Drawback-penalty

[arbs sarma]

Dear sirs

We offered discounts to foreign customers subsequent to export which resulted in short realisation of export proceeds. During audit on being pointed out by dept we paid excess Drawback along with interest. Now dept is asking us to pay penalty.

Query:

Are we liable for penalty , if so, under what section and up to what extent.

AI Summary

Drawback penalty exposure where post export discounts cause short realisation; recovery under Rule 16A and penalty provisions may apply.
Post export discounts caused short realisation of export proceeds, leading to excess drawback which was repaid with interest; department seeks penalty. No express provision was identified specifically for penalising excess drawback with interest, though penalty may be pursued by issuing a show cause notice under Customs provisions treating drawback as a form of refund. Recovery of the drawback where proceeds are unrealised is governed by Rule 16A of the Drawback Rules.