Law Corner News

Withdrawal of duty drawback amounts to new levy: Court

In a competitive bidding, when the winner of a contract quotes low taking into account the comforting fact that it is eligible for duty drawback and on the assurance that any new levy imposed during the course of execution of the contract would be to the contractee’s account, any subsequent withdrawal of duty drawback practically amounts to imposition of a new levy.

The Delhi High Court in National Highways Authority of India v. Afcons Infrastructure Ltd found that the contractors were attracted to NHAI projects allured by the promise of duty drawback with these projects being treated as deemed exports.

But the deemed export status was withdrawn with effect from April 1, 2001 leaving the respondent high and dry. The Court upheld its claim that the excise duty paid on raw materials in road laying to the extent it was not abated by duty drawback as hitherto virtually amounted to a fresh impost that had to be footed by the contractee, NHAI, in terms of the contract.

Source :