Duty-free fuel under Advance Licence must be excluded from DEPB computation, and export obligation can still be fulfilled.

Fuel imported duty free under the Advance Licence Scheme on an actual user basis must be excluded from DEPB computation where paragraph 4.9(d) of the Handbook so provides. The article states that this exclusion applies even if the exporter also claimed DEPB benefits on exports made with duty-paid inputs, because the import of fuel alone does not defeat the underlying export obligation. On that footing, the denial of DEPB-linked treatment and consequential action was unsustainable, and the relief granted to the importer remained undisturbed.

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Issues: Whether fuel imported under the Advance Licence Scheme was to be excluded while fixing the DEPB rate and whether exports effected by the importer could be treated as fulfilling the export obligation notwithstanding the simultaneous claim of DEPB benefit.

Analysis: The policy framework under Chapter 4 of the Foreign Trade Policy, 2002-2007 and the Handbook of Procedures permitted duty-free import of fuel under the Advance Licence Scheme on actual user basis. Paragraph 4.9(d) of the Handbook specifically provided that where fuel was allowed as an input, it was not to be taken into account while fixing the DEPB rate for the corresponding products. The imported fuel alone had been brought in under the licence, while the remaining inputs were duty paid. On that basis, the benefit under the Advance Licence Scheme could not be denied merely because DEPB had also been claimed on exports made with duty-paid inputs.

Conclusion: The exports were rightly treated as eligible for discharge of the export obligation, and the denial of DEPB-linked treatment and consequential action was unsustainable.

Final Conclusion: The writ appeal failed and the relief granted to the importer was left undisturbed.

Ratio Decidendi: Where fuel is imported duty free under an Advance Licence on actual user basis, paragraph 4.9(d) requires that such fuel be excluded from DEPB computation, and the exporter's use of duty-paid inputs for the exported goods cannot by itself defeat fulfillment of the export obligation.

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