Drawback on export packing material was refused, but recovery of drawback already sanctioned was quashed on equitable grounds.

Drawback on packing material used for exporting talcum powder was held not maintainable as a separate claim where no specific drawback rate had been fixed for the exported product and the scheme treated packing material as ordinarily included in the notified rate structure. By contrast, recovery of drawback amounts already sanctioned and disbursed was quashed on equitable grounds because the exporters had received and relied on the earlier approvals, and they could have sought fixation of rates if the position had been disclosed earlier. The remaining pending claims were left undisturbed.

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Issues: (i) whether drawback was admissible on the packing material used for exporting talcum powder when no specific drawback rate had been fixed for the exported product; (ii) whether recovery of drawback amounts already sanctioned and disbursed could be sustained.

Issue (i): whether drawback was admissible on the packing material used for exporting talcum powder when no specific drawback rate had been fixed for the exported product.

Analysis: Drawback under the Drawback Rules is allowable on export of goods at amounts or rates determined by the Central Government. The exported goods were talcum powder, not the packing material as such, and no drawback rate had been fixed for talcum powder. The notification governing the relevant year made clear that drawback rates are ordinarily inclusive of packing material, and the rules provided a separate mechanism for fixation of rates where no specific rate existed. On a strict application of the scheme, the claim for a separate drawback on the packing material was not maintainable.

Conclusion: The claim for drawback on the packing material, as a separate and independent claim for the pending consignments, was not admissible.

Issue (ii): whether recovery of drawback amounts already sanctioned and disbursed could be sustained.

Analysis: The authorities had themselves accepted and disbursed six drawback claims before changing their stand. Had the petitioners been told at the relevant time that no drawback would be available in the absence of fixation of rates, they could have sought fixation under the rules. Since the earlier claims had been sanctioned and paid, and the petitioners would have arranged their affairs on that basis, recovery in the peculiar facts was found to be inequitable and unjust.

Conclusion: Recovery of the drawback amounts already sanctioned and disbursed was quashed.

Final Conclusion: The challenge succeeded only to the extent of protecting the drawback already paid, while the rejection of the remaining pending claims was left undisturbed.

Ratio Decidendi: A separate drawback claim on packing material cannot be maintained where the exported product itself carries no fixed drawback rate, but recovery of drawback earlier sanctioned and paid may be quashed on equitable grounds in the peculiar facts of the case.

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