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2015 (7) TMI 379 - ALLAHABAD HIGH COURT100% EOU - allegation of diversion of the imported duty free raw material through its related firm - Further, during search, As such the officers had drawn a reasonable belief that the goods of foreign origin were not acquired validly and seized the same under Section 110 of the Customs Act, 1962. - Held that:- It is not denied that there might be some lapses in the observance of said notification, however, from the record there is no glaring averment which could establish that there was some deliberate deviation/disposal of material or any other loss to Revenue, but imported/duty free procured material were utilized in accordance with the notifications, for the manufacture of export products which were exported under physical supervision of Central Excise officers. The Hon’ble Apex Court in the case of Mangalore Chemicals & Fertilizers v. Deputy Commissioner [1991 (8) TMI 83 - SUPREME COURT OF INDIA] held that non-compliance with substantive and mandatory requirement fatal but non-compliance with formal and procedural requirement not fatal to the application for grant of permission. We are afraid the stand of the Revenue suffers from certain basic fallacies, besides being wholly technical. - There are condition and conditions, some may be substantive mandatory based on considerations of policy, and some others may merely belong to the area of procedure. - In fact, it is now a trite law that the procedural infraction of notifications/circulars etc. are to be condoned if exports have really taken place and the law is settled now that substantive benefit cannot be denied for procedural lapses. Procedure has been prescribed to facilitate verification of substantive requirements. The core aspect or fundamental requirement for debate is its manufacture and subsequent export. As long as this requirement is met, other procedural deviations can be condoned. All documents relating to removal were under scrutiny by these officers and relevant documents relating to removals were subjected to proper scrutiny. It is relevant from the record that the department did not point out any contraventions. In this background, the issuance of demand in the year 2005 for non-compliance with procedural rules for the year 2001-02 to 2003-04 are unsustainable and liable to be rejected. - Decided against the revenue.
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