Supreme Court rules on duty refund post re-export, emphasizing entitlement over procedural laws

The Supreme Court accepted the appellant's appeal, directing authorities to issue a certificate for obtaining a new DEPB book or re-crediting duty adjustment. The Court emphasized the appellant's entitlement to duty refund or adjustment post re-export, regardless of the payment method, citing the principle of undue enrichment. Procedural laws like the public notice do not alter substantive rights and cannot be applied retroactively, ensuring the appellant's entitlement to duty adjustment post re-export.

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Issues:
Claim of duty drawback rejected due to goods not being identifiable and duty not paid in cash but by DEPB.

Analysis:
The case involved the appellant importing watch parts for wrist watches, with an import duty imposed. Some parts were found defective, and the appellant applied for re-export, subsequently claiming duty drawback under Section 74 of the Customs Act, 1962. Initially, the claim was rejected by the authority-in-original on the ground of non-identifiability of goods. However, the Commissioner (Appeals) accepted the appeal and remanded the matter for reconsideration.

Upon re-examination, a second show cause notice was issued, proposing to deny the duty drawback claim due to non-payment of duty in cash but through DEPB. The assessing authority confirmed the identifiability of parts but rejected the duty drawback claim based on the payment method. The appellant appealed again, expressing a willingness to forego the claim but requested a certificate to approach the DGFT for a new DEPB book or re-credit of the duty adjustment in the existing DEPB book, citing a relevant public notice.

The appellate authority rejected the certificate request, stating the public notice did not apply retroactively to the case. Subsequently, the appellant filed a revision and a writ petition, both of which were dismissed. The Supreme Court, citing the principle of undue enrichment and the Mafatlal Industries Ltd. case, emphasized that once defective parts are re-exported, the appellant is entitled to a refund or adjustment of duty, regardless of payment method. The Court held that the revenue cannot benefit by denying duty drawback or refusing duty adjustment post re-export.

Consequently, the Supreme Court accepted the appeal, directing the authorities to issue a certificate to the appellant for obtaining a new DEPB book or re-crediting the duty adjustment in the existing DEPB book. The Court clarified that procedural laws, like the public notice, do not alter substantive rights and cannot be applied retroactively unless specified by the Legislature, ensuring the appellant's entitlement to the duty adjustment post re-export.

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