Substantive exemption over technical procedural lapse: duty demand not sustained where eligibility was otherwise established.

Substantive entitlement to exemption or concessional treatment prevailed over a short, technical lapse in licensing and Chapter X procedure. The goods were otherwise eligible for relief under the relevant exemption notifications, the procedural requirements were substantially met, and the assessee took immediate steps to regularise the position during a tariff restructuring. As there was no loss of revenue, the procedural non-compliance was treated as technical and insufficient to sustain the duty demand. Relief was therefore granted in favour of the assessee.

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Issues: Whether duty demand was sustainable where the goods were substantively eligible for exemption or concessional treatment, but the prescribed licensing and Chapter X procedure had not been followed for a short period.

Analysis: The goods were found to have been eligible for relief under the relevant exemption notifications, and the substance of the procedural requirements had been met. The record showed confusion at the time of restructuring of the tariff item, immediate steps by the assessee to regularise the position, and no loss of revenue. The non-compliance was thus technical in nature and did not outweigh the substantive entitlement to exemption or concessional treatment.

Conclusion: The duty demand was not justified, and the appeal was allowed in favour of the assessee.

Final Conclusion: Relief was granted because substantive entitlement prevailed over a merely technical procedural lapse.

Ratio Decidendi: Where the substantive conditions for exemption are satisfied and the breach is only technical, a duty demand should not be sustained merely for want of strict procedural compliance.

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