Case Note & Summary
The appellant, M/s Suraj Impex (India) Pvt. Ltd., a merchant exporter of Soyabean Meal, claimed All Industry Rate (AIR) duty drawback at 1% under Customs Notifications from 2006 to 2010. The drawback schedule showed the same rate whether CENVAT facility was availed or not, indicating the rate pertained only to the customs component. However, the Director General of Central Excise and Customs (DGCEI) withheld the drawback from 2008 onwards, taking the view that exporters who availed rebate of central excise duty under Rule 18 or Rule 19(2) of the Central Excise Rules, 2002 were not entitled to the AIR drawback. The Federation of Indian Export Organizations made a representation, leading to the issuance of Circular No. 35/2010-Cus. dated 17.09.2010, which clarified that the customs component of AIR drawback shall be available even if the exporter had availed excise rebate. The circular stated it was effective from 20.09.2010. The appellant sought retrospective application of the circular for exports prior to that date, but the Commissioner (Customs) Kandla and the CBEC denied it, stating the circular was prospective. The appellant filed Writ Petition No. 2576/2012 before the Madhya Pradesh High Court, which dismissed it holding the circular prospective. The review petition was also dismissed. The Supreme Court allowed the appeal, holding that the circular was clarificatory and benevolent, and therefore retrospective in nature. The Court noted that the circular did not create a new benefit but clarified the existing position under previous notifications. The Court set aside the High Court's judgment and directed the authorities to apply the circular retrospectively and release the drawback amounts due to the appellant.
Headnote
A) Customs Law - Duty Drawback - All Industry Rate - Retrospective Effect of Clarificatory Circular - Circular No. 35/2010-Cus. dated 17.09.2010 - The circular clarified that the customs component of AIR duty drawback is available even if the exporter has availed rebate of central excise duty under Rule 18 or Rule 19(2) of the Central Excise Rules, 2002. The Supreme Court held that being clarificatory and benevolent, the circular must be applied retrospectively, and the High Court erred in holding it prospective merely because it stated an effective date. (Paras 1-10) B) Customs Law - Duty Drawback - All Industry Rate - Interpretation of Notifications - Notifications No. 81/2006, 68/2007, 103/2008, 84/2010 - The schedule provided 1% AIR duty drawback on export of Soyabean Meal whether CENVAT facility availed or not. The Supreme Court held that the customs component is distinct from excise rebate, and the circular clarified the existing position, not created a new benefit. (Paras 3-5) C) Customs Law - Duty Drawback - Beneficial Circular - Retrospectivity - The Supreme Court held that a beneficial circular must be applied retrospectively, while an oppressive circular applies prospectively. The circular being clarificatory and beneficial, it applies to all pending proceedings and exports made prior to its issuance. (Paras 9-10)
Issue of Consideration
Whether Circular No. 35/2010-Cus. dated 17.09.2010, which clarified that the customs component of All Industry Rate duty drawback is available even if the exporter has availed rebate of central excise duty under Rule 18 or Rule 19(2) of the Central Excise Rules, 2002, is retrospective in nature and applicable to exports made prior to its effective date of 20.09.2010.
Final Decision
The Supreme Court allowed the appeal, set aside the High Court's judgment and order, and held that Circular No. 35/2010-Cus. dated 17.09.2010 is retrospective in nature. The Court directed the authorities to apply the circular retrospectively and release the duty drawback amounts due to the appellant in accordance with law.
Law Points
- Clarificatory circulars are retrospective
- Beneficial circulars apply retrospectively
- Duty drawback customs component available even if excise rebate availed
- All Industry Rate duty drawback interpretation
