Refund of duty cannot be denied for a procedural lapse when defective inputs are exported back to the supplier.

Refund of duty should not be denied merely because defective inputs were exported back to the original supplier without following the prescribed Central Excise procedure. Where the inputs had already suffered duty on import and the additional duty was reversed on removal for export, rejection of the refund claim solely for not exporting under bond was unjustified. The note records that the lapse was procedural only, with no substantive basis to deny relief, and the refund claim was allowed.

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Issues: Whether refund of duty could be denied merely because defective inputs were exported back to the original supplier without following the procedure under the Central Excise Rules, 1944.

Analysis: The inputs had suffered duty on import and the additional duty amount had been reversed when the defective inputs were removed for export. In these circumstances, the denial of refund solely on the ground that the export was not made under bond was held to be unjustified, as no substantive reason existed to reject the claim for a mere procedural lapse.

Conclusion: The refund claim was allowed and the impugned order was set aside, in favour of the assessee.

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