Beneficial exemption cannot be denied for procedural lapse when qualifying end-use is proved by evidence.

A beneficial exemption cannot be denied solely for non-observance of the prescribed procedure where the qualifying end-use is otherwise established on the evidence. Imported copper scrap was accepted as having been fully used in the manufacture of copper sulphate, and that factual position was not disputed in appeal. The applicable principle, supported by Supreme Court authority and the CBEC circular relied on, was that procedural lapse under Chapter X does not defeat Notification No. 35/81-C.E. when the intended use is proved. The respondents were therefore entitled to the exemption from countervailing duty.

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Issues: Whether the respondents were entitled to exemption from countervailing duty under Notification No. 35/81-C.E. despite not following the procedure prescribed in Chapter X of the Central Excise Rules, where the imported copper scrap was shown to have been used in the manufacture of copper sulphate.

Analysis: The factual position that the imported goods were fully used in the manufacture of copper sulphate was accepted before the adjudicating authority and was not disputed in the appeal proceedings. The governing principle applied was that exemption or concession under a beneficial notification cannot be denied merely for non-observance of the procedural requirement, if the intended use of the material is otherwise established by the importer or by other evidence. The reasoning was supported by the Supreme Court's view and the CBEC circular relied upon therein.

Conclusion: The respondents were entitled to the benefit of Notification No. 35/81-C.E. and the Revenue's challenge failed.

Ratio Decidendi: A beneficial exemption cannot be denied solely for failure to follow the prescribed procedure when the intended use qualifying for the exemption is established on the evidence.

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