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2025 SCC OnLine SC 1226

In the Supreme Court of India

(BEFORE B.V. NAGARATHNA AND SATISH CHANDRA SHARMA, JJ.)

Suraj Impex (India) Pvt. Ltd. … Appellant;

Versus
Union of India and Others … Respondents.
Civil Appeal Nos. of 2025 [Arising out of SLP (C) Nos. 26178-79 of
2016]
Decided on May 22, 2025
Advocates who appeared in this case:
Mr. Pranab Kumar Mullick, AOR, For Petitioner(s)
Mr. Arvind P Datar, Sr. Adv., Mr. Mayank Kshirsagar, AOR, Mr.
Ashutosh Upadhyay, Adv., Mr. Tushar Jarwal, Adv., Mr. Parth Sarathi,
Adv., Ms. Amumita Verma, Adv., Ms. Chaitanya Kashyap, Adv., For
Petitioner(s)
Mr. Gurmeet Singh Makker, AOR, For Respondent(s)
The Judgment of the Court was delivered by
SATISH CHANDRA SHARMA, J.:— Leave granted.
2. The captioned Appeal is directed against the Judgment and Order
dated 17.11.2014 passed by the High Court of Madhya Pradesh at
Indore in Writ Petition No. 2576/2012 whereby the applicability of the
Customs Circular No. 35/2010-Cus. dated 17.09.2010 for the purposes
of All Industry Rate (AIR) Duty Drawbacks was observed to be
prospective in nature. Review Petition bearing RP No. 1/2015 arising
therefrom was dismissed by the High Court vide Order dt. 01.04.2016
at the very threshold stating that there was no error apparent on the
face of the record. Aggrieved, the Appellant has assailed the
observations of the High Court thereunder, by way of the present
Appeal.
Factual Background
3. The factual conspectus of the captioned case is such that 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 231 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. Clause 5 of the Notification no. 81/2006 & 68/2007 and
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Clause 6 of Notification No. 103/2008 and 84/2010 respectively, are

identically worded and state as under:
“The figures shown under the drawback rate and drawback cap
appearing below the column “Drawback when Cenvat facility has not
been availed” refer to the total drawback (customs, central excise
and service tax component put together) allowable and those
appearing under the column “Drawback when Cenvat facility has
been availed” refer to the drawback allowable under the customs
component. The difference between the two columns refers to the
central excise and service tax component of drawback. If the rate
indicated is the same in both the columns, it shall mean that the
same pertains to only customs component and is available
irrespective of whether the exporter has availed of Cenvat or not.”
2
4. 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, Respondent no. 4 herein 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 Respondent no.
3 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 Representation dt. 13.12.2011 filed 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 thereunder 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.”
5. Eventually, 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
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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 relevant portion of the CBEC Notification No. 35/2010
dt. 17.09.2010 is reproduced herein as under:
“The Ministry has announced the revised All Industry Rates (AIR)
of Duty Drawback vide Notification No. 84/2010-Cus. (N.T) dated
17.09.2010. The rates of drawback have been made effective from
20.09.2010.
xxx xxxxxx xxxxxxxxx xxxxxxx
xxx xxxxxx xxxxxxxxx xxxxxxx
(vi) Miscellaneous
xxx xxxxxx xxxxxxxxx xxxxxxx
xxx xxxxxx xxxxxxxxx xxxxxxx
(d) The earlier notification (No. 103/2008 Cus. NT dt. 29.08.2008
as amended) provided that the rates of drawback in the Drawback
Schedule would not be applicable to products manufactured or
exported by availing the rebate of Central Excise duty paid on
materials used in the manufacture of export goods in terms of Rule
18 of the Central Excise Rules, 2002, or if such raw materials were
procured without payment of Central Excise Duty under Rule 19(2)
of the Central Excise Rules, 2002. References have been received
that exporters are being denied 1% of drawback, which is the
customs component of the AIR drawback, on the basis of the above
condition although the manufacturers had taken only the rebate of
Central Excise duties in respect of their inputs/procured the inputs
without payment of central excise duties; and the Customs duties
which remained unrebated should be provided thorough the AIR
drawback route.”
The issue has been examined. The present Notification no.
84/2020-Cus.(NT) dated 17.09.2010 provides that customs
component of AIR drawback shall be available even if the rebate of
Central Excise duty paid on raw material used in the manufacture of
export goods has been taken in terms of Rule 18 of the Central
Excise Rules, 2002, or if such raw materials were procured without
payment of Central Excise Duty under Rule 19(2) of the Central
Excise Rules, 2002.”
6. The Appellant had approached the Commissioner (Customs)
Kandla seeking disbursement of AIR Duty Drawback prior to
17.09.2010, who denied the said benefit stating that the effect of the
Circular was not retrospective but prospective in nature, and the
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benefits will only be applicable once the circular is in operation, i.e.

