Suppression in duty drawback declarations justified recovery, penalty, and extended limitation despite later circular clarification.

Failure to declare the correct source of procurement in drawback declarations was treated as suppression of material facts, justifying recovery of duty drawback and issuance of the show cause notice. The Government held that Circulars 54/2001-Cus. and 64/2001-Cus. were not complied with, and later clarification in Circular No. 16/2009 could not be applied retrospectively to cure the defect. It also found Rule 16A inapplicable as realization of export proceeds did not prevent recovery where the drawback conditions were violated. Penalty was upheld because vital information was withheld to obtain the benefit, and the notice was not time-barred since the extended period was validly invoked.

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Issues: Whether drawback already sanctioned to a merchant exporter was liable to recovery for failure to furnish the correct source of procurement and whether the show cause notice and penalty were sustainable.

Analysis: The goods were procured from the open market, but the exporter did not disclose the trader's particulars in the prescribed declaration and instead used the expression "supplier". The relevant circulars required a proper declaration of procurement details, and the later circular granting full drawback to merchant exporters purchasing from the local market was treated as prospective in operation. On that basis, the exporter could not claim retrospective benefit of the later circular. The omission to disclose the correct source was treated as suppression of material facts, justifying invocation of the extended limitation period and supporting the penalty.

Conclusion: The recovery of drawback, invocation of extended limitation, and imposition of penalty were upheld against the assessee.

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