Conditional duty refund requires strict procedural compliance; relaxation under the rule is discretionary and not automatic.

Refund of duty under Rule 173L depends on strict compliance with the prescribed procedure, including proper intimation, maintenance of accounts, separate storage, and timely completion of the return-and-reprocessing process. Where the assessee does not satisfy these statutory and procedural conditions, the refund claim is not admissible and may be rejected. The power to relax compliance under Rule 173L(4) is discretionary and requires a request and recorded reasons; it cannot be treated as automatic or invoked on the assessee's behalf. A distinction between substantive and procedural conditions does not displace the need to comply with the rule on the facts stated.

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Issues: (i) Whether refund of duty under Rule 173L was admissible when the assessee did not comply with the prescribed procedural requirements, including maintenance of accounts, separate storage, and timely completion of the prescribed process; (ii) Whether the Commissioner was bound to relax compliance under Rule 173L(4) in the absence of an application for relaxation by the assessee.

Issue (i): Whether refund of duty under Rule 173L was admissible when the assessee did not comply with the prescribed procedural requirements, including maintenance of accounts, separate storage, and timely completion of the prescribed process.

Analysis: Rule 173L permits refund only when the returned goods are re-entered and dealt with in the manner prescribed by the rule. The scheme requires compliance with the relevant declarations and procedural safeguards, including proper intimation, maintenance of detailed accounts of the returned goods and processes, and satisfaction of the Commissioner before refund is granted. The Court found that the assessee had not followed the prescribed procedure and had not properly initiated the refund process under the rule.

Conclusion: The refund claim was not admissible and was rightly rejected.

Issue (ii): Whether the Commissioner was bound to relax compliance under Rule 173L(4) in the absence of an application for relaxation by the assessee.

Analysis: The power to relax under Rule 173L(4) is discretionary and is intended to be exercised for recorded reasons. The Court held that such relaxation cannot be presumed or invoked automatically by the authority when the assessee itself never sought relaxation and had not complied with the rule's requirements. The reliance on the distinction between substantive and procedural conditions did not assist the assessee on the facts.

Conclusion: The Commissioner was not bound to grant relaxation, and no error arose from refusal to do so.

Final Conclusion: The questions of law were answered against the assessee, and the dismissal of the refund claim was sustained.

Ratio Decidendi: Where a refund exemption is conditional upon compliance with a prescribed statutory procedure, the assessee must satisfy those conditions and cannot demand relaxation as of right in the absence of a request and recorded reasons under the enabling provision.

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