The requirement of furnishing an insurance certificate under Rule 13(2)(iv) of the Drawback Rules, 1995, is not mandatory and should be interpreted liberally to further the object of the Drawback Rules, which is to boost export.

( 1 ) THIS reference application under Section 130a of the Customs Act, 1962 [hereinafter called the said Act] has been filed by the Commissioner of Customs, Mumbai in respect of an order dated 21-6-2000 passed by the Customs, Excise and Gold (Control) Appellate Tribunal, Eastern Regional Bench, Calcutta [hereinafter called as CEGAT], In the said application, 8 (eight) question were framed.

( 2 ) THE said application came up for hearing before a Division Bench of this Court and the said Division Bench, by an order dated 17-4-2001, after hearing the learned Counsels appearing for the parties, directed the Tribunal to refer to only one question for the opinion of this Court.

( 3 ) THE question which was referred to by the Division Bench is as follows :"whether the drawback is allowable more particularly in terms of Rule 13 (2) (iv) of the Drawback Rules, 1995 wherein the exporters were required to submit a valid insurance certificate along with the drawback claim. A perusal of the drawback application submitted by the claimants show that the Insurance Certificate was invalid and has been cancelled by the Insurance Company before the exports were effected?"

( 4 ) THE material facts of the case for a proper appreciation of the points involved in the said question are stated below : m/s. Terai Overseas Limited, the respondent No. 1 in this application, [hereinafter called TOL] as a Merchant-Exporter entered into a contract with M/s. Avia Exports, Moscow, a Government Undertaking of Russia for sale of various types of dresses and garments. Consequently, letters of credit were opened by the said Export House in the name of TOL on 18-4-1996. Therefore, TOL entered into a contract with M/s. Dugar Impex Pvt. Ltd. and M/s. Aruna Impex Pvt. Ltd. for manufacture and export of the said goods on certain terms and conditions. The relevant condition being that the export would be against the contract entered into by TOL with the overseas buyers and the documents would be negotiated against the Letter of Credit opened by the foreign buyer in favour of TOL and the Duty Drawback was to be assigned by the said manufacturer/exporter in favour of TOL. It was also agreed that M/s. Dugar Impex and M/s. Aruna Impex would be paid the cost of manufacturing and selling price as settled between them and TOL.

( 5 ) PURSUANT to such contract, M/s. Dugar Impex and M/s. Aruna Impex exported respectively 24 and 10 consignments for quality garments to Russia under various shipping bills and filed their Duty Drawback Claim for Rs. 95,87,115. 66 p. and Rs. 37,27,098. 75 p. on 30-9-1996 with the Customs authorities.

( 6 ) TOL then approached the Customs authorities through various letters with the claim of Drawback in respect of those 34 (24+10) consignments. TOL contended that the exports made by M/s. Dugar Impex and M/s. Aruna Impex were on its behalf.

( 7 ) THEREAFTER, as the Drawback Claim was not allowed, various proceedings were initiated in the High Court of Bombay with which this Court is not concerned.

( 8 ) ULTIMATELY, a show cause notice dated 30-12-1998 and followed by Addendum dated 12-1-1999 were issued allegedly cancelling the Drawback Claim and for confiscating the sale proceeds and imposition of personal penalty on the appellants. The main allegation in the said show cause notice was that M/s. Dugar Impex and M/s. Aruna Impex are fictitious firms and information was received from the Calcutta Customs that those two firms existed only on papers and could not be traced. It was also alleged that TOL imported rags by misdeclaring the same as high valued garments from Calcutta in the month of December, 1995 with a claim for Drawback. It was alleged that insurance certificate was subsequently cancelled by the Insurance Company and as such, the provisions of Customs and Central Excise Duty Drawback Rules, 1995 have been contravened and it was proposed to reject the claim of TOL for Drawback on the alleged ground of non-submis