Legal principle

Once imported goods found defective are re-exported, the Revenue cannot both refuse refund of duty paid in cash and deny adjustment of duty paid by DEPB debit, since the undue-enrichment principle binds the Revenue as much as the assessee.

Court decision

The Supreme Court allowed the appeal and directed the authorities to issue a Certificate to the assessee enabling it to approach the DGFT to obtain a new DEPB book or to have the duty adjustment re-credited in the earlier DEPB book.

Facts

The appellant-assessee imported watch parts for manufacture of wrist watches, with import duty of Rs. 11,79,199 paid not in cash but by debit in the Duty Entitlement Pass Book (DEPB). Some parts were found defective/unusable and, after permission, were re-exported. The assessee's duty drawback claim of Rs. 11,79,199 under Section 74 of the Customs Act, 1962 was first rejected by the original authority on the ground that goods were not identifiable, then on remand was rejected on the ground that duty was not paid in cash but by DEPB debit. The assessee's alternative prayer for a certificate under paragraph 7.50A of the Hand Book (inserted by Public Notice No. 16 (RE.00)/1997-2000 dated 30.06.2000) to obtain a fresh DEPB or re-credit was refused because the re-export (shipping bill dated 16.07.1999) preceded the public notice; a revision under Section 129DD failed and the High Court dismissed the writ petition.

Key provisions

• Section 129DD, Customs Act, 1962 — Revision by Central Government
• Section 74, Customs Act, 1962 — Drawback allowable on re-export of duty-paid goods