2018 (7) TMI 543 - AT - Customs

Interpretation of statute - Drawback Rules - demand of Interest - Rules 16 and 16A of the Drawback Rules - Held that - While the ld. consultant has been seeking to interpret the Drawback Rules, it is to be noted that they have been framed only under Sections 75 and 75A of Customs Act, 1962 - Section 75A ibid particularly makes it amply clear that when drawback becomes recoverable under the Act or Rules made therein, claimant shall be liable not only to repay the drawback amount but also to discharge interest liability at the rate fixed under section 28AA of the Customs Act. Demand upheld - appeal dismissed - decided against appellant.

Summary

Issues:
Recovery of alleged ineligible drawback amount, interpretation of Drawback Rules, liability for interest payment, applicability of Section 75A of the Customs Act.

Analysis:
The case involved manufacturers and exporters of fabrics who exported garments and claimed drawback. A show cause notice was issued proposing recovery of alleged ineligible drawback amount. The appellants paid the amount during the investigation. The adjudicating authority confirmed the proposals, upheld by the Commissioner (Appeals), leading to the appeal.

During the hearing, the consultant for the appellant argued that since the appellants complied with Rule 16A by paying the due amount within the prescribed period, there should be no demand for interest. He referenced Rules 16 and 16A of the Drawback Rules to support his argument.

On the contrary, the Additional Commissioner supported the impugned order and referred to a judgment by the High Court of Madras in a related case. After hearing both sides and reviewing the case records, the Tribunal analyzed the Drawback Rules framed under Sections 75 and 75A of the Customs Act, 1962.

The Tribunal highlighted Section 75A of the Customs Act, which states that when drawback becomes recoverable, the claimant is liable to repay the amount and discharge interest liability at the rate fixed under section 28AA of the Customs Act. The Tribunal cited a judgment by the High Court emphasizing that interest payment is automatic along with excess drawback repayment, without the need for a separate notice.

Based on the legal provisions and the High Court judgment, the Tribunal dismissed the appeal regarding interest liability. The decision was made in line with the statutory requirement of interest payment along with the repayment of excess drawback, as outlined in Section 75A of the Customs Act.

The judgment serves as a precedent for cases involving the recovery of excess drawback amounts and the corresponding liability for interest payment under the Customs Act, providing clarity on the legal obligations of claimants in such situations.