Delayed drawback interest follows simple interest rules, accrues from the relevant claim date, and applies at the notified rate in force

Interest on delayed drawback under the Customs Act is treated as simple interest because the statute prescribes only a notified annual rate and contains no express provision for compounding or rests. For accrual, the relevant claim date is the let export order date where the drawback claim is complete, but if a deficiency memo is issued, the claim is treated as filed on resubmission after defect cure; interest then runs after three months from that date. The applicable rate is not frozen at the export date but follows the notification in force for the relevant period.

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Issues: (i) Whether interest payable on delayed drawback under Sections 75A and 27A of the Customs Act is to be computed as compound interest or simple interest. (ii) From which date interest on drawback becomes payable, namely the date of the let export order or the date of resubmission after removal of deficiencies. (iii) Whether the rate of interest remains fixed at the rate prevailing on the date of export or follows the rate notified from time to time.

Issue (i): Whether interest payable on delayed drawback under Sections 75A and 27A of the Customs Act is to be computed as compound interest or simple interest.

Analysis: The statutory language merely provides for payment of interest at a notified rate and does not specify any period of rest or any other feature necessary for compounding. Where a statute fixes interest per annum without more, the normal rule is that the interest is simple interest. The presence of express language for compound interest with monthly rests in other enactments reinforced the conclusion that the absence of such language here was deliberate.

Conclusion: Interest under Sections 75A and 27A is payable as simple interest, not compound interest, and this issue was decided against the assessee.

Issue (ii): From which date interest on drawback becomes payable, namely the date of the let export order or the date of resubmission after removal of deficiencies.

Analysis: Under Rule 13 of the Customs and Central Excise Duties Drawback Rules, 1995, a properly filed drawback claim is deemed to be filed on the date of the order permitting clearance and loading for export. If the claim is incomplete and is returned with a deficiency memo, the date of resubmission after cure of the defect is treated as the date of claim. Interest becomes payable after expiry of three months from the relevant date.

Conclusion: Interest is payable after three months from the relevant claim date, which is the let export date if no deficiency memo was issued, or the date of resubmission if a deficiency memo was issued; this issue was decided in favour of the assessee.

Issue (iii): Whether the rate of interest remains fixed at the rate prevailing on the date of export or follows the rate notified from time to time.

Analysis: The Court held that the statute ties interest to the rate fixed under Section 27A and therefore the applicable rate is the rate in force under the relevant notification for the period concerned. A later notification reducing the rate could validly govern the subsequent period.

Conclusion: The rate of interest is governed by the notifications in force from time to time, and this issue was decided against the assessee to the extent the claim sought a fixed 15% rate for the entire period.

Final Conclusion: The petitioner succeeded on the nature of interest and on the starting point for accrual, but failed on the claim that a single 15% rate must apply throughout; the matters were disposed of with directions for payment of the balance interest on the basis indicated by the Court.

Ratio Decidendi: In the absence of express statutory provision for rests, interest is construed as simple interest; and where the statute links payment to a notified rate, the applicable rate is the one in force for the relevant period under the governing notification.

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