Drawback eligibility for Nepal exports upheld where KOICA-funded project supplies were paid in foreign exchange.

A drawback notification for exports to Nepal was construed as containing distinct eligibility categories, including one for project supplies financed by multilateral agencies and paid in freely convertible currency. On a harmonious reading, KOICA-funded humanitarian supplies exported to Nepal and paid through foreign exchange fell within that category, so the goods were eligible for drawback. The exclusion relating to third-country goods was held to apply only to the separate category based on global tenders and Indian-currency payment, and could not be imported into the independent category for multilateral agency-funded supplies. The free shipping bills were therefore permitted to be converted into drawback shipping bills under Section 149 of the Customs Act, 1962.

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Issues: Whether goods exported to Nepal under a KOICA-funded humanitarian supply arrangement, with payment received in foreign exchange, were eligible for drawback under the relevant notification and whether the free shipping bills could be converted into drawback shipping bills under Section 149 of the Customs Act, 1962.

Analysis: The notification governing drawback for exports to Nepal contained different categories of export, including supplies financed by multilateral agencies where payment is received in freely convertible currency. The dispute turned on whether the exports fell under the category dealing with global tenders and Indian-currency payment, along with its proviso excluding third-country goods, or instead fell within the separate category covering supplies to projects financed by multilateral agencies and paid for in freely convertible currency. On a harmonious reading of the notification and the facts, the exports were found to be project supplies financed by KOICA and paid for through foreign exchange, bringing them within the latter category. The exclusion relating to third-country goods was held to be tied to the category requiring Indian-currency payment and was not applied to the category covering multilateral agency funded supplies.

Conclusion: The exports were held to be eligible for drawback and the request to convert the free shipping bills into drawback shipping bills was allowed.

Final Conclusion: The appellants were entitled to drawback treatment for the Nepal exports, and the adjudicating authority was directed to modify the shipping bills accordingly.

Ratio Decidendi: Where a drawback notification contains distinct categories of eligible exports, the specific conditions and exclusions attached to one category cannot be transposed to another distinct category that independently satisfies its own eligibility conditions.

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