Substantial compliance with exemption conditions saved customs duty relief where the end-use certificate was filed after expiry.

Exemption under Notification 64/79 was upheld where the notification did not fix any time limit for furnishing the end-use certificate and the bond empowered the Assistant Collector to extend time. The importer sought extension within the bond period, but the request was rejected without reasons. By the appellate stage, the jurisdictional end-use certificate was available and confirmed that the imported material was fully used in manufacturing the specified drugs. In these circumstances, substantial compliance with the exemption conditions was sufficient, and the refusal to extend time, together with the resulting demand for differential customs duty, was not sustainable.

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Issues: Whether the demand for differential customs duty could be sustained when the importer sought extension of the bond period in time and produced the end-use certificate after expiry of the original period, in the context of exemption under Notification 64/79.

Analysis: The notification did not prescribe any time limit for furnishing the end-use certificate, and the bond conferred discretion on the Assistant Collector to extend time. The importer applied for extension within the validity period, but the request was rejected without reasons. By the time the matter reached the appellate stage, the jurisdictional Central Excise end-use certificate was available and it confirmed full use of the imported material in the manufacture of penultimate drugs, matching the bond particulars. In such circumstances, a rigid insistence on technical compliance was not justified where there was substantial compliance with the conditions of exemption.

Conclusion: The refusal to extend time and the consequential demand for differential duty were not sustainable, and the decision was in favour of the assessee.

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