2026-VIL-770-GUJ-CU
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CUSTOMS High Court Cases

Customs - Duty Drawback - All Industry Rate (AIR) - Retrospective Application of Clarificatory Circular - Petitioner claimed entitlement to AIR customs duty drawback at 1% on exports of Soya Bean Meal despite having availed CENVAT credit. The Customs Department denied the benefit on the ground that the clarificatory Circular No. 35/2010-Cus dated 17.09.2010 expressly stating that duty drawback was available to SBM merchants despite CENVAT availed only operated prospectively from 20.09.2010 onwards and could not be applied retrospectively to the years 2008-2010 - Whether a clarificatory circular that merely explains and settles the scope of benefit under previous notifications can be given retrospective operation - HELD - A distinction exists between a clarificatory Circular which explains the scope of existing provisions and one which introduces a new fiscal regime. The Circular No. 35/2010-Cus dated 17.09.2010 is clarificatory and explanatory in nature and does not substantively modify or amend the previous CBEC Notifications Nos. 81 of 2006, 68 of 2007, 103 of 2008 and 84 of 2010 - The language of the Circular does not expand or alter the scope of previous Notifications but merely cements the claim of merchant exporters who were entitled to receive the benefit of AIR customs duty drawback since 2007. By virtue of the Circular, no new right or benefit was created but the actual scope of the benefit was explained and settled. The Circular merely clarified that the benefit of 1% customs duty drawback under prior Notifications was available to SBM merchants despite having availed CENVAT. Being explanatory in nature, the Circular cannot be construed as adopting a fresh fiscal regime for rebate of customs duty intended to affect vested rights - The doctrine of fairness requires that where a beneficial provision merely explains existing entitlements without inflicting undue burden, retrospective effect should be granted. The petitioner is entitled to the benefit of 1% AIR customs duty drawback on export of SBM from 2008 onwards with retrospective operation to the Circular - The impugned order denying the drawback is quashed and set aside – The writ petition stands allowed
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