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2025 Supreme(SC) 894
SUPREME COURT OF INDIA
B.V. NAGARATHNA, SATISH CHANDRA SHARMA, JJ.
M/s Suraj Impex (India) Pvt. Ltd. – Appellant
Versus
Union of India and Others – Respondents
Civil Appeal No. 7089-7090 of 2025 [Arising Out of SLP (C) Nos. 26178-26179 of 2016]
Decided On : 22-05-2025
For the Petitioner(s): Mr. Arvind P Datar, Sr. Adv. Mr. Mayank Kshirsagar, AOR Mr. Ashutosh Upadhyay, Adv. Mr. Tushar Jarwal, Adv. Mr. Parth Sarathi, Adv. Ms. Amumita Verma, Adv. Ms. Chaitanya Kashyap, Adv.
For the Respondent(s): Mr. Gurmeet Singh Makker, AOR
The Customs Circular No. 35/2010-Cus. was clarificatory and should apply retrospectively, allowing duty drawback claims prior to its effective date.
Headnote:(A) Customs Tariff Act, 1975 - Circular No. 35/2010-Cus. dated 17.09.2010 - Applicability of All Industry Rate (AIR) Duty Drawbacks - The High Court erred in holding that the applicability of the Customs Circular was prospective. The Court found that the Circular was clarificatory in nature and applicable retrospectively, allowing the Appellant to claim 1% duty drawback from 2008. (Paras 12, 19)
(B) Clarification of Notifications - The Circular does not create new rights but clarifies the benefits previously available to exporters irrespective of whether the CENVAT facility was availed. (Paras 12, 14)
Facts of the case:
The Appellant engaged in soybean meal export has been denied a 1% duty drawback that was available since earlier Notifications, but withheld under the mistaken belief that it was contingent on CENVAT. (Paras 4-7)
Findings of Court:
The Impugned Judgment by the High Court dismissing the writ petition and review petition was set aside, entitling the Appellant to 1% AIR Customs Duty Drawback retrospectively. (Paras 20)
Issues: Whether the Customs Circular No. 35/2010 has retrospective applicability for duty drawback claims for exports prior to its effective date.
Ratio Decidendi: The Court concluded that the Circular serves merely to clarify existing rights without creating new burdens, thus applying retrospectively to provide rightful claims. (Paras 12, 20)
Result: Appeals allowed.
| Table of Content |
|---|
| 1. leave granted, appeal against high court judgment. (Para 1) |
| 2. factual background regarding duty drawback (Para 2 , 3 , 4 , 5 , 6 , 7) |
| 3. arguments on retrospective vs. prospective effect (Para 9 , 10) |
| 4. court's reasoning on the nature of the circular (Para 12 , 13 , 14 , 15 , 16 , 17 , 18 , 19) |
| 5. decision granting retrospective application (Para 20) |
| 6. final orders and disposition (Para 21 , 22) |
JUDGMENT :
SATISH CHANDRA SHARMA, J.
1. Leave granted.
2. The captioned Appeal is directed against the Judgment and Order dated 17.11.2014 passed by the High Court of Madhya Pradesh at Indore in Writ Petition No. 2576/2012 whereby the applicability of the Customs Circular No. 35/2010-Cus. dated 17.09.2010 for the purposes of All Industry Rate (AIR) Duty Drawbacks was observed to be prospective in nature. Review Petition bearing RP No. 1/2015 arising therefrom was dismissed by the High Court vide Order dated 01.04.2016 at the very threshold stating that there was no error apparent on the face of the record. Aggrieved, the Appellant has assailed the observations of the High Court thereunder, by way of the present Appeal.
Factual Background
3. The factual conspectus of the captioned case is such that the Appellant, M/s Suraj Impex (India) Pvt. Ltd. primarily engaged in the operations of export of Soyabean Meal, an agricultural-commodity falling under Chapter 231 [First Schedule to the Customs Tariff Act, 1975 - Chapter 23: Residues and waste from the food industries; prepared animal fodder] of the Custom Tariff Act, 1975, asserts that as a merchant exporter, the entity is entitled to claim duty drawbacks at All-Industry Rate (“AIR”) introduced by the Customs Notification No. 81/2006 dated 13.07.2006 and continued vide annual Notification Nos. 68/2007 dated 16.07.2007, No. 103/2008 dated 29.08.2008, No. 84/2010 dated 17.09.2010. Clause 5 of the Notification No. 81/2006 & 68/2007 and Clause 6 of Notification No. 103/2008 and 84/2010 respectively, are identically worded and state as under:
“The figures shown under the drawback rate and drawback cap appearing below the column “Drawback when Cenvat facility has not been availed” refer to the total drawback (customs, central excise and service tax component put together) allowable and those appearing under the column “Drawback when Cenvat facility has been availed” refer to the drawback allowable under the customs component. The difference between the two columns refers to the central excise and service tax component of drawback. If the rate indicated is the same in both the columns, it shall mean that the same pertains to only customs component and is available irrespective of whether the exporter has availed of Cenvat or not.”
4. The Schedule2 [First Schedule to the Customs Tariff Act, 1975-Chapter 23-Column 4 & 6 indicate the Drawback Rate as 1% for both instances whether Cenvat facility is availed or not] permits 1% AIR duty drawback on the export of SBM, on both occasions whether the CENVAT Facility (collective component of customs, central excise and service) was availed or not. The Appellant regularly received the benefit of the 1% AIR duty drawback up till 2008, when the Director General of Central Excise, [“DGCEI”] Indore, Respondent no. 4 herein framed an opinion that the manufacturers/exporters were not entitled to the said AIR drawback, if they had already availed the rebate of central excise duty under Rule 18 or Rule 19(2) of the CENTRAL EXCISE RULES , 2002. The Respondent no. 3 hence withheld the release of the duty drawback to the Appellant and such similarly placed merchant exporters, who then approached the Directorate of Drawback and the Central Board of Excise and Customs, New Delhi vide Representation dated 13.12.2011 filed on behalf of Federation of Indian Export Organizations, urging that the drawback on SBM Export was the customs component, whereas the benefit under Rule 18 and Rule 19(2) of the CENTRAL EXCISE RULES , 2002 was towards the central excise p
