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Issues: Recovery of Central Excise component of Drawback where export proceeds have not been realized.
Analysis: 1. The applicants exported garments to the USA, but a significant amount remained unrealized due to the bankruptcy of the foreign buyers. The Department demanded the applicants to surrender the drawback amount availed against the non-repatriated sale proceeds with interest. The applicants contested, arguing that the drawback was paid as a rebate on Central Excise Duty and not related to remittances of export proceeds. 2. The impugned drawback amount and interest were calculated, leading to a demand for a substantial sum from the applicants. The Revision Application raised several grounds, including the lack of reference to relevant judgments, the retrospective effect of Central Excise Act rules, and the applicability of Drawback Rules. 3. The Central Government analyzed the case, noting the absence of provisions for recovering the Central Excise component of Drawback before the insertion of Rule 16A in 1995. Citing legal precedents, including judgments by the Supreme Court, it was concluded that payments made before the rule's implementation could not be recovered, even if export proceeds were outstanding. 4. Consequently, the Government set aside the lower authorities' orders and allowed the Revision Application, providing consequential relief to the applicants. The judgment emphasized the limitations on retrospective application of rules and the need for prospective effect in legal provisions. 5. In summary, the judgment addressed the complex issues surrounding the recovery of Central Excise component of Drawback in cases of unrealized export proceeds, highlighting legal principles and precedents to support the decision to set aside the demands made on the applicants.
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