Prior approval for export of surplus cut tobacco was a substantive condition; exemption failed for non-compliance.

Compliance with Chapter X conditions was mandatory for concessionary procurement of cut tobacco, and surplus goods could be cleared for export only with the prior approval of the proper officer under Rule 196A. Mere letters stating an intention to export did not constitute a request for, or grant of, such approval, and the requirement was treated as a substantive condition rather than a technical formality. Non-compliance therefore defeated the claimed exemption, and the duty demand and penalty were upheld.

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Issues: Whether the appellants were entitled to the benefit of the notification and exemption from duty when surplus cut tobacco obtained under Chapter X was diverted for export without obtaining the previous approval of the proper officer under Rule 196A.

Analysis: The condition governing the concessional procurement of cut tobacco required compliance with Chapter X of the Central Excise Rules, 1944 and use of the goods for the purpose for which the concession was granted. Rule 196A specifically required prior approval of the proper officer before surplus goods could be cleared for export. Mere letters intimating an intention to use part of the tobacco for export did not amount to a request for or grant of previous approval. The requirement was treated as a substantive condition and not a mere technical formality, so non-compliance could not be excused as a procedural lapse.

Conclusion: The appellants were not entitled to the claimed relief, and the duty demand and penalty were upheld.

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