from 20.09.2010. Vide Communication dt. 04.01.2012, the CBEC
(Drawback Division) also reiterated that the Notification No. 84/2010-
Customs (N.T.) dated 17.09.2010 was made effective from 20.09.2010
and since the words are clear and have prospective effect, the request
for applicability of the same retrospectively does not arise. The
Appellant thus filed Writ Petition No. 2576/2012 challenging Letter dt.
04.01.2012 issued by the CBEC, seeking the following relief:
(i) Allow this petition with costs;
(ii) By a suitable writ, direction or order it may be declared that
circular No. 35/2010 Cus. dated 17.09.2010 has retrospective
effect.
(iii) Grant such other relief which this Hon'ble Court deems fit in the
facts and circumstances of the case in favour. of the Petitioners
7. 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. It was argued that the
contention of the Appellant that the drawbacks of more than Rs. 11
crores had been withheld was incorrect, as the same was legally
inadmissible.
8. The High Court relying upon this assertion of the Respondents
dismissed the Writ Petition no. 2576/2012 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 No. 1/2015 filed by the Appellant
was also dismissed in limine, vide Order dt. 01.04.2016.
Submissions
9. It has been argued on behalf of the Appellant that the Circular No.
35/2010-Cus. Dt. 17.09.2010 was a clarificatory & benevolent circular
issued with reference to the previous Notifications issued by the CBEC
for the purposes of availing the benefit of the customs component of
AIR duty drawback on the export of Soyabean Meal & De-Oiled Cake.
The Clarificatory Circular dt. 17.09.2010 which adopted the same
language as the previous Notifications for years 2006 to 2010, was
intended to have a uniform interpretation for the purpose of all recovery
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proceedings qua duty drawbacks payable from 2006 to 2010. It is

averred that the Department has accorded an erroneous interpretation
to Clauses 7(e) & (f) of the Custom Notification No. 81/2006 &
Notification No. 68/2007 and similar provisions contained in Clause 8 of
the Notification No. 103/2008; which pertain to the export of
commodities which are either manufactured or exported by availing
rebate of duty paid on materials at the time of processing the product
in terms of Rule 18(2) and Rule 19 of the Custom Excise Rules, 2002.
The Appellant has placed reliance on decisions by the Commissioner
(Appeals) qua the application of the same Circular No. 35/2010-Cus.
Dt. 17.09.2010, observing that the said CBEC Circular which gives a
clarification to the existing law/provisions of Notification, would apply
3
equally to any law/notifications issued earlier and there would not be
any double benefit in case an exporter having availed the central excise
duty and claims drawback of the customs portion.4 The Appellant
asserts that a beneficial Circular has to be applied retrospectively, while
5
an oppressive circular has to be applied prospectively.
10. Per contra, it is argued by the Respondents that the said Circular
No. 35/2010-Cus. dt. 17.09.2010 categorically states in the first
paragraph that “the rates of drawback have been made effective from
20.09.2010” and hence can in no manner be given a retrospective
operation. It is stated that Circular No. 35/2010-Cus. dt. 17.09.2010 is
an explanation to the Notification No. 84/2010 dt. 17.09.2010 which re
-iterates that the Notification as well as the Circular are prospective in
nature.
11. It was argued on behalf of the Respondents that not all
beneficial legislations are necessarily retrospective in nature, referring
to the decision in Shyam Sunder v. Ram Kumar6 whereby it was held
that though the amending Act is a beneficial legislation meant for the
general benefit of citizens but there is no such rule of construction that
a beneficial legislation is always retrospective in operation, even though
such legislation either expressly or by necessary intendment is not
made retrospective.
Discussion & Analysis
12. We have heard Sh. Arvind Datar, learned Senior Counsel for the
Appellant firm and learned counsel for the Respondents at length, and
have perused the record. The matter calls for the determination as to
whether the Circular No. 35/2010-Cus. Dt. 17.09.2010 for the purposes
of claim of custom duty drawbacks for merchant exporters, have
retrospective or prospective effect. In the present case, if the Circular is
held to be clarificatory, curative and declaratory in nature, its
application would be retrospective and would entail the claim of the
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Appellant of custom duty drawbacks at 1% AIR payable & enforceable

