Substantive refund benefit cannot be denied for procedural lapse when departmental action prevented compliance and export use was proved.

Refund of central excise duty on pack sheets used in a 100% export oriented unit was treated as admissible despite non-compliance with Notification No. 123/81-C.E. procedure, because the procedural lapse arose from departmental cancellation of the CT-3 facility. The goods were actually used in the manufacture of exported products, and the assessee was recognised as a 100% EOU for the relevant period. In these circumstances, the substantive conditions for the exemption benefit were satisfied, and the Department's own conduct could not be used to defeat the refund claim. The impugned order was set aside and refund with consequential relief was directed.

---

---

Issues: Entitlement to refund of central excise duty paid on pack sheets procured for use in a 100% Export Oriented Unit, despite non-compliance with the prescribed procedure under Notification No. 123/81-C.E., where the procedural lapse arose from departmental action.

Analysis: The appellant was ultimately recognised by the Department as a 100% EOU for the relevant period, and the record showed that the pack sheets were used in the manufacture of exported goods. The duty-paid goods were procured only because the Department had cancelled the CT-3 facility and thereby prevented the appellant from obtaining non-duty-paid inputs under the notification. In these circumstances, the procedural deviation could not be used to deny refund when the substantive conditions for the exemption benefit stood satisfied and the irregularity was attributable to the Department's own conduct.

Conclusion: The refund claim was held to be admissible, and the appellant succeeded on the issue.

Final Conclusion: The impugned order was set aside and refund of the duty amount was directed to be sanctioned with consequential relief.

Ratio Decidendi: A substantive exemption or refund benefit cannot be denied for procedural non-compliance where the assessee was prevented from following the procedure by departmental action and the goods were in fact used for the exempted export purpose.

---