Refund of input duty credit and drawback allocation must be verified before applying Rule 57F(3) to exported goods.

Refund of input duty credit under Rule 57F(3) could not be denied on the existing material where drawback had been allowed on exported goods, but the record did not establish whether the drawback covered only Customs duty or also reflected Central Excise duty on indigenous inputs. The proper course was to verify the basis of drawback computation from the Drawback Directorate and then apply the proviso to Rule 57F(3). The matter therefore required fresh examination, as the denial of refund was not sustainable without determining the exact drawback allocation.

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Issues: Whether the denial of refund of input duty credit under Rule 57F(3) was justified when drawback had been allowed on the exported goods, and whether the matter required fresh examination of the basis of drawback allocation.

Analysis: The exported finished goods had admittedly been allowed drawback at the rates specified in the drawback schedule. The record, however, did not conclusively establish that the drawback related exclusively to the Customs duty component, nor did it show whether any Central Excise duty component on indigenous inputs had been taken into account while fixing the drawback rate. In such circumstances, the proper course was to ascertain the basis of the drawback computation from the Drawback Directorate and then determine the effect of the proviso to Rule 57F(3).

Conclusion: The denial of refund could not be sustained on the material before the authority, and the matter was required to be reconsidered afresh.

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