Substantive exemption prevails over procedural lapse where eligibility is established and required certificates are produced.

Refund under an exemption scheme could not be denied solely for non-compliance with Chapter X procedure where the goods were otherwise eligible, the actual user held the required licence, and the CT-2 certificate had been produced. The lapse was treated as procedural only, and the substantive entitlement to exemption was held to prevail over the irregularity. On that basis, denial of refund for procedural defect alone was not justified, and the Revenue challenge failed.

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Issues: Whether refund could be denied merely because the Chapter X procedure was not strictly followed, when the goods were otherwise eligible for exemption and the substantive conditions were satisfied.

Analysis: The goods were shown to have been used by the actual user, who held the requisite licence, and the assessee had produced the CT-2 certificate. The only defect found was a procedural lapse in following Chapter X. The decision treated the lapse as procedural in nature and applied the principle that substantive exemption cannot be denied for mere procedural irregularity when the underlying entitlement is otherwise established.

Conclusion: The refund could not be denied on the ground of procedural non-compliance alone, and the Revenue appeal failed.

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