2012 (11) TMI 408 - AT - Customs

Interest seizure of Indian currency under a reasonable belief that the same is sale proceeds of smuggled goods - order of release delay in returning seized currency Held that - Though there is absolutely no justification for more than 10 years delay in returning the seized currency and the conduct of the officers amounts to defying the Tribunal s order, the Commissioner (Appeals) s order sanctioning the interest on the seized currency for the delay in its return is not correct - It is only the Hon ble High Court, or the Hon ble Supreme Court which in exercise of their writ jurisdiction can order the payment of interest by the Department for period of delay in return of the currency. In view of this, the impugned order ordering payment of interest is set aside and the Revenue s appeal is allowed

Summary

Issues:
Interpretation of provisions for payment of interest on seized currency under the Customs Act, 1962.

Analysis:
The case involved the seizure of Indian currency from a residence under suspicion of being proceeds of smuggled goods. The Commissioner of Customs ordered confiscation, but the Tribunal later directed the release of the currency. Despite the Tribunal's order, the currency was not returned promptly. The respondent sought interest on the delayed return of the currency. The issue at hand was whether interest was payable on the seized currency upon its release.

The Departmental Representative argued that interest under Section 27A of the Customs Act is only applicable to delayed duty refunds, not to the return of seized currency. The respondent contended that interest should be paid for the delay based on relevant judgments. The Tribunal examined the provisions of the Customs Act and the definition of goods, concluding that interest is not payable on seized currency upon release, as it falls under the definition of goods. The Tribunal emphasized that Section 27A pertains specifically to duty refunds, not to seized goods. The Tribunal highlighted that while the delay in returning the currency was unjustified, only the High Court or Supreme Court could order interest payment for such delays, not the Tribunal. Consequently, the Tribunal set aside the order for interest payment, allowing the Revenue's appeal.

In conclusion, the Tribunal held that interest is not payable on seized currency upon its release, as the Customs Act does not provide for such payments. The Tribunal emphasized that the jurisdiction to order interest for delays in returning seized goods lies with higher courts, not the Tribunal. As a result, the order directing interest payment was set aside, and the Revenue's appeal was allowed, rejecting the respondent's claim for interest at an enhanced rate.