Chapter X compliance was essential for inter-factory exemption; non-observance disentitled the assessee from the concession.

An exemption for specified tools and dies manufactured in one factory and used in another factory of the same manufacturer was available only on compliance with Chapter X of the Central Excise Rules, 1944. The Chapter X requirements, including registration and bond under Rule 192, were treated as linked substantive conditions for availing the concession in inter-factory use. Admitted non-observance of that procedure could not be treated as a mere technical lapse, and the cited authorities on procedural relaxation were distinguished because there was no sufficient compliance or departmental default. The concession was therefore unavailable where the prescribed procedural scheme was not followed.

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Issues: Whether the exemption under Notification No. 58/86 was available when the goods were removed for use in another factory of the same manufacturer without compliance with Chapter X of the Central Excise Rules, 1944.

Analysis: The notification granted exemption to specified tools and dies manufactured in a factory and intended for use in the same factory, and in the case of use in another factory of the same manufacturer, expressly made the exemption subject to observance of the procedure under Chapter X. The Chapter X scheme was treated as a set of linked conditions, with registration and bond under Rule 192 being central to its operation. The claim that non-compliance was only a technical lapse was rejected. The cited authorities on procedural relaxation were distinguished on facts, as the present case involved admitted non-observance of the Chapter X requirements and no departmental default or substantial compliance sufficient to sustain the exemption.

Conclusion: The exemption was not admissible, and the issue was decided against the assessee.

Ratio Decidendi: Where an exemption notification makes compliance with a specified procedural scheme an express condition for availing the concession in inter-factory use, failure to comply with that condition disentitles the assessee from the exemption.

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