Soya bean Meal Exporter Entitled To 1% AIR Customs Duty Drawback From 2008: Supreme Court
Soya bean Meal Exporter Entitled To 1% AIR Customs Duty Drawback From 2008: Supreme Court
The Supreme Court has held that the Soya bean Meal exporter is entitled to 1% All-Industry Rate (AIR) Customs Duty Drawback from the year 2008.
The bench of Justice Satish Chandra Sharma has observed that the statutory principle of “contemporanea exposito” which takes into consideration contemporaneous interpretation also becomes increasingly relevant insofar as the CBEC Circular dated 17.09.2010 read in conjunction with the previous Notifications already in operation, did not confer a prospective benefit on antecedent facts, but established the scope of the very benefit introduced vide the first Notification No. 81/2006 dt. 13.07.2006 for the sake of the Appellant and such similarly placed exporters. For this simple reason, the operation of the said CBEC Circular dated 17.09.2010 ought to be retrospective.
The bench stated that the Madhya Pradesh High Court adopted a cursory view by solely relying on the submission of the Respondents that because the subject Circular was to be made effective from 20.09.2010, it was prospective in nature. The High Court did not appreciate the rationale of the CBEC Circular nor the purport of the Notifications time and again issued by the Department and passed the Order in undue haste. Subsequently, as well it refused to remedy the error apparent on record, by dismissing the Review Petition at its threshold.
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 23 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 dt. 13.07.2006 and continued vide annual Notification Nos. 68/2007 dt. 16.07.2007, No. 103/2008 dt. 29.08.2008, No. 84/2010 dt. 17.09.2010.
The Schedule 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, department 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 department 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 Representationfiled 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 portion, which are distinct in nature.
It was mentioned that the “CBEC had itself fixed this rate uniformly at 1 % for exporters whether the CENVAT facility has been availed or has not been availed because the rate is based on the Customs component of the duty incidence and the CENVAT facility has no bearing on the rebate of Customs Duty.”
The CBEC issued the Clarificatory Circular No. 35/2010-Cus. dt. 17.09.2010, the bone of contention herein, wherein it was stated that the AIR duty drawback towards the customs portion as well as excise duty benefit under Rule 18 or Rule 19(2) of the Central Excise Rules, 2002 shall be available simultaneously.
It is urged by the Appellant that while all previous Notifications introduced the benefit of rate of drawback on the free on board (FOB) Value or on the rate per unit quantity of the export goods, Circular No. 35/2010-Cus. dt. 17.09.2010 made it clear that exporters shall be entitled to the custom duties which remained unrebated through the AIR drawback route, clarifying the applicability and operation of previously issued Circulars by the CBEC. Per contra, the Respondents have submitted that the Circular No. 35/2010-Cus. does not have a retrospective effect, and expressly states that the same has been made effective from 20.09.2010.
The stand of the Respondents before the High Court remained unwavering that since the Circular No. 35/2010-Cus. Dt. 17.09.2010 very categorically mentioned the effective date as 20.09.2010, which is clear and prospective in nature, the question of giving retrospective effect to a statute does not arise. It was argued that the benefit of the Notification could not be extended to the Appellant as the final product was exempted from payment of duty and did not come within the domain of CENVAT Scheme, and rather was covered under clause 8(e) & (f) of the Notification No. 103/2008 whereby the benefit under Rule 19(2) of Central Excise Rules, 2002 had already been availed by the Appellant for the manufacture of the goods.
The High Court relying upon this assertion of the department dismissed the Writ Petition stating that the Notification dt. 17.09.2010 was not merely to clarify the position or make explicit, an implicit issue in previous notifications and would not be applicable retrospectively as it clearly mentions that the same shall be effective from 20.09.2010. The Review Petition filed by the Appellant was also dismissed in limine.
The court quashed the Madhya Pradesh High Court’s Judgement and held that the exporter is is entitled to the benefit of 1 % AIR Customs Duty Drawback on its export of SBM from the year 2008 as applicable, by according retrospective operation to the Circular No. 35/2010- Cus. dated 17.09.2010 issued by the Central Board of Excise & Customs, New Delhi, for the purposes of All Industry Rate (AIR) Duty Drawbacks.
Case Details
Case Title: M/S Suraj Impex (India) Pvt. Ltd. Versus Union Of India & Ors.
Case No.: C.A. No.-007089-007090 - 2025
Date: MAY 22, 2025
Mariya is the Senior Editor at JurisHour. She has 5+ years of experience on covering tax litigation stories from the Supreme Court, High Courts and various tribunals including CESTAT, ITAT, NCLAT, NCLT, etc. Mariya graduated from MLSU Law College, Udaipur (Raj.) with B.A.LL.B. and also holds an LL.M. She started as a freelance tax reporter in the leading online legal news companies like LiveLaw & Taxscan.
