Drawback on free shipping bills allowed where notification confusion explained non-filing at export and discretion had to be exercised judiciously.

The drawback framework permits exemption from the requirement of filing drawback shipping bills where non-filing occurred for reasons beyond the exporter's control, and departmental circulars also recognise drawback on free shipping bills when the prescribed conditions are met. Confusion created by the relevant notifications, including a later notification specifically listing cereals and clarifying the category, was treated as a sufficient explanation for the failure to claim drawback at the time of export. The Commissioner's discretion had to be exercised judicially on the facts, and a rigid insistence on strict proof in these circumstances was held unjustified. The rejection of the drawback claim was set aside and drawback was allowed.

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Issues: Whether rejection of the drawback claim on the ground that the exporter had not shown reasons beyond its control for not filing drawback shipping bills at the time of export was valid.

Analysis: The applicable drawback framework permits the Commissioner to exempt the exporter from the requirement of filing drawback shipping bills where the failure occurred for reasons beyond control, and the departmental circular also recognizes that drawback may be allowed on free shipping bills without conversion when the conditions are satisfied. The explanation offered for not claiming drawback at the time of export was the confusion created by the relevant notifications, including the later notification which expressly listed cereals and clarified the category. The discretion vested in the Commissioner was required to be exercised judiciously on the facts, and the insistence on strict proof in the circumstances was held to be unjustified.

Conclusion: The rejection of the drawback claim was set aside and the exporter was held entitled to drawback.

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