Case is : An Exporter made some export and got the due drawback to him in 2015. Foreign remittance for the same i.e. sales proceed was realised in year 2020. He did not got extended his BRC period from RBI/Customs authorities/DGFT.
Question:
(i) Is the whole drawback amount recoverable ?
(ii) or exporter is liable to pay only interest (for the period drawback scroll out to till the date of BRC ) ? what is the rate of interest in such case?

ANSWER

Facts of the case:
1. The exporter claimed duty drawback but have not received payment within the period given in Foreign Exchange Management Act, 1999.
2. But the custom officer has not started any proceeding for recovery of drawback U/R 18(2) of the Customs and Central Excise Duties Drawback Rules, 2017.
3. The realisation is received later on.

Law applicable:

Rule 18 of The Customs and Central Excise Duties Drawback Rules, 2017

Recovery of amount of Drawback where export proceeds not realized-

(1) Where an amount of drawback has been paid to an exporter or a person authorized by him (hereinafter referred to as the claimant) but the sale proceeds in respect of such export goods have not been realised by or on behalf of the exporter in India within the period allowed under the Foreign Exchange Management Act, 1999 (42 of 1999), including any extension of such period, such drawback shall, except under circumstances or conditions specified in sub-rule (5), be recovered in the manner specified below:
Provided that the time-limit referred to in this sub-rule shall not be applicable to the goods exported from the Domestic Tariff Area to a special economic zone.

(2) If the exporter fails to produce evidence in respect of realisation of export proceeds within the period allowed under the Foreign Exchange Management Act, 1999, or any extension of the said period by the Reserve Bank of India, the Assistant Commissioner of Customs or the Deputy Commissioner of Customs, as the case may be, shall cause notice to be issued to the exporter for production of evidence of relation of export proceeds within a period of thirty days from the date of receipt of such notice and where the exporter does not produce such evidence within the said period of thirty days, the Assistant Commissioner of Customs or Deputy Commissioner of Customs, as the case may be, shall pass an order to recover the amount of drawback paid to the claimant and the exporter shall repay the amount so demanded within thirty days of the receipt of the said order:
Provided that where a part of the sale proceeds has been realized, the amount of drawback to be recovered shall be the amount equal to that portion of the amount of drawback paid which bears the same proportion as the portion of the sale proceeds not realized bears to the total amount of sale proceeds.

(3) Where the exporter fails to repay the amount under sub-rule (2) within said period of thirty days referred to in sub-rule (2), it shall be recovered in the manner laid down in rule 17.

(4) Where the sale proceeds are realized by the exporter after the amount of drawback has been recovered from him under sub-rule (2) or sub-rule (3) and the exporter produces evidence about such realisation within a period of three months from the date of realisation of sale proceeds, the amount of drawback so recovered shall be repaid by the Assistant Commissioner of Customs or Deputy Commissioner of Customs, as the case may be, to the claimant provided the sale proceeds have been realized within the period permitted y the Reserve Bank of India:
Provided that-

(i) the Principal Commissioner of Customs or Commissioner of Customs, as the case may be, may extend the aforesaid period of three months by a period of nine months provided the sale proceeds have been realized within the period permitted by the Reserve Bank of India;

(ii) an application fee equivalent to 1% of the FOB value of exports or one thousand rupees whichever is less, shall be payable for applying for grant of extension by the Principal Commissioner of Customs or Commissioner of Customs, as the case may be.

(5) Where sale proceeds are not realised by an exporter within the period allowed under the Foreign Exchange Management Act, 1999 (42 of 1999), but such non-realisation of sale proceeds is compensated by the Export Credit Guarantee Corporation of India Ltd. under an insurance cover and the Reserve Bank of India writes off the requirement of realisation of sale proceeds on merits and the exporter produces a certificate from the concerned Foreign Mission of India about the fact of non- recovery of sale proceeds from the buyer, the amount of drawback paid to the exporter or the claimant shall not be recovered.

Interpretation:
The custom officer has power to start recovery proceedings after the issue of show cause notice to the exporter if the BRC is not submitted within the time.
There is no provision made in law that the exporter will return the drawback suo moto.
The lawmaker introduced the requirement of BRC to assure that there is no fake export and drawback is not claimed against dummy exports.
Rule18(4) permits reclaim of drawback by the exporter if the payment is received after the time limit given in Foreign Exchange Management Act, 1999.
In rule 18(4), there is no limitation given for the late payment.

Conclusion:
On the basis of the above interpretation our answer is:
1. Drawback is not recoverable.
2. Exporter is not liable to pay interest.
3. Not applicable.
(Reply dt. 18/09/2021)