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AI Drafter ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether a merchant exporter who procures goods from the open market is liable to refund duty drawback on the basis that the goods were not manufactured by it or got manufactured under job work, and whether Circular No. 16/2009-Cus could justify recovery of drawback already paid for an earlier period.
Analysis: The Court followed the earlier decision holding that Rule 3 of the Customs and Excise Drawback Rules, 1995 did not draw any distinction between a manufacturer-exporter and a merchant exporter purchasing goods from the market. The earlier circulars and the 2009 circular showed that drawback policy had treated market-purchase exports differently at different times, but the later circular did not authorise reopening completed transactions for periods prior to its issuance. Since the exports had been completed and drawback had been sanctioned long before the 2009 circular, the attempt to recover the amount was unwarranted.
Conclusion: The respondents were not entitled to recover the drawback paid to the petitioner, and the impugned recovery order was quashed.
Ratio Decidendi: Where the governing drawback rule does not distinguish between merchant exporters and manufacturer-exporters, drawback already sanctioned for completed exports cannot be recovered merely because a later circular modifies or clarifies the administrative position prospectively.
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