2013 (2) TMI 795 - HC - Central Excise

Summary

Issues involved: Challenge to refusal of refund u/s Prohibition & Excise Superintendent's order, under-valuation of assessable value, legality of refund rejection, availability of alternative remedy, entitlement to interest on refund.

Refusal of Refund Order: The petitioners challenged an order refusing refund of a sum of Rs. 2,48,612/= by the Prohibition & Excise Superintendent. The petitioners held necessary license for storing alcohol and manufacturing products under the Medicinal and Toilet Preparations Act, 1955. Various authorities confirmed a duty demand against the petitioners, which was later quashed by the revisional authority. Despite this, the Superintendent refused the refund, citing under-valuation of goods due to exclusion of labor and overhead charges in the valuation of preparations.

Legality of Refund Rejection: The High Court found the Superintendent's refusal to grant the refund as illegal. The Court emphasized that once a higher authority had quashed the duty demand, the refund was rightfully due to the petitioners. The Court noted that the Superintendent's grounds for rejection were already decided in favor of the petitioners by the revisional authority, and it was impermissible for the Superintendent to ignore the binding order and raise the same issues again. The Court held that the Superintendent's actions were against legal principles of finality of decisions and ordered the refund to be released with interest.

Availability of Alternative Remedy: The Court dismissed the argument of the respondents regarding the availability of an alternative remedy, stating that the illegal nature of the Superintendent's order warranted intervention through writ jurisdiction. The Court deemed the Superintendent's order as completely illegal and against legal norms, justifying the Court's interference in the matter to ensure justice for the petitioners.

Entitlement to Interest on Refund: The Court directed the respondents to release the refund to the petitioners with simple interest at 9% per annum, starting three months from the date of the refund application. The Court emphasized the duty of the Superintendent to release the refund within a reasonable period and criticized the prolongation of litigation due to frivolous grounds. The Court also ordered the respondents to pay the costs of the petition and allowed for an inquiry into the conduct of the Superintendent for potential recovery of interest and costs if found responsible for causing damage to the Government.