Interest on delayed drawback accrues after one month from the Let Export Order, despite pending adjudication.

The Respondent exported garments under seven shipping bills dated 24 February 2003 and claimed duty drawback of ₹49,75,536 under Section 75 of the Customs Act, 1962.

The goods were permitted for export through Let Export Orders issued on 13 March 2003.

Subsequently, the Department issued a show-cause notice disputing the declared value and proposing re-determination of the drawback.

The proceedings were ultimately dropped by the adjudicating authority on 31 May 2012, and the Department’s appeal was dismissed by the CESTAT on 7 October 2021.

The drawback was sanctioned on 2 April 2022, but the Respondent’s claim for interest under Section 75A was rejected on the ground that the drawback became admissible only after the appellate proceedings concluded.

The Commissioner (Appeals) granted interest only from one month after the adjudication order dated 31 May 2012, whereas the CESTAT held that interest was payable from one month after the Let Export Order dated 13 March 2003 until actual payment.

The Department challenged the CESTAT’s order under Section 130 of the Customs Act.

Whether the Respondent’s appeal before the CESTAT, seeking interest on delayed payment of drawback under Section 75A of the Customs Act, was barred by the first proviso to Section 129A(1), thereby depriving the CESTAT of jurisdiction?

Whether interest under Section 75A became payable only after the drawback entitlement was finalised through adjudicatory proceedings, or upon expiry of one month from the date of the Let Export Order under Rule 13 of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995?

The Court applied Section 129A(1) of the Customs Act, 1962, including its first proviso, which excludes CESTAT jurisdiction over orders relating to payment of drawback under Chapter X and the rules made thereunder; such jurisdictional exclusions must be strictly construed and cannot be enlarged by implication.

Section 75A(1) requires payment of interest where drawback payable under Sections 74 or 75 is not paid within one month from the date of filing the drawback claim, with interest running thereafter until payment.

Rule 13(1) of the Drawback Rules creates a statutory deeming fiction whereby the triplicate shipping bill is deemed to be a drawback claim on the date the proper officer permits clearance and loading for export; under Rule 13(5), an electronic shipping bill is similarly treated as the claim.

The statutory scheme does not postpone the commencement of interest merely because the drawback entitlement is subjected to adjudication.

The Court held that the dispute before the Commissioner (Appeals) and the CESTAT concerned only the Department’s liability to pay statutory interest on an already-sanctioned drawback, not the Respondent’s entitlement to or the quantum of drawback.

Since Section 129A(1) expressly excludes only disputes relating to payment of drawback and does not expressly extend the exclusion to an independent claim for interest under Section 75A, the CESTAT retained jurisdiction; a statutory appellate bar could not be expanded by implication.

On the merits, Rule 13 deemed the shipping bills to be drawback claims on 13 March 2003, when the Let Export Orders were issued.

Section 75A linked the commencement of interest to the filing of the claim, not to the date of sanction or final adjudication.

The subsequent show-cause proceedings merely delayed disbursement and did not extinguish or postpone the statutory filing date.

Since those proceedings ultimately concluded in the Respondent’s favour, the later sanction implemented an existing entitlement rather than creating a new one.

Accepting the Department’s interpretation would allow prolonged adjudication and appeals to defer interest indefinitely, contrary to the compensatory purpose of Section 75A.

It held that the Respondent’s appeal before the CESTAT was maintainable because a claim for interest on delayed drawback is distinct from a dispute concerning the admissibility or quantum of drawback.

It further held that interest under Section 75A became payable upon expiry of one month from the Let Export Order dated 13 March 2003, continuing until actual payment of the drawback.

Finding no substantial question of law and no merit in the Department’s appeal, the High Court dismissed the appeal and all pending applications.