Exemption notification compliance and revenue neutrality were disputed, but no final adjudication was reached after a split bench view.

The CESTAT Chandigarh considered whether exemption under Notification No. 83/90-Cus, as amended, was available where the imported goods were used in manufacture and the end-use certificate was produced late. One Member treated the certificate and bond requirements as procedural, found substantive compliance with the notification, and accepted revenue neutrality; the other held that the notification was conditional, that the prescribed requirements were not met in the required manner, and that revenue neutrality could not defeat the demand. A difference of opinion was recorded and the matter was referred for third-member consideration, with no final adjudication on the exemption claim or demand.

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Issues: Whether the benefit of Notification No. 83/90-Cus as amended was available on the facts found, whether the demand could be defeated on the ground of revenue neutrality, and whether the appeal should be allowed or dismissed.

Analysis: One Member held that the imported goods had been used in manufacture and that production of the end-use certificate amounted to actual compliance with the substantive conditions of the notification; on that view, late production of the certificate and the bond requirement were treated as procedural, and the claim of revenue neutrality was accepted. The other Member held that the notification was conditional, that the prescribed conditions were not complied with in the manner required, and that revenue neutrality could not be invoked to displace the demand. A difference of opinion was therefore recorded and the questions were referred for third-member consideration.

Outcome: No final adjudication was reached by the Bench on the merits of the exemption claim or the demand.

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