Delhi High Court Slams CBIC For Cryptic Order Denying Duty Drawbacks To Vedanta Despite Its Own Instructions Allowing Retrospective Benefit

The plea was rejected by CBIC through a “cryptic order” citing limitation despite its own Instruction clearing air on eligibility of drawbacks on clean energy cess, with retrospective benefit to pending cases, a division bench of Justices Prathiba M. Singh and Rajneesh Kumar Gupta noted.

Vedanta had sought duty drawback in respect of the amount it had deposited as clean energy cess, on utilisation of coal as a raw material. Amid uncertainty between 2010-17 as to whether clean energy cess would be liable to be included in the calculation of the brand rate, Vedanta had not claimed drawbacks.

However, pursuant to a clarification issued by CBIC in October 2019, the Company moved before different Commissionerates seeking release of drawbacks. Its representations were however rejected on the ground that the same was barred by limitation.

The company argued that until the Instruction was issued, it was unaware that it could claim clean energy cess as part of the drawback and, therefore, its application cannot be held to be barred by limitation. It also cited Customs and Central Excise Duties Drawback Rules, 1995 that provide for power to relax the limitation period.

CBIC, on the other hand submitted that since the exports relate to the period 2010-2017 and the maximum period to claim duty drawback is three months, which can be further extended for a period of another three months, Vedanta's applications are barred.

At the outset, the High Court perused the letter issued by the CBIC Drawback Division rejecting Vedanta's application. It said that the same 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,” it said.

The Court noted that even the CBIC Instruction was clear to the effect that pending applications were to be dealt with in terms of the said instruction. “Thus, the instructions were not merely prospective in nature. Benefit could be given even to pending applications,” it said and asked CBIC to relook into the matter and pass a reasoned order within three months.

Appearance: Mr. Aarohi Bhalla, Mr. Alok Agarwal, Mr. Prachit Mahajan, Mr. Shubham Singh and Mr. Mohit Kalra, Advs for Petitioner; Mr. Aditya Singla, SSC, CBIC with Ms. Arya Suresh Nair, Adv for Respondent

Case title: Vedanta Limited v. CBIC

Citation: 2025 LiveLaw (Del) 392

Case no.: W.P.(C) 3675/2025

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