Chapter X exemption benefits survive later rescission where retrospective restoration removes the basis for a duty demand.

Duty could not be demanded on inputs received under Chapter X while the exemption notification was still operative, because later rescission did not invalidate benefits validly availed during the effective period. The demand was based on an incorrect assumption that Chapter X relief ceased to apply to earlier receipts merely because the notification was withdrawn later. A subsequent restoring notification, given retrospective effect under the retrospective exemption law, covered the affected cases and removed the foundation for the demand. The duty demand was therefore unsustainable, and relief was allowed in favour of the assessee.

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Issues: Whether duty could be demanded on inputs already received under Chapter X procedure before rescission of the exemption notification, when the rescinding notification took effect subsequently and a later notification restored the benefit retrospectively.

Analysis: The goods were received under the exemption then in force, and the subsequent rescission did not nullify benefits already validly availed for receipts made during the operative period. The demand proceeded on the incorrect premise that Chapter X procedure ceased to be available for such earlier receipts merely because the notification was later rescinded. The later restoring notification, given retrospective effect under the retrospective exemption law, covered cases affected by the withdrawal and removed the basis for the demand.

Conclusion: The duty demand was unsustainable and the appeal was allowed in favour of the assessee.

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