against the Respondents.
13. In determining the said question, it is apposite to give credence
to the substance of the Circular and not merely its form as directed by
this Court in several decisions including Sree Sankaracharya University
7 8
of Sanskrit v. Dr. Manu , State of Bihar v. Ramesh Prasad Verma,
Commissioner of Income Tax I, Ahmedabad v. Gold Coin Health Food
(P) Ltd9. On a careful examination of the CBEC Circular/Notification No.
35/2010-Cus. dt. 17.09.2010, the following aspects emerge
undisputably:
(i) The Circular was issued pursuant to representations & references
received by exporters who were being denied the 1% drawback of
the customs portion, despite previous notifications clearly stating
that the drawback was available irrespective of whether the
exporter had availed CENVAT or not.
(ii) A combined reading of the Circular and the Notifications issued
prior thereto, would show there is no express distinction in the
benefit accrued to the SBM merchant exporters from day one to
the date of issuance of the circular. For reference, the table as
indicated by the Appellant is reproduced as under:
Table for Comparison of Customs Notifications No.
81/2006, 68/2007, 103/2008, 84/2010
S. No. Notification Notification Notification Notification
No. 81/2006 No. 68/2007 No. No. 84/2010
103/2008
1. (5) The (5) The (6) The (6) The
figures shown figures shown figures shown figures shown
under under under under
drawback rate drawback rate drawback rate drawback rate
and drawback and drawback and drawback and drawback
cap appearing cap appearing cap appearing cap appearing
below the below the below the below the
column column column column
“Drawback “Drawback “Drawback “Drawback
when Cenvat when Cenvat when Cenvat when Cenvat
facility has facility has facility has facility has
not been not been not been not been
availed” refer availed” refer availed” refer availed” refer
to the total to the total to the total to the total
drawback drawback drawback drawback
(customs, (customs, (customs, (customs,
central excise central excise central excise central excise
and service and service and service and service
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tax tax tax tax

component component component component
put together) put together) put together) put together)
allowable and allowable and allowable and allowable and
those those those those
appearing appearing appearing appearing
under the under the under the under the
column column column column
“Drawback “Drawback “Drawback “Drawback
when Cenvat when Cenvat when Cenvat when Cenvat
facility has facility has facility has facility has
been availed” been availed” been availed” been availed”
refer to the refer to the refer to the refer to the
drawback drawback drawback drawback
allowable allowable allowable allowable
under the under the under the under the
customs customs customs customs
component. component. component. component.
The difference The difference The difference The difference
between the between the between the between the
two columns two columns two columns two columns
refer to the refer to the refer to the refer to the
central excise central excise central excise central excise
and service and service and service and service
tax tax tax tax
component of component of component of component of
drawback. If drawback. If drawback. If drawback. If
the rate the rate the rate the rate
indicated is indicated is indicated is indicated is
the same in the same in the same in the same in
both the both the both the both the
columns, it columns, it columns, it columns, it
shall bean shall bean shall bean shall bean
that the same that the same that the same that the same
pertains to pertains to pertains to pertains to
only customs only customs only customs only customs
component component component component
and is and is and is and is
available available available available
irrespective of irrespective of irrespective of irrespective of
whether the whether the whether the whether the
exporter has exporter has exporter has exporter has
availed of availed of availed of availed of
Cenvat or Cenvat or Cenvat or Cenvat or
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not. not. not. not.

