Case Details: In Re: Gulabdas International Trading LLP (2026) 41 Centax 290 (G.O.I.)
Judiciary and Counsel Details
- Shri Shrawan Kumar, Principal Commissioner
Facts of the Case
The applicant, filed 119 shipping bills between 13.06.2019 and 21.08.2020 claiming duty drawback amounting to ₹1,24,79,155 and also filed 131 shipping bills during the period 01.04.2019 to 29.06.2020 claiming IGST refund of ₹4,70,30,761. The refund and drawback scrolls were kept in abeyance by the department for verification of the exporter’s credentials in terms of relevant Board circulars issued to check fraudulent claims. Upon completion of verification, the applicant was not found to be a risky exporter and the amounts were sanctioned and paid on 09.09.2020. The applicant thereafter sought interest on delayed payment of drawback and IGST refund, which was rejected by the Original Authority on the ground that delay occurred due to permissible verification under the law and hence was not attributable to the department. The appellate authority upheld this rejection. Aggrieved, the applicant filed a revision application contending that the delay was solely on the part of the department and that statutory provisions mandate payment of interest for delay beyond the prescribed period.
CESTAT Held
The Government held that although the department is empowered under Rule 10 of the Drawback Rules, 2017 to undertake verification of exporter-related information, such verification does not bar the entitlement of the exporter to interest on delayed payment. It was observed that Section 75A of the Customs Act, 1962 clearly provides for payment of interest where drawback is not disbursed within one month from the date of filing the claim and does not carve out any exception for delays caused due to verification. Since the drawback claims were not found deficient and the delay was attributable to departmental verification, the applicant was held entitled to interest on delayed payment of drawback beyond one month. However, with respect to interest on IGST refund, it was held that the revision proceedings were instituted under Section 35EE of the Central Excise Act, 1944, and therefore, provisions of the CGST Act, 2017 could not be invoked in such proceedings. Accordingly, the claim relating to interest on IGST refund was held to be not maintainable. The revision application was thus partly allowed in favour of the applicant.
List of Departmental Clarification Cited
- C.B.I. & C. Circular No. 16/2019-Cus., dated 17-6-2019 [Paras 2, 3]
- C.B.I. & C. Circular No. 131/1/2020-GST, dated 23-1-2020 [Paras 2, 3]
List of Notifications Cited
- Notification No. 75/2003-Cus. (N.T.) dated 12-9-2003 [Para 3]
- Notification No. 13/2017-Central Tax, dated 28-6-2017 [Para 3]
