2014 (3) TMI 55 - HC - Customs

Release of foreign currency seized earlier - grant of interest on such seizure as interest on arrears of refund - Held that - The Customs Department themselves stated before this Court that the amount of US 289250 is lying with them while seeking a stay of the order dated 19 October 2010. - the petitioner has not been granted any interest on the amount of refund. It would therefore, be arbitrary and unreasonable to deny the petitioner, both interest on the arrears of refund for the period from 1994 to 2014 on the one hand and the compensation consequential upon variations in the foreign exchange rate between 1994 to 2014 on other hand. - Customs department directed to refund the amount.

Summary

Issues: Implementation of Court Order for Refund of Seized Currency; Compliance with Customs Act Section 110(1A); Interest on Refund Amount

Implementation of Court Order for Refund of Seized Currency:
The judgment pertains to the implementation of an order dated 19 October 2010 by the Bombay High Court in a writ petition. The order allowed the petitioner's request for the release of US$ 289,250 by the Customs department and permitted its export with Reserve Bank of India's permission. However, the claim for interest on the seized amount was rejected. The Customs Department failed to refund the US$ 289,250 as directed, despite clear court orders. The petitioner argued for the refund based on the court's decision, emphasizing the importance of following the court's directives in such matters. The court noted that the Customs Department had not disputed holding the amount and was obligated to comply with the court's order for the refund.

Compliance with Customs Act Section 110(1A):
The judgment also delves into the Customs Act Section 110(1A) concerning the disposal of seized goods. The court highlighted that both foreign and Indian currency were classified as goods under this section since 1996. The Customs Department contended that the amount in question had been sold in 1994 and was subsequently refunded in Indian Rupees in 2012. However, the court pointed out the lack of evidence regarding specific directions from the Central Government on the disposal of seized currency. Despite the Customs Department's arguments, the court emphasized the need to adhere to the court's order for the refund of the US$ 289,250.

Interest on Refund Amount:
Regarding the denial of interest on the refund amount, the court deemed it arbitrary and unreasonable to withhold interest accrued from 1994 to 2014. The petitioner was entitled to interest on the arrears of the refund and compensation due to fluctuations in the foreign exchange rate during the period. Consequently, the court directed the Customs Department to refund the US$ 289,250 within four weeks to enable the petitioner to export the currency, aligning with the court's previous order. The notice of motion was allowed in favor of the petitioner, emphasizing the necessity of complying with court directives and ensuring fair treatment in refund matters.