Conditional exemption under Notification 64/86 requires strict Chapter X compliance before any refund can be claimed.

A conditional exemption under Notification No. 64/86 required strict compliance with Chapter X procedures when goods were used in another factory. The benefit of the notification was available only on fulfilment of those prescribed conditions, and prior payment of duty did not by itself justify refund. Procedural compliance was treated as a mandatory prerequisite to the exemption, so refund could not be granted in its absence.

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Issues: Whether the refund claim based on Notification No. 64/86 could be allowed when the procedural requirements under Chapter X were not followed.

Analysis: The exemption was conditional and depended on compliance with the procedure prescribed under Chapter X where the goods were used in another factory. The benefit of the notification was available only if the prescribed conditions were fulfilled, and the fact that duty had been paid earlier did not entitle the assessee to seek refund without such compliance. The prior authority cited on the point was followed to hold that procedural requirements under a conditional exemption are essential prerequisites.

Conclusion: The refund claim was not sustainable for want of compliance with the Chapter X procedure, and the Revenue's appeal succeeded.

Ratio Decidendi: In the case of a conditional exemption notification, compliance with the prescribed procedural requirements is a mandatory prerequisite, and refund cannot be granted in their absence.

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