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Issues:
1. Entitlement to drawback claim under Section 75 of the Customs Act for a shipment of ply wood tea chest panels that encountered difficulties during transit. Analysis: The appellants, M/s. Sun Industries, shipped 100,000 sets of ply wood tea chest panels intended for delivery in Colombo. However, the ship carrying the goods encountered engine trouble and ran aground before reaching its destination. The Assistant Collector rejected the drawback claim on the grounds that there had been no export of the goods as defined in Section 2(18) of the Customs Act. The Appellate Collector also dismissed the appeal. The appellants contended that under a C.I.F. contract, the title had passed to the purchaser upon loading, completing the export, and thus, they were entitled to the drawback claim. They argued that the engine trouble occurred beyond India's territorial waters, signifying completion of export. On the other hand, the Department argued that mere passage beyond territorial waters was insufficient to establish export, citing Section 35 of the Customs Act. The Tribunal referred to a decision by the Madras High Court in the case of Lucas TVS v. Assistant Collector, where it was held that the exporter becomes entitled to drawback once goods are loaded on a ship, even if damaged or destroyed before sailing. The High Court emphasized that once goods are cleared and loaded, they are considered exported for the exporter. The Tribunal applied this precedent to the current case, ruling that the appellants were entitled to the drawback claimed, as the goods were loaded and intended for export, despite the ship's mishap. Consequently, the appeal was allowed, and lower authorities' orders were set aside. In a separate judgment by the Vice-President, it was noted that the facts were even stronger in favor of the appellants compared to the Lucas TVS case. The ship had left Calcutta, encountered engine trouble in high seas, and ran aground while diverting to Paradeep Port. The Department argued that proof of goods reaching a foreign country was necessary for export, not just crossing territorial waters. Referring to a case before the West Regional Bench, it was established that off-loading at the foreign port was not a prerequisite for drawback entitlement. Considering the circumstances, including the ship crossing territorial waters and no evidence of goods being salvaged or re-landed in India, the Vice-President concurred that the appellants were entitled to the drawback, leading to the appeal's allowance and setting aside of lower authorities' orders.
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