Duty drawback refund and interest principles: customs component denied for unrealised export proceeds, excise refund attracts delayed-payment interest.

Where export proceeds remain unrealised, the customs component of duty drawback cannot be refunded back to the exporter and may be recovered under the Customs Act, 1962. The revisional relief was confined to the excise duty component, and the order could not be construed as directing refund of the customs component. However, once the excise component became refundable and was paid only after a long delay, interest was payable on that delayed restitution. Applying the principle reflected in Section 11BB of the Central Excises Act, 1944 and analogous customs provisions, the Court awarded simple interest at 12% per annum on the excise refund for the relevant period after adjustment of amounts already paid.

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Issues: (i) Whether the petitioner was entitled to refund of the customs component of the duty drawback together with interest; and (ii) whether the petitioner was entitled to interest on the delayed refund of the excise duty component of the drawback.

Issue (i): Whether the petitioner was entitled to refund of the customs component of the duty drawback together with interest.

Analysis: The revisional order had, in substance, confined relief to the excise component, and the earlier claim and the revisional proceedings themselves proceeded on the distinction between the customs and excise components. The second proviso to Section 75 of the Customs Act, 1962 made it clear that where export proceeds were not realised, the drawback relating to imported materials could be recovered, and the department could also invoke recovery machinery under the Customs Act, 1962. The Court held that the customs component could not be claimed back once the export proceeds remained unrealised, and the revisional order could not be read as directing refund of the customs component.

Conclusion: The claim for refund of the customs component of the drawback together with interest was rejected.

Issue (ii): Whether the petitioner was entitled to interest on the delayed refund of the excise duty component of the drawback.

Analysis: The excise component became refundable under the revisional order, but it was actually paid only years later. Although there was no specific drawback provision governing interest on delayed refund of the excise component, the Court applied the principle reflected in Section 11BB of the Central Excises Act, 1944 and analogous customs provisions recognising interest on delayed refund. The Court also relied on the general principle that the State must compensate for delayed restitution of amounts wrongfully retained.

Conclusion: The petitioner was held entitled to simple interest at 12 per cent per annum on the excise duty component refund for the relevant period, after adjustment of the amount already paid.

Final Conclusion: The writ petition succeeded only to the extent of interest on the delayed refund of the excise duty component, while the claim for refund of the customs component was declined.

Ratio Decidendi: Where drawback is recoverable because export proceeds remain unrealised, the customs component may be recovered under the Customs Act, 1962, but delayed refund of an admitted excise component carries interest on equitable and statutory principles supporting restitution.

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