Exemption conditions prevail over procedural lapse where actual receipt and intended use of goods are proved; fresh factual verification was required.

Exemption under the notification depended on the goods being specified components intended for use in the manufacture of diesel oil operated internal combustion engines, with Chapter X procedure relevant only where such use was elsewhere than in the factory of production. The Tribunal treated actual receipt by the buyer and use in the intended manufacture as the ative factual questions; if those substantive conditions were proved, non-compliance with Chapter X would be only a technical irregularity and would not by itself defeat the exemption. On the existing record, the certificate did not conclusively establish receipt and utilisation, so the denial of exemption was not sustained and the matter was remanded for fresh factual verification.

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Issues: Whether exemption under the notification could be denied solely for non-compliance with Chapter X procedure when the goods were claimed to have been received by the buyer and intended for use in the manufacture of diesel oil operated internal combustion engines.

Analysis: The notification granted exemption to specified components parts intended for use in the manufacture of diesel oil operated internal combustion engines and required Chapter X procedure only where such use was elsewhere than in the factory of production. The Tribunal held that the decisive question was the factual one whether the 200 pumps were actually received by the buyer and utilised for the intended manufacture. If that factual position were established, the procedural lapse of not following Chapter X would be only a technical irregularity and would not, by itself, defeat the exemption. Since the available certificate only showed non-availment of credit and did not conclusively establish receipt and use, further verification was necessary.

Conclusion: The denial of exemption on the existing record was not sustained, and the matter was sent back for fresh factual determination on receipt and utilisation of the goods.

Final Conclusion: The appeal succeeded only to the extent that the matter was reopened for de novo consideration on the factual fulfilment of the exemption conditions.

Ratio Decidendi: Where the substantive conditions of an exemption notification are shown to be satisfied, a procedural lapse in complying with the prescribed procedure will not by itself justify denial of the exemption.

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