The Delhi High Court has directed the Central Board of Indirect Taxes and Customs (CBIC) to pass a reasoned order within 3 months in respect of the non-grant of duty drawback to Vedanta.
The bench of Justice Prathiba M. Singh and Justice Rajneesh Kumar Gupta has observed that the CBIC, Drawback Division ought to look into the matter and pass a reasoned order on the representations of the Petitioner while considering the purpose and the rationale behind issuance of the Instruction No. 4/2019 dated 11th October 2019.
The Petitioner- Vedanta Limited has challenged the non-grant of relief in terms of drawback under Instruction No. 4/2019 issued by Central Board of Indirect Taxes and Customs (CBIC) dated 11th October, 2019.
The Petitioner had sought duty drawback in respect of the amount it had deposited as clean energy cess, on utilisation of coal as a raw material, during the course of manufacturing of aluminium products. While calculating the brand rate for the purpose of duty drawbacks, the clean energy cess ought to be permitted to be added so that whenever the products are exported, exporters can get drawbacks inclusive of the amount of clean energy cess.
Between 2010-2017, various exports are stated to have been made by the Petitioner, however, at the relevant point in time there was no clarity as to whether clean energy cess which was charged on consumption of coal would be liable to be included in the calculation of the brand rate or not.
The position became clear after the clarification in Instruction No. 4/2019 dated 11th October, 2019. Instruction No. 4/2019 dated 11th October, 2019 states that since the cess is collected as additional duty under Section 3 of Customs Tariff Act, the provisions of Customs Act, 1962 related to drawback, refund, etc. are applicable to it in terms of Section 3(12) of the Customs Tariff Act. 1975. Therefore, the incidence of Clean Environment cess (erstwhile Clean Energy cess) is required to be included in the calculation of Brand Rate. It may be mentioned that Clean Energy cess was renamed as Clean Environment cess in Finance Bill 2016 and the latter has been subsumed under GST w.e.f 01.07.2017.
The Petitioner moved before different Commissionerates seeking release of drawbacks, which were rejected by the respective Commissionerates as also by the CBIC Drawback Division on the ground that the same was barred by limitation.
The court perused the letter issued by the CBIC, Drawback Division shows that the rejection is completely cryptic and merely says that the “request for relaxation is not considered favorably”. There are no other reasons which have been assigned for the rejection of the representation of the Petitioner.
Case Details
Case Title: Vedanta Limited Versus CBIC
Case No.: W.P.(C) 3675/2025 & CM APPL. 17199/2025
Date: 26th March, 2025
Counsel For Petitioner: Aarohi Bhalla
Counsel For Respondent: Aditya Singla
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