In Brief
A contractor supplied goods for a World Bank-funded hydro-electric power project in India. The contractor claimed duty drawback (refund of excise duties paid) under the 'deemed export' scheme, treating the supply as earning foreign exchange for the country. The government initially rejected the claim but later approved it after committee review. However, the government delayed payment for seven years (1996–2003) and refused to pay interest on the delayed refund. The Supreme Court held that the contractor was entitled to both the duty drawback and interest under the Customs Act. The Court found that supplies to multilateral-agency-funded projects clearly qualify as deemed exports under the 1992 policy, and delayed refunds automatically trigger statutory interest at fifteen percent per annum—not discretionary concession.
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