Merchant exporters and excise drawback: open-market purchases stayed outside recovery on the facts considered.

Merchant exporters who buy readymade goods from the open market and export them were treated under the drawback scheme as entitled only to the customs component, not the excise component, under the earlier circulars. The 2003 circular relaxed certification requirements for some exporters but did not change that basic position for open-market purchases. A later 2009 circular reflected the same interpretation of the rule, but it could not support reopening exports and drawback payments already completed years earlier. On those facts, recovery of the excise drawback was not sustainable and the Tribunal's relief was upheld.

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Issues: Whether a merchant exporter who procures goods from the open market and exports them is entitled to the excise component of All Industry Rate duty drawback, and whether recovery of such drawback could be sustained on the basis of the circulars and procedure relied upon by the Revenue.

Analysis: The dispute turned on the interaction between the drawback scheme, the relevant circulars, and the factual position that the respondent was not a manufacturer but a merchant exporter purchasing readymade goods from the open market. The Court noted that the earlier circulars of 1997 and 1998 treated merchant exporters procuring goods from the open market differently from manufacturers and merchant exporters using job workers, and restricted their drawback entitlement to the customs portion only. The 2003 circular simplified the certification requirement for certain exporters, but did not alter the basic position governing open market purchases. The later 2009 circular reflected the interpretation of the rule but could not justify reopening completed exports and drawback payments made years earlier. On the facts, the demand was founded on a procedure not applicable to the respondent's category, and no substantial question of law arose from the Tribunal's view.

Conclusion: The respondent was not liable to the demanded recovery of excise drawback, and the Tribunal's order granting relief was upheld.

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