Export subsidy entitlement for sugar factories supplying through exporters depends on bearing transport and freight costs, not the exporter's licence arrangement.

An export subsidy scheme for domestically manufactured sugar covered internal transport and freight charges where the sugar factory supplied consignments through an exporter, including ex-factory delivery arrangements under an agreement placing those costs on the factory. The scheme did not exclude entitlement merely because the exporter acted under an advance licence or other import-related export arrangement. On the stated facts, the factory had borne the stipulated transport and freight burden and the Government had directed supply through the exporter, so the subsidy claim was maintainable and denial on that ground was unsustainable.

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Issues: Whether a sugar factory that supplied domestically manufactured sugar through an exporter was entitled to reimbursement of internal transport and freight charges under the export subsidy scheme, and whether denial of subsidy on the ground that the exporter had acted under an advance licence for imported raw sugar was justified.

Analysis: The scheme introduced by the notification dated 21.06.2002, issued under Section 9 of the Sugar Development Fund Act, 1982, and Rule 20 of the Sugar Development Fund Rules, 1983, was framed to defray internal transport and freight charges on export shipments of domestically manufactured sugar. The text of Rule 20(3) expressly covers export by the sugar factory itself or through an exporter, and Explanation I specifically contemplates delivery of the export consignment ex-factory to an exporter, provided the agreement places the transport and freight burden on the sugar factory. The scheme contains no exclusion barring a sugar factory merely because the exporter may have been acting under an advance licence or other export obligation. The record also showed that the respondent had borne the internal transport and freight charges, and the Government itself had directed supply of the sugar for export through the exporter.

Conclusion: The respondent was entitled to the export subsidy, and the denial of the claim on the stated ground was unsustainable.

Ratio Decidendi: Where an export subsidy scheme expressly covers export through an exporter and does not contain any exclusion based on the exporter's separate import or export arrangement, entitlement cannot be denied to the manufacturer-supplier if it bears the stipulated transport and freight burden.

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