Export Cannot be Penalised for Dept’s Delay in Litigation: CESTAT Orders Interest on Duty Drawback from 2003 [Read Order]
CESTAT directed that Siddhachalam Exports Pvt. Ltd. must receive interest on its sanctioned duty drawback starting from 2003, not 2012, because the delay was caused by departmental litigation and not the exporter’s fault
Export - Litigation - CESTAT - taxscan.
Export - Litigation - CESTAT - taxscan.
The New Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has allowed the appeal of Siddhachalam Exports Pvt. Ltd., modifying the order of the Commissioner (Appeals) and directing payment of interest on sanctioned duty drawback from 2003 due to departmental delay in finalization.
M/s Siddhachalam Exports Pvt. Ltd. filed seven shipping bills on 24.02.2003 for export of “Ladies Top” and “Denim Shirt,” claiming a duty drawback of ₹49,75,536 under section 75 of the Customs Act, 1962. The let export order was issued on 13.03.2003, and as per Rule 13 of the Drawback Rules, the drawback claim was filed on that date itself.
However, the department issued a Show Cause Notice (SCN) on 11.09.2003 questioning the valuation of goods and the eligible drawback.
The adjudicating authority dropped the SCN by order dated 31.01.2005, but the department appealed to the Tribunal. The Tribunal allowed the appeal on 14.09.2006, which led the exporter to approach the Supreme Court. The Supreme Court, by judgment dated 01.04.2011, set aside the Tribunal's order and remanded the matter for fresh adjudication.
Following the Supreme Court’s directions, the adjudicating authority again dropped the proceedings on 31.05.2012, and this order attained its finality after the Tribunal dismissed the department's appeal on 07.10.2021. Eventually, the drawback amount was sanctioned on 24.04.2022, but interest was denied.
On appeal before the Commissioner (Appeals), interest was allowed only from one month after 31.05.2012, on the ground that the completion of valuation was within the relevant date. Siddhachalam Exports Pvt. Ltd. challenged this, seeking interest from 14.04.2003, one month after the let export order.
The bench comprising Justice Dilip Gupta (President), and P.V. Subba Rao (Technical Member) held that the exporter cannot be penalized for the prolonged departmental litigation, noted that the Rule 13 of the Drawback Rules clearly provides that the shipping bills shall be treated as a claim for drawback filed on a date on which the proper officer of customs makes an order permitting clearance. The ‘let export order’ was issued on 13.03.2003.
The Tribunal noted that Section 75A of the Customs Act mandates interest if the drawback is not paid within one month from the date of claim. The Tribunal thus directed that interest from 14.04.2003 up to the date of payment of drawback shall be paid to the appellant within a period of one month from the order date, failing which the appellant shall become entitled to also receive interest from 01.03.2025 up to the date of payment of interest.
The appeal was accordingly allowed.
The assessee was represented by Hari Radha Krishan, while M.R. Dhaniya appeared for the revenue.
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