Drawback entitlement depends on disputed input use and proper consideration of policy circulars, requiring fresh adjudication.

Drawback entitlement turned on disputed input usage, with the Department alleging grey fabric was used while the export declaration referred to dyed polyester fabric. The record also indicated that the relevant Standard Input Output Norms permitted either dyed or grey fabric, and the DFRC policy provisions required comparison with inputs of the same quality and specifications as those used in the end product. Because the adjudicating authority had not properly considered the applicable circulars, policy material and rival interpretations, the matter required fresh consideration and de novo adjudication after hearing the party.

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Issues: Whether the drawback dispute required fresh adjudication in light of the declared input, the Standard Input Output Norms, the EXIM Policy provisions and the relevant customs circulars.

Analysis: The export goods were assessed on the basis of the declaration that dyed polyester fabric was the input, but the Department asserted that grey fabric had actually been used and relied on the second proviso to Rule 3(1) of the Customs and Central Excise Duties and Service Tax Drawback Rules, 1995. The record also showed that the relevant SION entry permitted import of either dyed fabric or grey fabric for the export product, and the Exim Policy provision on DFRC contemplated import of inputs having the same quality and specifications as those used in the end product. The circulars dealing with the DFRC-cum-drawback scheme were not considered by the adjudicating authority, and the competing interpretations of those circulars and policy provisions required examination on facts and law.

Conclusion: The matter could not be finally decided on the existing adjudication and had to be sent back for fresh consideration.

Final Conclusion: The impugned order was set aside and the claim was directed to be reconsidered afresh after hearing the party and examining the relevant policy material, rules and circulars.

Ratio Decidendi: Where the applicability of drawback depends on disputed input usage and relevant policy circulars and scheme provisions have not been properly considered, the matter requires de novo adjudication.

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