2. (7) The rates (7) The rates (8) The rates (9) The rates
of drawback of drawback of drawback and caps of
specified in specified in specified in drawback
the said the said the said specified in
Schedule Schedule Schedule column (4)
shall not be shall not be shall not be and (5) of the
applicable to applicable to applicable to said schedule
export of a export of a export of a shall not be
commodity or commodity or commodity or applicable to
product if product if product if export of a
such such such commodity or
commodity or commodity or commodity or product if
product is - product is - product is - such
(e) (e) (e) commodity or
manufactured manufactured manufactured product is -
or exported or exported or exported (a)
by availing by availing by availing manufactured
the rebate of the rebate of the rebate of or exported
duty paid on duty paid on duty paid on by availing
materials materials materials the rebate of
used in the used in the used in the duty paid on
manufacture manufacture manufacture materials
or processing or processing or processing used in the
of such of such of such manufacture
commodity or commodity or commodity or or processing
product in product in product in of such
terms of rule terms of rule terms of rule commodity or
18 of the 18 of the 18 of the product in
Central Excise Central Excise Central Excise terms of rule
Rules, 2002; Rules, 2002; Rules, 2002; 18 of the
(f) manufac- (f) manufac- (f) manufac- Central Excise
tured or tured or tured or Rules, 2002;
exported in exported in exported in (b) manufac-
terms of sub- terms of sub- terms of sub- tured or
rule (2) of rule (2) of rule (2) of exported in
rule 19 of the rule 19 of the rule 19 of the terms of sub-
Central Excise Central Excise Central Excise rule (2) of
Rules, 2002; Rules, 2002; Rules, 2002; rule 19 of the
Central Excise
Rules, 2002;
(iii) The Circular does not vest any fresh rights on merchant
exporters or casts upon any burden on the Department except the
one already cast upon them vide previous Notifications.
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14. Even otherwise, a threadbare analysis of the nature and

substance of the CBEC Circular No. 35/2010-Cus. dt. 17.09.2010,
would firstly make it evident that there is no substantive modification
and amendment to the previous CBEC Notifications. The language of
the Circular does not expand or alter the scope of the previous
Notifications, but cements the claim of the merchant exporters, who
were entitled to receive the benefit of AIR customs duty drawback since
2007. The Circular dt. 17.09.2010 per se clarifies and makes it explicit
that the customs duties which remained unrebated to the concerned
manufacturers, should be provided through the AIR drawback route,
with or without the rebate of Central Excise Duties at the time of
processing in terms of Rule 18 or 19 of the Central Excise Rules, 2002.
15. Having regard to the concerned Circular dt. 17.09.2010 vis-à-vis
the previous Notifications, no new right or benefit came to be created,
but the actual scope of the benefit accruing to the Appellant and such
similarly placed merchant exporters, was explained and settled once
and for all. By virtue of the said Circular, it was merely clarified that the
benefit of 1% customs duty drawback as indicated under the prior
Notification was available to SBM merchants despite having availed
CENVAT. Being explanatory in nature, the Circular in question cannot
be construed as an adoption of a fresh fiscal regime for rebate of
customs duty, intended to affect vested rights or impose new burdens
upon the Department. It was passed to resolve the ambiguity qua the
meaning & threshold of the previous Notifications. For the same reason,
the operation of such a provision or instruction by the Department
could only be retrospective in nature, so as to give effect to the
objective of the Notifications issued by CBEC.
16. It also cannot be deduced that by virtue of the Circular, CBEC
intended to deprive the Appellant and such similarly placed merchant
exporters from the benefit of customs duty drawbacks prior to
20.09.2010. In our considered view, it is inconceivable that the
previous Notifications would be in operation in any other manner except
as specified and clarified in the manner indicated in the Circular dt.
17.09.2020, and it is not the case of the Department that before the
issuance of the Circular dt. 17.09.2020 read with Notification No.
84/2010-Cus of even date, the Notifications for the years 2006 to 2009
were not in operation.
17. The use of the expression “should” in reference to the previous
Notifications, is also deliberate & declaratory in nature, and intended to
clear all/any ambiguity that could have arisen in the interpretation of
the CBEC Circular. The language “shall be deemed always to have
meant” or “shall be deemed never to have included” is declaratory and
is in plain retrospective10 and it is apparent that the CBEC was mindful
of its intent whilst adopting the said terminology in issuing the said
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circular in question. In this respect, the statutory principle of

