Reasons Ought to be Given for Rejection of Duty Drawback in Respect of Clean Energy Cess under Customs: Delhi HC Grants Relief to Assessee [Read Order]
CBIC, Drawback division ought to look into the representations of the Petitioner and pass a reasoned order
![Reasons Ought to be Given for Rejection of Duty Drawback in Respect of Clean Energy Cess under Customs: Delhi HC Grants Relief to Assessee [Read Order]](https://www.taxscan.in/wp-content/uploads/2025/04/Delhi-High-Court-Duty-Drawback-Rejection-Reasons-Clean-Energy-Cess-Customs-Duty-TAXSCAN.jpg "Reasons Ought to be Given for Rejection of Duty Drawback in Respect of Clean Energy Cess under Customs: Delhi HC Grants Relief to Assessee [Read Order]")
The Delhi High Court has recently held that an order rejecting the benefit of duty drawback of clean energy cess must spell out reasons for the same and the order cannot be a simply cryptic one. The Petitioner, Vedanta Ltd, sought duty drawback in respect of the amount it had deposited as clean energy cess, on utilisation of coal as a raw material, during the course of manufacturing...
The Delhi High Court has recently held that an order rejecting the benefit of duty drawback of clean energy cess must spell out reasons for the same and the order cannot be a simply cryptic one.
The Petitioner, Vedanta Ltd, sought duty drawback in respect of the amount it had deposited as clean energy cess, on utilisation of coal as a raw material, during the course of manufacturing of aluminium products. While calculating the brand rate for the purpose of duty drawbacks, the clean energy cess ought to be permitted to be added so that whenever the products are exported, exporters can get drawbacks inclusive of the amount of clean energy cess.
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Between the period 2010-2017, various exports were stated to be made by the Petitioner. However, at that point of time, there was no clarity as to whether clean energy cess which was charged on consumption of coal would be liable to be included in the calculation of the brand rate or not. The position became clear after a clarification was made by the Central Board of Indirect Taxes and Customs (CBIC) vide Instruction No. 04/2019 dated 11.10.2019 in this regard.
Read more: Rejecting Claim of Duty Drawback Without Stating any Reason is not Valid
Accordingly, the Petitioner moved before different Commissionerates seeking release of drawbacks, which were rejected by the respective Commissionerates and also by the CBIC drawback division on the ground that it is barred by limitation.
Counsel for the Petitioner, Aarohi Bhalla, submitted that until the issuance of Instruction No. 04/2019 dated 11.10.2019, the Petitioner was unaware that it was eligible to claim clean energy cess as part of drawback and, therefore, it cannot be held that the application is barred by limitation. Reliance was also placed on Rule 17 of Customs and Central Excise Duties Drawback Rules, 1995 which provide for power to relax the limitation period. , Alok Agarwal, Prachit Mahajan, Shubham Singh and Mohit Kalra also appeared on behalf of the Petitioner
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Counsel for the Department, Aditya Singla, on the other hand submitted that since the exports relate to the period 2010-2017 and the maximum period to claim duty drawback is three months, which can be further extended for a period of another three months. Therefore, the petitioner is barred from seeking any duty drawback. Ms. Arya Suresh Nair also appeared for the Department.
The bench of Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta observed that the rejection is completely cryptic by just merely observing that the request for relaxation is not considered favourably. It was observed that no further reasons have been assigned for the rejection of duty drawback to the Petitioner.
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The bench further observed that the CBIC, Drawback division has also failed to consider the representations dated 08.05.2024 made by the Petitioner. The Court considers the Instruction No. 04/2019 to observe that the said instruction is not merely prospective in nature and the benefit could also be given to pending applications pertaining to duty drawback.
Thus, the Court stated that CBIC, drawback division, ought to have looked into the matter to pass a reasoned order on the representations of the Petitioner while considering the purpose and the rationale behind issuance of the said Instruction No. 4/2019 dated 11th October 2019. The present Writ Petition was directed to be treated as a valid representation of the Petitioner and the CBIC, drawback division was ordered to pass a reasoned order within three months.
Hence, the Writ Petition was allowed and all remedies of the Petitioner were left open in accordance with law.
To Read the full text of the Order CLICK HERE
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