Rule 16A drawback recovery fails where export proceeds were realised, so the related penalty could not survive.

Rule 16A of the Duty (Drawback) Rules, 1995 permits recovery of drawback only where drawback has been paid and export sale proceeds are not realised within the permissible period. Here, the export proceeds were in fact realised and certified as received by the bank, so the statutory precondition for invoking recovery was absent. As the basis for recovery failed, the associated penalty could not be sustained. Recovery of drawback under Rule 16A was therefore held unsustainable, and the penalty order was set aside in favour of the assessee.

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Issues: Whether drawback could be recovered and penalty sustained under Rule 16A of the Duty (Drawback) Rules, 1995 when export proceeds had in fact been realised, though after delay.

Analysis: Rule 16A applies only where drawback has been paid and the sale proceeds of the export goods have not been realised within the permissible period. The record showed that the export proceeds were realised and were certified as received by the bank. In such a situation, the condition precedent for invoking Rule 16A was absent. Once the foundation for recovery failed, the penalty imposed on the appellants also could not survive.

Conclusion: Recovery of drawback under Rule 16A was not sustainable, and the penalty order also failed. The issue was decided in favour of the assessee.

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