Customs drawback is unavailable to a hundred per cent export oriented unit when the supplier bears the duty incidence.

Drawback under the customs regime was held not admissible to a hundred per cent export oriented unit where the governing notification excluded such entitlement for exports by that unit. The framework treated supplies from a domestic tariff area unit to the export oriented unit as deemed export, and the drawback rate applied only where excise duty had been paid on procurement of bulk tea by the specified supplier. Because the duty incidence was borne by the domestic supplier, that supplier was the proper claimant for drawback, not the recipient export oriented unit. The demand and recovery of drawback paid to the export oriented unit were therefore sustained.

---

---

Issues: Whether drawback under the customs drawback regime is admissible to a hundred per cent export oriented unit, and whether the demand and recovery of drawback paid on the impugned goods was sustainable.

Analysis: The governing framework treated supplies from a domestic tariff area unit to a hundred per cent export oriented unit as deemed export, and the relevant notification made the drawback rate applicable only where excise duty had been paid on procurement of bulk tea by specified units. The exclusion in General Notes 2(c) of C.B.E. & C. Notification No. 31/1999-Cus. (N.T.) barred drawback for exports by a hundred per cent export oriented unit. Since the excise duty had been suffered by the bulk tea manufacturer supplying the goods to the hundred per cent export oriented unit, the proper claimant for drawback was that manufacturer, not the recipient export oriented unit.

Conclusion: The hundred per cent export oriented unit was not entitled to claim drawback, and the order allowing drawback in its favour was erroneous.

Final Conclusion: The revision applicant succeeded, and the demand for recovery of drawback was restored against the respondent unit.

Ratio Decidendi: Drawback is not admissible to a hundred per cent export oriented unit where the governing notification excludes such entitlement and the duty incidence has been borne by the supplying domestic unit treating the transaction as deemed export.

---