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2006 (11) TMI 12 - HC - CustomsCustoms Recovery of drawback where export proceeds not realized Revenue appeal in S.C. against revision order dismissed on limitation Sec 11BB of CE Act, 1944 and CBEC Circulars on interest liability for delayed refund applicable -Revision order sanctioning refund of excise duty component of drawback paid by petitioner attained finality
Issues Involved:
1. Refund of the customs component of the duty drawback. 2. Interest on the delayed refund of the duty drawback. Issue-wise Detailed Analysis: 1. Refund of the Customs Component of the Duty Drawback: The petitioner challenged the rejection of the claim for refund of the customs component of Rs. 46,06,890. The background facts reveal that the petitioner exported garments but could not realize export proceeds due to the bankruptcy of foreign buyers. Consequently, the Customs Authorities demanded the repayment of the duty drawback allowed earlier. The petitioner's initial challenge to this demand was dismissed, and subsequently, the Commissioner of Customs (Appeals) upheld the demand, stating that Rule 16A of the Duty Drawback Rules, 1995 applied retrospectively. The central government, in a revision petition, confined the issue to the recovery of the central excise component, holding that Rule 16A could not be retrospective. The Supreme Court dismissed the government's appeal against this order. Consequently, the petitioner sought the refund of the entire amount paid, including the customs component. The impugned order dated 12-6-2003 rejected the refund of the customs component, stating that the order in revision restricted the claim to the excise component. The court agreed with this interpretation, noting that the second proviso to Section 75 of the Customs Act, 1975, effective from 27-12-1991, clearly stated that if export proceeds were not realized, the corresponding customs duty component of the drawback would have to be refunded. The petitioner's own submissions before the appellate authorities acknowledged this distinction. Thus, the court held that the petitioner was not entitled to the refund of the customs component. 2. Interest on Delayed Refund of the Duty Drawback: The petitioner also claimed interest at 24% per annum on the entire amount of Rs. 1,71,37,545 from the date of deposit till the date of refund. The impugned order rejected this claim, stating that Section 75A of the Customs Act, 1962, which provided for interest on delayed refunds, was inserted only on 26-5-1995 with prospective effect. The court held that while there was no specific provision for interest on the delayed refund of the excise duty component of the drawback, the petitioner was entitled to interest based on equity and the principle recognized in various Supreme Court judgments. The court referred to Section 11BB of the Central Excises Act, 1944, which provides for interest on delayed refunds of excise duty, and similar provisions in the Customs Act, 1962. The court concluded that the petitioner was entitled to 12% per annum simple interest for the delayed refund of the excise duty component from 11-6-1999 to 12-6-2003, after adjusting the amount already paid. Summary of Conclusions: 1. The petitioner's claim for refund of the customs component of the drawback together with interest is rejected. 2. The petitioner is directed to be paid interest for the delayed refund of the excise duty component at the rate of 12% per annum on Rs. 1,25,30,645 for the period 11-6-1999 to 12-6-2003, after adjusting the amount already paid. The writ petition is partly allowed and disposed of accordingly.
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