Concessional excise clearance upheld despite procedural lapse where goods moved with departmental knowledge and no diversion was shown.

Concessional central excise clearance of refrigerator parts under the relevant notification depended on the prescribed undertaking and Chapter X procedure. Although the L6 licence and bond were not completed before despatch, the goods were cleared with the local excise officer's knowledge, were received and acknowledged at destination, and there was no evidence of diversion or misuse. The lapse was treated as technical rather than substantive, and the differential duty demand was held unsustainable; the appeal was allowed.

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Issues: Whether the demand for differential central excise duty could be sustained where the goods were cleared at a concessional rate under the notification, but the formal requirements of the licence and Chapter X procedure were not completed before despatch.

Analysis: The concessional notification applied to refrigerator parts supplied to a factory, subject to the prescribed undertaking and compliance with the Chapter X procedure. Strictly speaking, the clearance did not fully satisfy the formal conditions because the L6 licence and bond were not in place before despatch. However, the goods were cleared with the knowledge of the local Central Excise officer, were received and acknowledged at destination, and the record showed no diversion or misuse. The authority treated the lapse as technical, and placed weight on the Department's failure to object promptly or seize the goods when the alleged irregularity first arose. In these circumstances, the demand was viewed as resting only on a technical breach rather than a substantive violation.

Conclusion: The demand for differential duty was not sustainable, and the appeal was allowed.

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