• Dated 11^th March, 2026

Bombay High Court allows Brand Rate Duty Drawback even when Manufacturer is not the Importer

Brief Facts

The Assessee manufactured export products using raw materials purchased from a 100% Export Oriented Unit (EOU). The EOU had paid basic customs duty and social welfare surcharge while clearing the goods to the Domestic Tariff Area (DTA) and supplied the same to the Assessee.

The Assessee exported the finished goods and applied for fixation of Brand Rate of Duty Drawback under Rule 7 of the Customs and Central Excise Duties Drawback Rules, 2017. However, the customs authorities rejected the drawback claims on the ground that the Assessee had not directly paid the custom duty on the inputs and that the invoices did not specifically show such duty component. The Assessee therefore challenged the impugned order before the Hon'ble Bombay High Court.

Assessee's Contention

The Assessee argued that the EOU had paid customs duty and social welfare surcharge while clearing the goods into DTA and had issued declarations confirming that such duty had been included in the price charged to the Assessee. Consequently, although the duty was initially paid by the EOU, the incidence of such duty was borne by the Assessee, making it eligible for drawback.
It was also contended that there is no requirement under the Customs Act or Drawback Rules that customs duty must be separately reflected in the supplier's tax invoice. The authorities therefore wrongly rejected the claim despite the documentary evidence and declarations furnished by the supplier.

Respondent's Contention

The revenue authorities contended that the Assessee was not entitled to duty drawback since it had failed to establish that it had actually borne the customs duty on the inputs used in the manufacture of export goods. According to the department, the tax invoices issued by the EOU only reflected CGST and SGST and did not show the customs duty component. In the absence of documentary proof that the Assessee had paid or borne such duty, the drawback claims were rejected.

Court's Decision

The Hon'ble Bombay High Court held that the authorities erred in rejecting the drawback claim and ignored the statutory presumption under Section 28D of the Customs Act, 1962, which provides that the incidence of duty is deemed to have been passed on to the buyer unless proved otherwise. Also it observed that the EOU had paid the customs duty and issued declarations stating that the duty component was included in the price charged to the Assessee. Since the Assessee had paid the entire price of the goods including the duty element, the incidence of such duty was borne by it and therefore it was entitled to claim drawback.
The Hon'ble Court further clarified that there is no legal requirement that customs duty must be separately mentioned in the tax invoice for claiming drawback. Accordingly, the Court set aside the impugned orders and directed the authorities to sanction the brand rate duty drawback under Section 75 of the Customs Act read with Rule 7 of the Drawback Rules, 2017.

BTA's Comment

This judgment clarifies that an exporter can claim duty drawback even if the customs duty on inputs was paid by a supplier, provided the exporter ultimately bears the incidence of such duty as part of the purchase price. The Hon'ble Court emphasized that denial of drawback merely because the duty is not separately reflected in the tax invoice is not legally sustainable.

Case Reference: Syngenta India Limited v. Union of India & Others, Writ Petition No. 664 of 2024: Bombay High Court (Goa Bench).

Author: Harsh Kr Gupta

Edited By: Sneha Nandi