Sun & Moon Ltd. sent a consignment of manufactured goods by a ship from Mumbai to London. The company has paid export duty and GST on the components used in manufacture. A duty drawback rate has been fixed for these

Case study on refusal to grant drawback As per Rule 3 of the Customs and Central Excise Duties Drawback Rules, 2017, drawback may be allowed on the export of goods at such amount, or at such rates, as may be determined by the Central Government. Thus, the answer to the issue involved would depend upon whether any export of goods has taken place. Rule 2(c) of the said rules inter alia defines "export" to mean taking out of India to a place outside India. Whereas, Section 2(27) of the Customs Act defines "India" to include the territorial waters of India. The combined reading of the aforesaid provisions reveals that to be eligible to claim drawback, there has to be export of goods and the word export has been defined as taking the goods from India to a place outside India. India has been defined so as to include Indian Territorial Waters. In short, the export is said to have taken place only of goods cross Indian territorial waters. In the present case, the consignment sent by Sun and Moon Ltd from Mumbai to London ran into trouble and sunk in Indian Territorial Waters. Thus, it is clear that export of goods have not been taken in the instant case. Accordingly, the duty drawback will not be admissible and denial thereof by the Customs Authorities is justified in law. The present issue is covered by the judgment of the Hon'ble Supreme Court in the matter of Union of India vs. Rajindra Dyeing & Printing Mills Ltd. 2005 (180) ELT 433(SC).