Vedanta Limited vs. Central Board Of Indirect Taxes And Customs & Ors.

Facts

Vedanta Limited (Petitioner) filed a writ petition challenging the non-grant of relief in duty drawback concerning clean energy cess paid on coal used in manufacturing aluminium products for export between 2010 and 2017. The Petitioner contended that Instruction No. 4/2019 issued by the Central Board of Indirect Taxes and Customs (CBIC) on October 11, 2019, clarified that clean energy cess should be included in the brand rate calculation for duty drawbacks. However, their subsequent applications for drawback were rejected by various Commissionerates and the CBIC Drawback Division, citing limitation. The Petitioner argued that they were unaware of this claim until the 2019 instruction and that Rule 17 of the Customs and Central Excise Duties Drawback Rules, 1995, allows relaxation of limitation periods for reasons beyond control.

Held

The Court held that the rejections of the Petitioner's representations by the CBIC Drawback Division were cryptic and lacked reasoned justification. The Court noted that Instruction No. 4/2019, which clarified the inclusion of clean energy cess in brand rate calculations, was not merely prospective and was intended to cover pending applications. The Court found that the Petitioner had made representations within three months of the issuance of Instruction No. 4/2019. Therefore, the Court directed the CBIC Drawback Division to reconsider the Petitioner's representations and pass a reasoned order, taking into account the purpose and rationale behind Instruction No. 4/2019. The writ petition was treated as a representation, and the CBIC was given three months to pass the reasoned order. All remedies of the Petitioner were left open.

Key Issues

1. Whether the Petitioner's claim for duty drawback, including clean energy cess, for exports made between 2010-2017 is barred by limitation, considering Instruction No. 4/2019 clarified the eligibility for such drawback. Petitioner's arguments: The Petitioner argued that they were unaware of their eligibility to claim clean energy cess as part of the drawback until the issuance of Instruction No. 4/2019 on October 11, 2019. Therefore, their applications made after this clarification should not be considered time-barred. They also relied on Rule 17 of the Customs and Central Excise Duties Drawback Rules, 1995, which permits the Central Government to relax limitation periods for exporters who have failed to comply with rules for reasons beyond their control. Revenue's arguments: The Revenue (CBIC) contended that the maximum period to claim duty drawback is three months, extendable by another three months. Since the Petitioner's applications were made after these periods, they are barred by limitation, and the rejections are valid. The Revenue also argued that there was no pending application from the Petitioner on the date of Instruction No. 4/2019.