Post-repeal drawback recovery and export valuation reassessment were held unsustainable under the successor customs regime.

A post-01.10.2017 show cause notice cannot be sustained under the repealed 1995 Drawback Rules where the 2017 regime preserves only limited accrued rights. The text notes that Rule 16 of the 1995 Rules had no workable machinery for demanding or recovering drawback already paid, so recovery under that provision was unsustainable. It further states that, once export was completed, the department had no power to reassess the FOB value of goods already exported under the export valuation rules and Section 14 of the Customs Act. On these grounds, the impugned notice was quashed.

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Issues: (i) Whether a show cause notice issued after 01.10.2017 could invoke Rule 16 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 despite the coming into force of the 2017 Drawback Rules. (ii) Whether the 1995 Drawback Rules contained any mechanism to demand or recover drawback already disbursed. (iii) Whether the department had power to reassess the value of goods after export.

Issue (i): Whether a show cause notice issued after 01.10.2017 could invoke Rule 16 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 despite the coming into force of the 2017 Drawback Rules.

Analysis: Rule 20(2) of the 2017 Drawback Rules contained only a limited saving of accrued rights and actions. The notice was issued after the repeal regime had taken effect, yet it sought to proceed under the repealed 1995 Rules. On that basis, invocation of Rule 16 of the 1995 Rules was held unsustainable.

Conclusion: The challenge succeeded and the post-01.10.2017 notice could not validly invoke Rule 16 of the 1995 Drawback Rules.

Issue (ii): Whether the 1995 Drawback Rules contained any mechanism to demand or recover drawback already disbursed.

Analysis: The provisions of the Customs Act, 1962 and the Drawback Rules were examined together, and it was held that the 1995 Rules did not provide a workable machinery for raising such a demand. In the absence of an enabling mechanism, recovery under Rule 16 could not be sustained.

Conclusion: The demand for recovery of drawback was held unsustainable.

Issue (iii): Whether the department had power to reassess the value of goods after export.

Analysis: The notice proposed rejection and redetermination of FOB value of goods already exported under the export valuation rules and Section 14 of the Customs Act, 1962. The Court followed the later view that, once export was completed, the department had no power to reassess the value of goods already exported.

Conclusion: The department was held to have no power to reassess the value of exported goods.

Final Conclusion: The impugned show cause notice could not survive in law and was quashed in relation to the petitioner.

Ratio Decidendi: A post-repeal show cause notice cannot be sustained under the repealed drawback rules where the successor regime preserves only limited accrued rights, and in the absence of a statutory mechanism the department cannot recover drawback or reopen the value of goods already exported.

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