Conditional excise exemption requires prior approval before purchase; later permission cannot cure non-compliance.

A 100% Export Oriented Unit could claim exemption from central excise duty on Diesel Generating Sets under Notification No. 1/95-C.E. only if the prescribed prior approval or recommendation of the Board or Committee was obtained before purchase. The CT-3 certificate merely authorised removal of excisable goods and did not substitute for the required permission to buy the generating sets. Because the goods were received before approval was sought, the later permission could not operate retrospectively to validate the transaction. The demand of excise duty was therefore sustained.

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Issues: Whether the appellant, a 100% Export Oriented Unit, was entitled to exemption from central excise duty on Diesel Generating Sets under Notification No. 1/95-C.E. dated 04.01.1995 despite purchasing the goods before obtaining the requisite approval of the Board or Committee.

Analysis: The exemption under the notification was available only on compliance with the conditions prescribed therein before purchase of the Diesel Generating Sets. The notification and its annexure required prior recommendation or permission of the Board or Committee for captive use. The CT-3 certificate obtained from the Assistant Commissioner merely permitted removal of excisable goods and did not amount to permission for purchase of the generating sets. The subsequent application for approval was made after the goods had already been received in the factory, and the later permission could not operate retrospectively to validate a completed purchase made in breach of the notification conditions.

Conclusion: The appellant was not entitled to the benefit of Notification No. 1/95-C.E. dated 04.01.1995, and the demand of excise duty was sustained.

Ratio Decidendi: Where an exemption notification is conditional, its benefit can be claimed only upon prior and strict compliance with the prescribed conditions, and post facto permission cannot retrospectively cure a completed non-compliant transaction.

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