Procedural lapse in SEZ bond filing cannot defeat exemption where goods were actually received in the SEZ.

Failure to furnish a General Bond or Letter of Undertaking before supplying goods to an SEZ was treated as a procedural lapse, not a substantive defect, where the goods were admittedly received in the SEZ. The governing exemption condition was aimed at implementing the exemption procedure, and technical non-compliance could not defeat relief once the assessee otherwise satisfied the statutory object. Exemption provisions are strictly construed at the stage of coverage, but after entry within the exemption, procedural irregularities should not override the intended benefit. The denial of exemption was therefore unsustainable.

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Issues: Whether failure to furnish a General Bond or Letter of Undertaking before exporting goods to a Special Economic Zone, when the goods were admittedly received in the SEZ, could deny the appellant the substantive benefit of export treatment under the exemption procedure.

Analysis: The condition relied upon by the revenue was treated as procedural and technical rather than substantive. The goods were not in dispute to have been supplied to the SEZ, and the governing requirement was aimed at implementing the exemption procedure. Where the underlying exemption is otherwise available and the statutory object is satisfied, non-compliance with a procedural formality does not defeat the substantive benefit. The decision followed the principle that exemption provisions are to be construed strictly at the stage of coverage, but once the assessee falls within the exemption, technical lapses should not override the benefit intended by the law.

Conclusion: The procedural lapse in not furnishing the bond or undertaking did not justify denial of the exemption benefit. The impugned order was unsustainable and the appeal succeeded.

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