Delayed intimation as a procedural lapse did not defeat exemption where substantive eligibility under the notification was satisfied.

Delayed intimation of the option under Notification No. 50/2003-CE did not defeat exemption where the assessee otherwise satisfied the substantive eligibility conditions. The only defect was filing the option intimation about two months after commencement of clearances, and that requirement was treated as procedural rather than substantive. Applying the principle that exemption eligibility must be strictly construed, but directory procedural conditions may be interpreted liberally when non-compliance does not affect the substance of the benefit, the denial of exemption for the earlier clearances was unsustainable. The assessee was entitled to the exemption for the relevant period.

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Issues: Whether the assessee was entitled to exemption under Notification No. 50/2003-CE despite delayed intimation of the option to the department.

Analysis: The assessee had otherwise satisfied the eligibility for the exemption. The only objection was that the intimation of exercise of the option under the notification was filed about two months after commencement of clearances. The delayed intimation was treated as a procedural requirement. In light of the settled principle that exemption provisions are to be strictly construed as to eligibility but that directory procedural conditions may receive a liberal approach where their non-compliance does not affect the substance of the exemption, the delay in intimation did not defeat the entitlement.

Conclusion: The assessee was entitled to the benefit of Notification No. 50/2003-CE for the relevant period, and the denial of exemption for the prior clearances was unsustainable.

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