Retrospective permission and job-work exemption limits: later approval cannot cure earlier removal, though penalty may still be avoided.

Permission granted under Rule 57F(2) was treated as effective only from the date of grant, so it could not validate removals made earlier in anticipation of approval. The Notification No. 214/86-C.E. exemption was available only where the goods satisfied the job-work and undertaking conditions, and those factual requirements were not established for the removal in question, so duty remained payable. On penalty, the pending permission request and surrounding facts were considered sufficient to avoid penal consequences, and the penalty was set aside.

---

---

Issues: (i) Whether permission granted subsequently under Rule 57F(2) could validate removal of goods made before the permission was actually granted; (ii) Whether exemption under Notification No. 214/86-C.E. was available on the facts; (iii) Whether penalty was warranted.

Issue (i): Whether permission granted subsequently under Rule 57F(2) could validate removal of goods made before the permission was actually granted.

Analysis: Permission under Rule 57F(2) takes effect from the date of grant and does not operate retrospectively unless the statute or the permission itself expressly provides otherwise. Removal of goods in anticipation of approval is not covered by a later grant of permission.

Conclusion: The subsequent permission did not cover the earlier removal; the assessee's contention failed.

Issue (ii): Whether exemption under Notification No. 214/86-C.E. was available on the facts.

Analysis: The notification applies to goods manufactured in a factory as job work and used in or in relation to manufacture of the supplier's final product, subject to the prescribed undertaking and conditions. The goods removed were not shown to fall within the exempted category with certainty, and in any event the notification could not be invoked for the removal in question so as to avoid duty.

Conclusion: The exemption was not available and duty was rightly demanded.

Issue (iii): Whether penalty was warranted.

Analysis: Although duty was payable, the removal took place while the request for permission remained pending for a considerable period. On that factual footing, imposition of penalty was not justified.

Conclusion: The penalty was set aside.

Final Conclusion: The demand of duty was restored, but the penalty did not survive, leaving the revenue's appeal successful only to that extent.

Ratio Decidendi: A permission or exemption that is not expressly retrospective cannot validate removals made before its grant, and a job-work exemption can be applied only when the factual and statutory conditions of the notification are satisfied.

---