Deemed Export Scheme – Interest for delay in payment of Duty Drawback for  supplies in civil construction of Koyna Power Project aided by the World Bank – Section 75A(1) of the Customs Act

Respondent is the Class I contractor and specializing in civil contract works of funneling and hydro electric projects.

The contractor was awarded sub-contract  from Lake Intake to the Emergency Valve Tunnel of Koyna Hydro Electric Power Project, Maharashtra, aided by the World Bank.   The work was completed in March 1996.  Three applications were filed for different amounts of duty drawback.

The said applications were rejected on the ground that supplies in civil construction were eligible for deemed export benefit. The respondent continued to make representations.

However, on the decision of the Policy Interpretation Committee, the duty drawback was paid to the respondent.   Thereafter, interest was claimed for delay in payment of duty drawback. It was rejected.

The writ petition of the respondent was allowed on 22.9.2005 and awarded interest at 15% p.a. from 5.12.2000.  The Division Bench dismissed the writ appeal of the appellants.

HELD that, on a conjoint reading of the Exim Policy, 1992-1997 with the Central Excise Act and the Customs Act, it is evident that the supply of goods by the respondent to the project was the case of “deemed export” and therefore, entitled to duty drawback under the Scheme.  It was untenable for the appellants to contend that refund of duty drawback was granted as a concession and it should not be treated as a precedent.  The applicants for refund were made in 1996, decision to refund was taken on 7.10.2002 and payments were made in 2003.   Therefore, the respondent was entitled to interest.   The appeal of the appellants was dismissed.

Judgment dated 5.2.2024 in Civil Appeal No.7238 of 2009 of Union of India and others Vs. M/s. B.T.Patil and Sons Belgaum (Construction) Pvt Ltd.