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Issues: Whether recovery of duty drawback could be made under Rule 16A of the Customs and Central Excise Duty Drawback Rules, 1995 for exports made before the rule came into force, and whether the show cause notice issued for such recovery was liable to be quashed.
Analysis: The rule in question was invoked to recover drawback on the footing that export proceeds had not been realised. The Court followed the Supreme Court's view that Rule 16A was a clarificatory provision operating retrospectively, but only in harmony with the existing statutory scheme. On the facts before it, the recovery was founded on a notice issued under Rule 16A, and the Court held that the demand could not be sustained by treating the rule as retrospectively authorising recovery in the manner proposed by the department. The Court confined its examination to the show cause notice and did not decide the broader factual controversies raised by the respondents.
Conclusion: Recovery under Rule 16A was held impermissible in the manner sought, and the show cause notice was quashed and set aside.
Final Conclusion: The writ petition succeeded and the impugned recovery action was annulled.
Ratio Decidendi: A recovery notice founded on a subsequently introduced drawback-recovery rule cannot be sustained unless the rule is applicable to the relevant exports and the statutory basis for recovery clearly authorises such action.
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