Holding

Circular No. 35/2010‑Cus is a clarificatory, curative and declaratory instrument and therefore operates retrospectively, entitling the appellant to the 1% AIR customs duty drawback from 2008.

Summary

M/s Suraj Impex (India) Pvt. Ltd., a merchant exporter of soybean meal, claimed a 1% All‑Industry Rate (AIR) customs duty drawback that it had been denied after availing CENVAT benefits. The dispute centered on whether Circular No. 35/2010‑Cus dated 17 September 2010, which clarified that the customs component of the drawback was available even when CENVAT rebates were claimed, should operate retrospectively or only prospectively from 20 September 2010. The High Court held the circular to be prospective, dismissing the appellant’s writ and review petitions. On appeal, the Supreme Court examined the nature of the circular, deeming it a clarificatory, curative and declaratory instrument that merely explained existing notifications without creating new rights. Applying principles of statutory interpretation, fairness and purposive construction, the Court concluded that the circular must have retrospective effect to give effect to the benefit intended since 2006‑2008. Consequently, the High Court’s orders were set aside and the appellant was awarded the 1% AIR drawback retrospectively from 2008. The appeal was allowed.

Issues considered

Whether Circular No. 35/2010‑Cus dated 17 September 2010 has retrospective or prospective effect for the claim of customs duty drawbacks by merchant exporters.
Whether the circular creates a new right or merely clarifies existing notifications concerning AIR duty drawback.
Whether the doctrine of fairness and purposive construction warrant a retrospective operation of a clarificatory circular.

Legislation cited

Subjects

Customs CircularMerchant exporterRetrospective effectCustom dutyClarificatoryCurativeDeclaratoryAIR payableCustoms duty drawbackNotificationsPrinciple of contemporanea expositoDoctrine of fairnessBeneficial legislationPurposive constructionAIR customs duty drawbackFiscal regime for rebate of customs dutySBM merchants

Judgment

[2025] 5 S.C.R. 974 : 2025 INSC 755

M/s Suraj Impex (India) Pvt. Ltd.
v.
Union of India & Ors.
(Civil Appeal No(s). 7089-7090 of 2025)
22 May 2025
[B.V. Nagarathna and Satish Chandra Sharma,* JJ.]

Issue for Consideration
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.

Headnotes†
Custom Tariff Act, 1975 – Chapter 23 – Central Excise Rules,
2002 – Circular No. 35/2010-Cus. Dt. 17.09.2010 – The High
Court held that the subject Circular was to be made effective
from 20.09.2010, it was prospective in nature:
Held: Having regard to the 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 – In the instant 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

* Author
[2025] 5 S.C.R. 975

M/s Suraj Impex (India) Pvt. Ltd. v. Union of India & Ors.

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 – Thus, the impugned judgment and order of the High
Court is set aside – 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. [Paras 15, 19, 20]

Interpretation of Statutes – Doctrine of fairness – Purposive
construction – Retrospectivity of a statute – Clarificatory/
declaratory provision:
Held: 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 effect – 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. [Para 18]

Case Law Cited
Commissioner of Central Excise, Bangalore v. Mysore Electricals
Industries Ltd. [2006] Supp. 9 SCR 19 : [2006] 12 SCC 448;
Shyam Sunder v. Ram Kumar [2001] Supp. 1 SCR 115 : [2001]
8 SCC 24; Sree Sankaracharya University of Sanskrit & Ors. v.
Dr. Manu & Anr [2023] 7 SCR 366 : [2023] SCC Online SC 640;
State of Bihar v. Ramesh Prasad Verma [2017] 2 SCR 342 : [2017]
5 SCC 665; CIT v. Gold Coin Health Food (P) Ltd. [2008] 12 SCR
179 : [2008] 9 SCC 622; CIT v. Vatika Township (P) Ltd. [2014] 12
SCR 1037 : [2015] 1 SCC 1; Vijay v. State of Maharashtra [2006]
Supp. 4 SCR 81 : [2006] 6 SCC 289 – referred to.

