Excise exemption for original equipment use survives technical procedural lapse where substantive notification conditions are met.

Benefit under Notification No. 161/76 was treated as admissible where tyres and tubes were supplied for intended original equipment use and the substantive conditions of the notification were satisfied. The absence of a valid L-6 licence during the relevant period, together with alleged non-compliance with Chapter X procedure, was viewed as a technical lapse rather than total non-compliance, because the goods moved under AR-3A forms and CT-2 certificates and there was no material showing misuse or failure of intended use. On that basis, strict procedural defects did not justify denial of the exemption, and the duty demand was held unsustainable.

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Issues: Whether the benefit of Notification No. 161/76, dated 12-5-1976 could be denied for want of strict compliance with Chapter X procedure and a valid L-6 licence, despite the goods being supplied for intended original equipment use and the other conditions of the notification being satisfied.

Analysis: The decisive consideration was whether the procedural requirement of Chapter X of the Central Excise Rules, 1944 was merely irregularly complied with or whether there was total non-compliance. The record showed movement of tyres and tubes under AR-3A forms and CT-2 certificates, subsequent issuance of the L-6 licence, and no material suggesting misuse of the goods or failure of intended use. The majority view treated the absence of the licence during the relevant period as a technical lapse in the course of compliance, not as a ground to deny the exemption where the substantive conditions of the notification were otherwise met.

Conclusion: The benefit of the notification was held admissible and the duty demand was not sustainable against the assessee.

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