Brand rate drawback for SEZ electricity supplies is permissible, with fresh adjudication required under the applicable framework.

The SEZ framework permits drawback or duty in lieu of drawback on supplies from a Domestic Tariff Area to an SEZ developer, and the drawback scheme allows fixation of a special or brand rate even where the schedule rate is nil, if the legal conditions are met. Departmental circulars were treated as binding on departmental authorities, and precedent was relied on to support drawback eligibility for electrical energy. Because the brand rate application had been rejected without a reasoned merits-based adjudication, the matter was sent back for fresh decision in accordance with the applicable SEZ rules, drawback notifications and circulars.

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Issues: Whether brand rate fixation of drawback was permissible for electricity and clean energy cess supplied from Domestic Tariff Area to a Special Economic Zone, and whether the matter required fresh adjudication in light of the applicable SEZ rules, drawback notifications and departmental circulars.

Analysis: The application for brand rate was rejected without a clear adjudication on merits. The relevant SEZ framework permits drawback or duty in lieu of drawback on supplies to SEZ developers, and the drawback scheme contemplates fixation of a special or brand rate even where the schedule rate is nil or where the goods are otherwise claimed to be non-excisable, if the legal conditions are satisfied. The departmental circulars relied upon were treated as binding on the departmental authorities, and the cited precedent supported eligibility for drawback in respect of electrical energy. In that setting, the authority was required to pass a fresh order after considering the applicable legal position.

Conclusion: Brand rate fixation for electricity and clean energy cess exported to SEZ was held to be permissible, and the matter was remanded for a fresh order with directions to decide the claim accordingly.

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