ORDER
G.R. Sharma, Member (T)
1. This is an appeal against the finding of the Commissioner holding that during a particular period, the appellants instead of following the provision of Notification No. 214/86 followed the procedure set out under Rule 173N and, therefore they were not entitled to the benefit of Notification No. 214/86.
2. The appellants are manufacturers of shoes. They undertook the job work also. They were receiving leather from the shoes manufacturer converting into shoe uppers and returning it to the supplier of the leather. With the introduction of Budget of 1995-96, the appellants instead of claiming the benefit of Notification No. 214/86 availed the procedure set out under Rule 173N. The department alleged that the procedure set out under Rule 173A is applicable to such goods which are specified under Rule 139 and since the shoe uppers were not specified under Rule 139, the appellants were not entitled to the benefit under Rule 173N and asked the appellants to pay duty. The appellants in reply to the SCN submitted that they had followed the procedure set out under Rule 173N on the verbal instructions of the Range Superintendent. The authorities below confirmed the demand on the ground that the benefit of Notification No. 214/86 was not admissible to the appellants during the period for which the demand has been raised. The Commissioner held that the appellants were not entitled to the benefit during the relevant period. Being aggrieved by this order, the appellants filed this appeal.
3. Shri Gopal Prasad, ld. Advocate submits that the appellants have been consistently following the provisions of Notification No. 214/86. He submits that it was only for a short period that they had followed the procedure set out under Rule 173N on the verbal instructions of the Range Superintendent. He submits that there is no dispute or allegation that the leather was not received by the appellants or shoe uppers were not cleared by them and sent back to the supplier of the leather. He submits that as usual the leather was being received from the manufacturers of shoes and shoe uppers were being returned to them. He, therefore submits that the procedure set out for availing the benefit of Notification No. -214/86 was being followed. He submits that during a short period for which the demand was raised, the appellants were in addition following the procedure set out under Rule 173N. He submits that Rule 173N is a warehousing rule where the goods transferred under AR 3A and on reaching destination an endorsement of the receipt of the goods at the destination is made and AR 3A duly endorsed is sent back to the destination of origin. He submits that this document can be treated as document showing receipt of the shoe uppers at the end of the supplier of the leather. He, therefore submits that since the procedure set out under Notification No. 214/86 i.e. receipt of raw materials/inputs at the job worker’s end and return of the semi finished products or components from the job worker’s factory to the manufacturer’s unit. He submits that if at all there was any lapse or failure it was failure of procedure. He submits that substantive benefit cannot be denied for failure of procedure or lapse of following the procedure. He, therefore prays that the appeal may be allowed.
4. Shri V.M. Udhoji, ld. JDR reiterates the findings of the lower authorities.
5. Heard the rival submissions. On careful consideration of the provisions of Notification No. 214/86, we find that notification grants exemption. If the goods are manufactured out of raw materials supplied and manufactured goods are returned to the supplier of the raw materials. In the instant case, there is no allegation in the SCN that the leather was not received by the appellants or shoe uppers were not returned to the supplier of the leather. Thus at best it can be lapse which is only procedural lapse. Looking to this aspect, we set aside the impugned order and allow the appeal with consequential relief, if any admissible, in accordance with law.