Interest and Principal Amount of Demand

[Ashok Chopra]

Dear Forum,

I received duty draw back in my bank amount, long time back.

Part Payment received from buyer and balance payment written off by me and proper request for Self Written Off sent to bank.

My queries:-

1. Should i pay immediately proportionately amount of drawback to custom authorities or wait for the letter from them?

2. Should i pay interest on the said amount also?

3. In case of interest amount is more than the amount of draw back, should i pay excess amount of interest or not more than the amount of drawback?  (Is there any notification/clarification of department that interest amount can not be more than principal amount? please provide me the same)

Thanks and regard

[YAGAY andSUN]

Dear Ashok,You would have to pay back the proportionate Duty Draw Back with interest at applicable rate. As per the RBI Guideline you can write of Foreign remittance upto the 10 percent of the average export performance of last three year. But as per the DGFTs notifications and circular proportionate export promotions benefits should be reversed along with interest.Customs Department may also conduct Audit (Post Import/Export. So take a conscious view in this matter.RegardsTeam YAGAY & SUN(Management & Indirect Tax Consultants)

AI Summary

Repayment of Duty Drawback: Pay with Interest After Write-Off; Follow RBI and DGFT Guidelines; Customs May Audit. An individual inquired about the repayment of duty drawback after writing off a balance payment from a buyer. They questioned whether to pay the drawback amount immediately or wait for a customs letter, whether interest should be paid, and if interest exceeding the drawback amount is necessary. A response advised repaying the duty drawback with applicable interest, referencing RBI guidelines allowing up to 10% foreign remittance write-off based on average export performance. It was noted that DGFT notifications require reversing export promotion benefits with interest, and customs may conduct audits, urging a cautious approach.