Chatroom: 'Interest can be claimed on delayed payment of drawback'

Q. The Principal Commissioner recently disposed of our Revision Application, filed under Section 129DD of the Customs Act, in our favour. Our deposit on account of appeals has been stuck with the department since 2019. Can we claim interest on this pre-deposit amount, and also for delayed payment of drawback? If yes, under which sections?

First, Section 129DD of the Customs Act, 1962 deals with Revision by the Central Government and so, I infer that the Principal Commissioner you refer to has passed the order in his capacity as Additional Secretary to the Government of India. Second, you can claim interest on the pre-deposit amount in accordance with Section 129EE of the Customs Act, 1962. Third, you can claim interest for delayed payment of duty drawback in accordance with Section 76(1) of the Customs Act, 1962.

 

Q. We avail of duty credits under the RoDTEP scheme. The duty credit is given immediately after export. Sometimes, we are required to take partial write-off of export proceeds and, in such cases, we are required to repay the proportionate amount of duty credit along with interest. What is the rate of interest in such cases, as well as the relevant notification?  

In accordance with Para 5(1) of notification no.76/2021-Cus (NT) dated September 23, 2021 (notifying the manner to issue the duty credits under the RoDTEP scheme), the exporter must, in case of a shortfall in realisation of export credits, repay the amount of duty credit, along with interest, at the rate as fixed under Section 28AA of the Customs Act 1962, for the purposes of that section. Notification no.33/2016-Cus (NT) dated March 1, 2016, issued under Section 28AA, prescribes the rate of interest of 15 per cent per year.

Q. SEZ entities execute a Bond-cum-LUT (Legal Undertaking) in terms of Rule 22 of the SEZ Rules, 2006, which also covers activity like movement of goods between the SEZ and the gateway port for export of goods by SEZ entities. Please clarify whether SEZ entities are also required to execute an LUT (Letter of Undertaking) with the GST Authorities for movement of goods meant for export, as required in the case of export (zero rates supply) by DTA units?

Yes, in my opinion, as the CBIC has not issued any circular exempting SEZ units from furnishing an LUT before export of goods without IGST payment under the GST laws.

Q. SEZ entities remove material to gateway ports for export, after filing of shipping bills with the SEZ Customs. Are SEZ entities required to make a tax invoice as prescribed under GST laws, show the rate of IGST and amount of IGST therein, mention the LUT details and the phrase “supply meant for export under bond or LUT without payment of IGST”, as is being done by DTA units while carrying out exports?

Yes. In my opinion, you must make out an invoice giving all the applicable details as prescribed in Rule 46 of the SEZ Rules, 2006.

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