Substantive duty benefit cannot be denied on a procedural lapse where credit reversal was made under departmental compulsion.

Notification No. 225/86-C.E. allowed set-off of duty paid on Mono Ethylene Glycol against duty on Polyester Staple Fibre, and the trade notice did not require one-to-one correlation between inputs and final product. Where credit was reversed at the insistence of the revenue authorities, denying refund on a technical objection would let the Revenue benefit from its own compulsion. The governing principle is that a substantive duty benefit cannot be refused merely because of a procedural lapse. The refund was therefore treated as admissible and the Revenue objection failed.

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Issues: Whether the refund of reversed set-off credit was admissible where the notification and departmental trade notice did not require one-to-one correlation between inputs and final product, and whether a substantive benefit could be denied on a merely procedural objection after reversal of credit had been compelled by the departmental authorities.

Analysis: Notification No. 225/86-C.E. granted set-off of duty paid on Mono Ethylene Glycol against duty payable on Polyester Staple Fibre, and the procedure adopted under the trade notice did not contemplate one-to-one correlation between inputs and the final product. The reversal of credit from the set-off register had been made at the behest of the revenue authorities, and the amount, if not so reversed, could have been utilised against duty on home clearances. In these circumstances, the denial of refund on a technical objection would improperly allow the revenue to take advantage of its own action. A substantive benefit cannot be refused merely because of a procedural lapse.

Conclusion: The refund was rightly granted and the Revenue's objection failed; the appeal was dismissed in favour of the assessee.

Ratio Decidendi: Where the governing procedure does not require one-to-one correlation, and credit is reversed under departmental compulsion, a substantive duty benefit cannot be denied on a purely procedural ground.

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