Books and Periodicals Cited
Justice G.P. Singh, “Principles of Statutory Interpretation” (15th
Edition LexisNexis 2021) – referred to.
976 [2025] 5 S.C.R.

Supreme Court Reports

List of Acts
Custom Tariff Act, 1975; Central Excise Rules, 2002.

List of Keywords
Customs Circular; Merchant exporter; Retrospective effect; Custom
duty; Clarificatory; Curative; Declaratory; AIR payable; Customs
duty drawback; Notifications; Principle of contemporanea exposito;
Doctrine of fairness; Beneficial legislation; Purposive construction;
AIR customs duty drawback; Fiscal regime for rebate of customs
duty; SBM merchants.

Case Arising From
CIVIL APPELLATE JURISDICTION: Civil Appeal No(s). 7089-7090
of 2025
From the Judgment and Order dated 01.04.2016 and 17.11.2014
of the High Court of Madhya Pradesh at Indore in RP No. 1 of
2015 and WP No. 2576 of 2012

Appearances for Parties
Advs. for the Appellant:
Arvind P. Datar, Sr. Adv., Mayank Kshirsagar, Ashutosh Upadhyaya,
Tushar Jharwal, Parth Sarathi, Mrs. Anumitaverma, Chaitanya
Kashyap.
Advs. for the Respondents:
K M Nataraj, A.S.G., Gurmeet Singh Makker, Vatsal Joshi, Anuj
Srinivas Udupa, Shivank Pratap Singh, Sarthak Karol, Shivank
Pratap Singh.

Judgment / Order of the Supreme Court

Judgment

Satish Chandra Sharma, J.

1. 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
[2025] 5 S.C.R. 977

M/s Suraj Impex (India) Pvt. Ltd. v. Union of India & Ors.

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 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.”
4. The Schedule2 permits 1% AIR duty drawback on the export of
SBM, on both occasions whether the CENVAT Facility (collective

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.
978 [2025] 5 S.C.R.

Supreme Court Reports

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 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.
[2025] 5 S.C.R. 979

M/s Suraj Impex (India) Pvt. Ltd. v. Union of India & Ors.

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
980 [2025] 5 S.C.R.

Supreme Court Reports

not retrospective but prospective in nature, and the 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.
[2025] 5 S.C.R. 981

M/s Suraj Impex (India) Pvt. Ltd. v. Union of India & Ors.

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 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 equally to any law/notifications issued
earlier3 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 an oppressive circular has
to be applied prospectively.5
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.

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 Vs Mysore Electricals Industries Ltd. [2006] 12 SCC 448.
982 [2025] 5 S.C.R.

Supreme Court Reports

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 Vs 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 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 of Sanskrit & Ors. Vs Dr. Manu & Anr.7, State of
Bihar vs Ramesh Prasad Verma,8 Commissioner of Income Tax
I, Ahmedabad vs 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.

6 Shyam Sunder Vs Ram Kumar [2001] 8 SCC 24.
7 Sree Sankaracharya University of Sanskrit & Ors. Vs Dr. Manu & Anr, [2023] SCC Online SC 640.
8 State of Bihar vs Ramesh Prasad Verma [2017] 5 SCC 665.
9 CIT vs Gold Coin Health Food (P) Ltd. [2008] 9 SCC 622.
[2025] 5 S.C.R. 983

M/s Suraj Impex (India) Pvt. Ltd. v. Union of India & Ors.

