Retrospective withdrawal of drawback benefits rejected where a later circular could not impair rights accrued under earlier export guidance.

Circular No. 39/2001 was treated as a fresh administrative circular, not a mere clarification, and therefore could not be applied retrospectively to withdraw or recover brand rate drawback already accrued under earlier circulars. Benefits that exporters had obtained or were entitled to consider under the prior regime were protected until the later circular came into force. The rejection orders based on retrospective application were quashed, and the authorities were directed to process pending or completed drawback claims in accordance with the earlier circular position, as retrospectivity could not be implied to impair vested benefits without clear legal authorisation.

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Issues: Whether Circular No. 39/2001 could be applied retrospectively to deny or recover brand rate drawback already granted under the earlier circulars, and whether the impugned rejection orders could stand.

Analysis: The earlier circulars extended brand rate drawback under the DEPB scheme where Modvat/Cenvat credit was unavailable, and exporters had acted on that position. Circular No. 39/2001 introduced a narrower regime and was held not to be a mere clarification but a fresh circular altering the earlier position. A departmental circular may be binding on the department, but it cannot be given retrospective effect so as to take away benefits already accrued under the previous circular regime. The Court also distinguished the precedent relied upon by the respondents, holding that the power to amend an exemption or administrative notification does not justify retrospective withdrawal of rights already conferred by a circular.

Conclusion: Circular No. 39/2001 was held to operate prospectively only, and the rejection orders founded on retrospective application of that circular were quashed.

Final Conclusion: The exporters retained entitlement to consideration of their pending or completed drawback claims under the earlier circular regime up to the date the later circular came into force, and the departmental authorities were directed to process the applications accordingly.

Ratio Decidendi: An administrative or departmental circular that confers a benefit cannot be applied retrospectively to withdraw or impair rights already accrued under an earlier circular unless such retrospectivity is clearly authorised by law.

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