adjudication, even though it was not claimed at import, and the Board's circular dispensing with physical supervision for specified EOUs was binding on departmental authorities. Since the other substantive requirements were met, denial of the exemption was not justified and the Revenue challenge failed.

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Issues: Whether the importer was entitled to the benefit of Notification No. 13/81-Cus. though it was not claimed at the time of import, and whether non-observance of physical customs supervision or customs bond conditions disentitled the importer from the exemption.

Analysis: The alternative exemption claim under Notification No. 13/81-Cus. was raised during adjudication when the original benefit under Notification No. 126/94 stood under challenge, and such a legal plea could be taken at that stage. The condition relating to customs bond and physical supervision was treated as procedural rather than substantive. The Board's Circular No. 15/95-Cus. had dispensed with physical supervision for 100% EOUs in aquaculture, horticulture and floriculture, and the circular was binding on the departmental authorities. Since the other substantive requirements of the exemption were satisfied, denial of the benefit was not justified.

Conclusion: The importer was entitled to the benefit of Notification No. 13/81-Cus., and the Revenue's challenge failed.

Final Conclusion: The appellate order granting exemption was sustained and the Revenue appeal was rejected.

Ratio Decidendi: Where the substantive conditions of an exemption notification are fulfilled, a procedural requirement such as physical supervision or customs bond compliance cannot defeat the exemption, and departmental authorities are bound by a clarificatory circular issued by the Board.

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