Strict construction of drawback recovery rules bars customs action without RBI information, and write-off of export bills defeats recovery.

Rule 16A of the Customs and Central Excise Duties Drawback Rules, 1995 was construed strictly: customs authorities could initiate drawback recovery only on receipt of relevant information from the Reserve Bank of India, and the power could not be expanded to cover suo motu action or information from another source. Applying the plain meaning rule, the Court held that no additional words could be read into the provision. As the RBI had extended time for realisation and later written off the export bills, the recovery proceedings could not survive and the impugned notices and orders were quashed.

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Issues: Whether, under Rule 16A of the Customs and Central Excise Duties Drawback Rules, 1995, the customs authorities could initiate and continue recovery of drawback only on receipt of relevant information from the Reserve Bank of India, and whether the recovery proceedings could survive after the Reserve Bank of India wrote off the export bills without surrender of drawback.

Analysis: The relevant unamended Rule 16A required issuance of notice only "on receipt of relevant information from the Reserve Bank of India" and did not authorise suo motu action or action on information from any other source. The Court applied the plain meaning rule and held that no words could be added to the provision to enlarge the customs authorities' power. It further noted that the Reserve Bank of India had extended the time for realisation and had later written off the export bills, and that the RBI's stand supported the exporter. The Court also treated the foreign exchange law framework as governing the write-off process and found that the customs authorities ought to have dropped the recovery once the RBI had issued the write-off communication.

Conclusion: The recovery proceedings and the impugned orders were unsustainable and were quashed; the issue was decided in favour of the assessee.

Final Conclusion: The writ petition succeeded and all consequential drawback recovery proceedings based on the impugned notices and orders were set aside.

Ratio Decidendi: A taxing or recovery provision must be construed strictly as written, and where the rule makes action contingent on receipt of information from a specified source, the authority cannot enlarge that power by implication or by reading in additional words.

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