(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. Notification No. Notification No. Notification No. Notification No.
No. 81/2006 68/2007 103/2008 84/2010
1. (5) The figures shown (5) The figures shown (6) The figures shown (6) The figures shown
under drawback rate under drawback rate under drawback rate under drawback rate
and drawback cap and drawback cap and drawback cap and drawback cap
appearing below the appearing below the appearing below the appearing below the
column “Drawback column “Drawback column “Drawback column “Drawback
when Cenvat facility when Cenvat facility when Cenvat facility when Cenvat facility
has not been has not been has not been has not been
availed” refer to availed” refer to availed” refer to availed” refer to
the total drawback the total drawback the total drawback the total drawback
(customs, central (customs, central (customs, central (customs, central
excise and service excise and service excise and service excise and service
tax component put tax component put tax component put tax component put
together) allowable together) allowable together) allowable together) allowable
and those appearing and those appearing and those appearing and those appearing
under the column under the column under the column under the column
“Drawback when “Drawback when “Drawback when “Drawback when
Cenvat facility has Cenvat facility has Cenvat facility has Cenvat facility has
been availed” refer been availed” refer been availed” refer been availed” refer
to the drawback to the drawback to the drawback to the drawback
allowable under allowable under allowable under allowable under
the customs the customs the customs the customs
component. The component. The component. The component. The
difference between difference between difference between difference between
the two columns the two columns the two columns the two columns
refer to the central refer to the central refer to the central refer to the central
excise and service excise and service excise and service excise and service
tax component of tax component of tax component of tax component of
drawback. If the rate drawback. If the rate drawback. If the rate drawback. If the rate
indicated is the same indicated is the same indicated is the same indicated is the same
in both the columns, in both the columns, in both the columns, in both the columns,
it shall bean that the it shall bean that the it shall bean that it shall bean that
same pertains to only same pertains to only the same pertains the same pertains
customs component customs component to only customs to only customs
and is available and is available component and is component and is
irrespective of irrespective of available irrespective available irrespective
whether the exporter whether the exporter of whether the of whether the
has availed of Cenvat has availed of Cenvat exporter has availed exporter has availed
or not. or not. of Cenvat or not. of Cenvat or not.
984 [2025] 5 S.C.R.

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2. (7) The rates of (7) The rates of (8) The rates of (9) The rates and
drawback specified drawback specified drawback specified caps of drawback
in the said Schedule in the said Schedule in the said Schedule specified in column
shall not be applicable shall not be shall not be (4) and (5) of the said
to export of a applicable to export applicable to export schedule shall not be
commodity or product of a commodity of a commodity applicable to export
if such commodity or or product if such or product if such of a commodity
product is - commodity or commodity or or product if such
product is - product is - commodity or
product is -
(e) manufactured or (e) manufactured or (e) manufactured (a) manufactured
exported by availing exported by availing or exported by or exported by
the rebate of duty paid the rebate of duty paid availing the rebate availing the rebate
on materials used in on materials used of duty paid on of duty paid on
the manufacture or in the manufacture materials used in materials used in
processing of such or processing of the manufacture the manufacture
commodity or product such commodity or or processing of or processing of
in terms of rule 18 of product in terms of such commodity or such commodity or
the Central Excise rule 18 of the Central product in terms of product in terms of
Rules, 2002; Excise Rules, 2002; rule 18 of the Central rule 18 of the Central
Excise Rules, 2002; Excise Rules, 2002;
(f) manufac-tured or (f) manufac-tured or
exported in terms of exported in terms of (f) manufac-tured or (b) manufac-tured or
sub-rule (2) of rule 19 sub-rule (2) of rule 19 exported in terms of exported in terms of
of the Central Excise of the Central Excise sub-rule (2) of rule sub-rule (2) of rule
Rules, 2002; Rules, 2002; 19 of the Central 19 of the Central
Excise Rules, 2002; 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.
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.
[2025] 5 S.C.R. 985

M/s Suraj Impex (India) Pvt. Ltd. v. Union of India & Ors.

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 circular in question. In this respect, the statutory
principle of “contemporanea exposito” which takes into consideration
contemporaneous interpretation also becomes increasingly relevant

10 Justice G.P. Singh, “Principles of Statutory Interpretation”
(15th Edition LexisNexis 2021).
986 [2025] 5 S.C.R.

Supreme Court Reports

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

11 CIT vs Vatika Township (P) Ltd. [2015] 1 SCC 1 & Vijay Vs State of Maharashtra [2006] 6 SCC 289.
[2025] 5 S.C.R. 987

M/s Suraj Impex (India) Pvt. Ltd. v. Union of India & Ors.

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.

Result of the case: Appeals disposed of.

†
Headnotes prepared by: Ankit Gyan