DEPB liability and drawback recovery turn on export evidence, with settlement terms granting instalments and limited immunity.

The settlement commission examined whether DEPB liability could be fastened on the basis of comparative invoices and alleged FOB overvaluation, and it found the material insufficient where no contemporaneous market inquiry disproved the export declarations and banking evidence showed realisation of export proceeds. It also considered drawback claims for shipping bills without bank realisation certificates, sustaining recovery only to the limited quantified extent linked to unresolved realisation. On the disclosure made, the commission fixed the payable amounts under the admitted heads, permitted instalments, continued the corporate guarantee until payment, and granted immunity from penalty, fine, and limited prosecution for the matters covered.

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Issues: (i) Whether liability under the DEPB scheme was sustainable on the material placed before the Settlement Commission; (ii) whether drawback was recoverable in respect of shipping bills where export proceeds were not realised and whether the balance drawback claim was otherwise inadmissible; (iii) what settlement terms, including payment, interest and immunity, should follow from the disclosure made by the applicant.

Issue (i): Whether liability under the DEPB scheme was sustainable on the material placed before the Settlement Commission.

Analysis: The Revenue relied on comparative invoices and alleged overvaluation of FOB value, but no market inquiry had been conducted at the time of export. The Commission accepted that the invoices relied on by the Revenue were not shown to be conclusive against the applicant, and that the export proceeds had been realised through banking channels with the relevant certificates on record. On that basis, the Commission held that the material did not justify fastening DEPB liability on the applicant.

Conclusion: DEPB liability was negatived and this issue was decided in favour of the assessee.

Issue (ii): Whether drawback was recoverable in respect of shipping bills where export proceeds were not realised and whether the balance drawback claim was otherwise inadmissible.

Analysis: The Commission accepted that drawback could not be retained where export proceeds had not been realised within the relevant shipping bills, and quantified a limited amount payable for the shipping bills still lacking bank realisation certificates. The Revenue's reliance on overvaluation and Section 76(1)(b) of the Customs Act, 1962 was not accepted as a basis for disallowing the claim in full, but the applicant was nevertheless held liable to pay the quantified amount relating to the unresolved shipping bills.

Conclusion: Drawback liability was sustained only to the limited extent quantified by the Commission, and this issue was partly in favour of the assessee.

Issue (iii): What settlement terms, including payment, interest and immunity, should follow from the disclosure made by the applicant.

Analysis: The Commission proceeded under the settlement mechanism, treated the disclosure as sufficient for settlement, and fixed the total amount payable under the admitted heads. It allowed payment in instalments, continued the corporate guarantee until payment, granted immunity from penalty and fine, and granted limited immunity from prosecution under the Customs Act, 1962, the Indian Penal Code and the Foreign Exchange Regulation Act in relation to the matters covered by the application.

Conclusion: The matter was settled on the quantified terms fixed by the Commission, with instalment facility and partial immunity granted to the applicant.

Final Conclusion: The settlement accepted the applicant's disclosure in part, deleted DEPB liability, sustained only the quantified duty and drawback components, and granted consequential instalment relief and immunity in respect of the matters covered.

Ratio Decidendi: Where the Revenue does not establish overvaluation by cogent contemporaneous inquiry and the export proceeds are realised, DEPB liability cannot be fastened merely on comparative invoices, while drawback may be recovered only to the extent the statutory conditions for retention are not satisfied.

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