“contemporanea exposito” which takes into consideration
contemporaneous interpretation also becomes increasingly relevant
insofar as the CBEC Circular dt. 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 dt. 17.09.2010 ought to be retrospective.
18. It may be argued by the Department that not every beneficial
legislation is intended to be retrospective in nature; however, the
retrospectivity of a statute is to be tested on the anvil of the doctrine of
“fairness”. The substratum of a beneficial legislation is to ensure that
the benefit is uniform and absolute, which may be prospective in
nature, but when such benefit to one person does not inflict any undue
burden on the other, the purposive construction can be considered to
be given a retrospective effect11. It is therefore pertinent to clarify that
except in cases where such enactments or issuance of Circulars are
arbitrary, vexatious or constitute a parallel mechanism making its
operation unfair, the Courts need not entertain objections to the
operation of a clarificatory/declaratory provision which is only intended
to assert & give effect to its parent provision/statute.
19. In the present case, the 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 Impugned Order dt.
17.11.2014 in undue haste. Subsequently, as well it refused to remedy
the error apparent on record, by dismissing the Review Petition at its
threshold.
20. Thus, for the reasons indicated hereinabove, the Impugned
Judgment and Order dated 17.11.2014 passed by the High Court of
Madhya Pradesh at Indore in Writ Petition No. 2576/2012 and Order dt.
01.04.2016 in R.P No. 1/2015 is set aside, and, the Appellant 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.
21. The appeals stand disposed of.
22. Pending application(s), if any, stands disposed of.
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———
1
First Schedule to the Customs Tariff Act, 1975 - Chapter 23 : Residues and waste from
the food industries; prepared animal fodder—

2
First Schedule to the Customs Tariff Act, 1975—Chapter 23-Column 4 & 6 indicate the
Drawback Rate as 1% for both instances whether Cenvat facility is availed or not.

3
Pradeep Overseas Ltd Ahmedabad & Ors. vide OIA F No. S/49-48, 49 & 54/CUS/JMN/2012
dt. 14.09.2012.

4
Ruchi Soya Industries & Ors. vide OIA No. 01 to 06/Commr(A)/JMN/2013 dt. 17.01.2013.

5
Commissioner of Central Excise, Bangalore v. Mysore Electricals Industries Ltd. (2006) 12
SCC 448.

6
Shyam Sunder v. Ram Kumar (2001) 8 SCC 24.

7
Sree Sankaracharya University of Sanskrit v. Dr. Manu, 2023 SCC OnLine SC 640.

8
State of Bihar v. Ramesh Prasad Verma (2017) 5 SCC 665.

9
CIT v. Gold Coin Health Food (P) Ltd. (2008) 9 SCC 622.

10 th
Justice G.P. Singh, “Principles of Statutory Interpretation” (15 Edition LexisNexis 2021).

11
CIT v. Vatika Township (P) Ltd. (2015) 1 SCC 1 & Vijay v. State of Maharashtra (2006) 6
SCC 289.

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disputes will be subject exclusively to jurisdiction of courts, tribunals and forums at Lucknow only. The authenticity of
this text must be verified from the original source.