Vedanta Limited Vs Central Board of Indirect Taxes And Customs & Ors. (Delhi High Court)
Delhi High Court has directed the Central Board of Indirect Taxes and Customs (CBIC) to re-examine Vedanta Limited’s claim for duty drawback related to the clean energy cess paid on coal used in aluminum production. The court expressed dissatisfaction with the “cryptic” rejections issued by the CBIC’s Drawback Division, which failed to provide reasons for denying the relief. Vedanta had sought the inclusion of the clean energy cess in the calculation of brand rates for duty drawbacks on exported aluminum products between 2010 and 2017.
Vedanta’s counsel argued that clarity on the eligibility of clean energy cess for drawback purposes only emerged with the issuance of CBIC Instruction No. 4/2019 dated October 11, 2019. This instruction clarified that the clean energy cess, collected as an additional duty of customs, should be included in the brand rate calculation. Following this clarification, Vedanta approached various Commissionerates seeking the release of drawbacks, but these requests were rejected, a decision upheld by the CBIC Drawback Division citing limitation.
The petitioner contended that until the 2019 instruction, there was ambiguity regarding the inclusion of the clean energy cess in drawback claims, thus the delay in filing should not be held against them. Furthermore, reliance was placed on Rule 17 of the Customs and Central Excise Duties Drawback Rules, 1995, which grants the Central Government the power to relax limitation periods if the exporter’s non-compliance was due to reasons beyond their control.
The High Court observed that the CBIC’s rejection letters lacked any substantive reasoning, merely stating that the relaxation request was “not considered favorably.” The court highlighted that Instruction No. 4/2019 was not solely prospective and was intended to apply to pending applications as well. While the CBIC’s counsel argued that Vedanta had no pending applications at the time of the instruction, the petitioner asserted that representations were made within three months of the clarification.
Considering the circumstances, Justice HC opined that the CBIC Drawback Division must provide a reasoned order on Vedanta’s representations, taking into account the purpose and rationale behind the issuance of the 2019 instruction. The court disposed of the writ petition by treating it as a representation and directed the CBIC to pass a reasoned order within three months, leaving all other legal remedies open to Vedanta.
FULL TEXT OF THE JUDGMENT/ORDER OF DELHI HIGH COURT
