Customs drawback and export proceeds realisation: valid extension by an AD category I bank must be examined before denial.

Customs drawback under Section 75 of the Customs Act may be denied only if export proceeds remain unrealised beyond the period permitted under FEMA and the applicable extension framework. The court noted that the governing master circular appeared to allow extension by an AD category I bank as well as the RBI, and the petitioner's bank communications and certificate had not been properly examined. As the key question was whether a valid extension covered the relevant remittances, the rejection of drawback required reconsideration rather than outright affirmation without that determination.

---

---

Issues: Whether the claim for customs drawback could be denied for non-realisation of export proceeds within time, and whether an extension granted by an AD category I bank could satisfy the requirement under Rule 16A.

Analysis: The entitlement to drawback under Section 75 of the Customs Act, 1962 is subject to the conditions governing realisation of export proceeds. Rule 16A provides for recovery where proceeds are not realised within the period allowed under the Foreign Exchange Management Act, 1999, including any extension of such period. The material placed before the Court indicated that the relevant master circular permitted extension not only by the Reserve Bank of India but also by an AD category I bank. The documents relied on by the petitioner, including the bank communications and certificate, were not adequately examined in the impugned orders, and the question whether the remittances were covered by a valid extension required fresh consideration.

Conclusion: The matter required reconsideration, and the rejection of drawback could not be sustained without examining whether the AD category I bank had validly extended the time for realisation.

Ratio Decidendi: Where the governing foreign-exchange framework authorises an AD category I bank to extend the time for realisation of export proceeds, drawback cannot be denied without a proper determination of whether such extension existed and covered the relevant remittances.

---