Exemption notification procedure cannot be denied when departmental verification lapses, and the assessee remains entitled to relief.

An exemption notification prescribing a reciprocal monthly procedure cannot be denied to an assessee solely because the department failed to complete its own verification and intimation within the prescribed time. The Tribunal noted that the assessee had complied with the initial intimation requirement, and the departmental inaction prevented completion of the notification mechanism. Applying strict construction to the notification, the majority held that the assessee was entitled to the benefit despite having initially utilised Cenvat credit for GTA-related service tax and later making payment in cash. On the facts, the demand for the relevant months was also not sustainable as framed, and the assessee succeeded.

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Issues: Whether the assessee was entitled to the benefit of Notification No. 39/2001-C.E. despite having utilised Cenvat credit for payment of service tax on GTA services and later made payment in cash, and whether the demand for the relevant months was hit by limitation.

Analysis: The Notification contemplated a monthly mechanism under which the manufacturer could take credit in the personal ledger account of duty paid in cash, subject to intimation to the proper officer and verification by the department. The assessee complied with the initial intimation requirement, but the departmental officer did not determine the correctly refundable amount within the time stipulated in the Notification. The majority held that strict construction of the exemption notification applied to both sides, and the assessee could not be denied the benefit where the breach of the prescribed procedure was occasioned by departmental inaction. The majority also accepted that, on the facts of the case, the assessee could not be fastened with the entire demand as framed.

Conclusion: The assessee was entitled to the benefit of the Notification and the appeal was allowed in full.

Final Conclusion: The impugned demand and denial of the notification benefit did not survive, and the assessee succeeded before the Tribunal.

Ratio Decidendi: Where an exemption notification prescribes a reciprocal procedural mechanism for both the assessee and the department, the assessee cannot be denied the benefit solely because the department failed to perform its own statutory verification and intimation within the prescribed time.

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