2022 (4) TMI 574 - HC - Customs

Seeking interest on belated payment of duty drawback - inordinate delay in determining the brand rate of duty drawback for over a period of 8 years - HELD THAT - The provisions of the Customs and Central Excise Duties Drawback Rules, 1995, makes it clear that wherever an application is filed for fixation of brand rate duty drawback, such application should be disposed of within a period of 60 days. As the delay is not on account of the petitioner in failing to file any documents required for processing the duty drawback, there is no justification in the stand of the Department by stating that the amount has been immediately paid within a period of one month from the date of fixation of the duty drawback on 31.07.2008 and 04.07.2008 respectively. Though payments have been made, there is an enormous delay in sanctioning the duty drawback to the petitioner on the exports made during 2000 under various shipping bills. The Writ Petitions are allowed by quashing the impugned order/communication and directing the respondents to pay interest at 7.5% p.a. from the date of applications filed for fixation of brand rate on 16.09.2000 and 03.11.2000 respectively. The rate of interest at 7.5% p.a. has been fixed considering the fact that the rate of interest has varied during this period substantially. The respondents are directed to pay the quantified amount and pay the interest to the petitioner within a period of three months from the date of receipt of a copy of this order. Petition allowed.

Summary

Issues:
Delay in determining brand rate duty drawback, entitlement to interest on belated payment.

Analysis:
The petitioner challenged communications from the Assistant Commissioner of Central Excise and the Assistant Commissioner of Customs regarding the delay in determining brand rate duty drawback for goods exported in 2000. The petitioner argued for interest on the belated payment due to the significant delay in processing their applications.

The petitioner contended that they filed applications for duty drawback in 2000, but the determination was made only in 2008, leading to an unreasonable delay of 8 years. The petitioner sought interest on the delayed payment as per the Customs and Central Excise Duties Drawback Rules, 1995.

On the other hand, the Standing Counsel for the respondents argued that there was no delay on their part in fixing the brand rate or duty drawback. They explained that the delay was due to the issue being pending before various High Courts until it was resolved by the Supreme Court in a specific case. Following the Supreme Court decision, the applications were processed, and the duty drawbacks were paid to the petitioner.

The court examined the arguments presented by both parties and referred to Rule 6 of the Customs and Central Excise Duties Drawback Rules, 1995, which mandates disposing of applications for brand rate duty drawback within 60 days. The court noted that the delay was not due to any fault of the petitioner and found the Department's justification for immediate payment post-determination inadequate.

Consequently, the court ruled in favor of the petitioner, quashing the impugned order and directing the respondents to pay interest at 7.5% per annum from the dates of the applications filed in 2000. The interest rate was set considering the varying rates during the delayed period. The respondents were instructed to pay the quantified amount along with interest within three months of receiving the court's order. The Writ Petitions were allowed with no costs imposed.