2023 (9) TMI 774 - HC - Customs

Drawback claim - The respondents / Department have neither passed a formal order rejecting the claim nor have they released the same in terms of the application in terms of Rule 12(1) of the Customs Central Excise Duties Drawback Rules 1995 - Entitlement of claim where the petitioner did not pay any Basic Customs Duty BCD on the imported articles and merely paid the additional duty as imposed in terms of Section 3 of the Customs Tariff Act 1975 - HELD THAT - The provision of section 3 to the Tariff Act obliges an importer to pay an additional duty equivalent to the excise duty for the time being leviable on a like article if produced or manufactured in India. It becomes pertinent to note that while the additional duty which comes to be levied in terms of Section 3 of the Tariff Act is to be computed bearing in mind the excise duty which would be leviable on a like article it remains a duty which gets attracted at the time of import. The mere fact that the said additional duty is equated to a duty of excise which is leviable does not essentially change the character of that duty as being one other than that which is imposed on import of articles into India. Since in the present case an AI Rate had been prescribed there was no corresponding obligation placed upon the petitioner to independently prove the payment of customs or central excise duty or for that matter service tax. In any case the scope of Condition No. 6 has been duly explained in Combitic Global and since undisputedly it was the AI Rate which applied the submissions urged by the respondents on this score are clearly rendered untenable. Undisputedly the free shipping bills were duly amended on 27 February 2015 whereafter the petitioner applied for release of drawback benefits on 06 May 2015. In terms of Section 75A of the Customs Act interest becomes payable upon the expiry of a period of one month from the date of making of an application seeking drawback till such time as the payment is ultimately affected. In the facts of the present case therefore the respondents are also liable to pay interest which would commence upon the expiry of the period of one month from 06 May 2015 and would run till such time as the amount is ultimately paid. The respondents are hereby commanded to attend to the claim of the petitioner for disbursement of drawback benefits as claimed and release the same with due expedition - Petition allowed.

Summary

Issues Involved:
1. Entitlement to drawback benefits.
2. Applicability of Basic Customs Duty (BCD) and additional duty.
3. Compliance with the Drawback Notification conditions.
4. Claim for interest on delayed drawback payment.

Summary:

1. Entitlement to Drawback Benefits:
The petitioner sought a writ commanding the respondents to process a pending drawback claim of Rs. 2,15,48,344/- along with applicable interest. The respondents argued that since the petitioner did not pay Basic Customs Duty (BCD) on the imported articles, they were not entitled to the claimed drawback benefits. The petitioner countered that they had paid additional duty under Section 3 of the Customs Tariff Act, 1975, which should qualify them for drawback benefits.

2. Applicability of Basic Customs Duty (BCD) and Additional Duty:
The court noted that the petitioner imported gold dore bars without paying BCD but paid additional duty under Section 3 of the Tariff Act. The petitioner argued that this additional duty is akin to customs duty and should qualify them for drawback benefits. The court referred to the Supreme Court's decision in Hyderabad Industries Ltd. v. Union of India, which clarified that additional duty under Section 3 of the Tariff Act falls within the broad category of customs duty.

3. Compliance with the Drawback Notification Conditions:
The respondents contended that the petitioner violated Condition No. 23 of Notification No. 98/2013, which restricts drawback benefits for goods exported under schemes allowing duty-free import. The court found that since the petitioner paid additional duty under Section 3 of the Tariff Act, the goods were not imported "duty-free," and thus, the petitioner did not violate the condition.

4. Claim for Interest on Delayed Drawback Payment:
The court noted that the petitioner applied for the release of drawback benefits on 06 May 2015, and under Section 75A of the Customs Act, interest is payable after one month from the application date until payment is made. Therefore, the respondents were liable to pay interest from the expiry of one month from 06 May 2015 until the amount is paid.

Conclusion:
The writ petition was allowed. The respondents were commanded to process and release the drawback benefits with due expedition and to pay interest as per Section 75A of the Customs Act.