Substantial compliance under Notification No. 70/92-CE sustained exemption for packing material despite late filing of undertaking.

Notification No. 70/92-CE was held inapplicable only where the exclusion clauses were properly invoked and supported by particulars; here, the show cause notice did not specifically establish that the packing material fell within the exclusion for cases where exemption was already availed on the packing material, and the clause tied to inclusion of packing cost in assessable value did not apply because the final goods were fully exempt. The principal manufacturer's undertaking, though filed late, was on record, and the notification did not require it to be furnished before or at the time of clearance. Substantial compliance was therefore accepted, and denial of the exemption, along with the demand, interest, and penalty, was set aside.

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Issues: Whether the appellant was rightly denied the benefit of Notification No. 70/92-CE in respect of packing material and whether the belated filing of the undertaking by the principal manufacturer defeated the exemption.

Analysis: The exclusion clauses in the notification had not been specifically invoked in the show cause notice with adequate particulars. The record did not establish that the packing material fell within the exclusion relating to exemption being availed on the packing material, and the clause concerning inclusion of packing cost in the assessable value was inapplicable where the final goods were fully exempt. The undertaking by the principal manufacturer was on record, though filed late, and the notification did not expressly require that it be furnished before or at the time of clearance. In such circumstances, the condition was held to have been substantially complied with.

Conclusion: The denial of Notification No. 70/92-CE was unsustainable, and the demand, interest, and penalty were set aside in favour of the assessee.

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