Conditional drawback under the Drawback Schedule applies only when duty-free imports are limited to specified inputs.

Drawback under sub-serial No. 2707 of the Drawback Schedule was available only as a limited exception to General Note 2(b) where exports were made under the duty exemption scheme and the duty-free imports were confined to the inputs specified in the footnote. The note did not extend the benefit where other duty-free inputs were also imported, because the language of the exception was conditional and narrowly framed. Accordingly, where garments were manufactured under the DEEC Scheme with additional duty-free inputs beyond zips, buttons or snap fasteners, drawback at the industry rate was not admissible.

---

---

Issues: Whether drawback under sub-serial No. 2707 of the Drawback Schedule was admissible where the exported garments were manufactured under the DEEC Scheme and, besides zips or buttons/snap fasteners, other duty-free inputs had also been imported.

Analysis: General Note 2(b) barred payment of drawback at the industry rate where export goods were manufactured or exported in discharge of export obligation against an advance licence under the duty exemption scheme, but the proviso permitted drawback where specially authorised by a specific entry or note. Sub-serial No. 2707 created such an exception, but only on the condition that the permitted duty-free imports were confined to the specified items mentioned in the footnote. The footnote did not enlarge the benefit where other items were also permitted or imported; rather, the words used in the note showed that the benefit was conditional and limited, and the rate reduction operated only within that confined exception.

Conclusion: The applicants were not entitled to drawback under sub-serial No. 2707 because items other than the specified permissible inputs had been imported duty free, and the rejection of the claims was and upheld.

---