2018 (9) TMI 1786 - HC - Customs

Failure to refund amount, calculated towards anticipated duty and penalty - re-export of crafts - Held that - The petitioner s right to a refund of the penalty amount deposited, accrued to it on 23.06.2017 when the CESTAT decided that the penalty and the redemption fine were unwarranted. Given these circumstances and also the fact that the petitioner is a foreign company, not subject to the laws of India nor having any office in India the formalities insisted upon it appear to have prolonged the issue unnecessarily. The respondents are hereby directed to ensure the refund of the amounts concerned (Rs.2.5 crores towards penalty and ₹ 3.37 crores towards redemption fine) along with interest @ 12% per annum from 01.10.2017 till the date of payment being remitted to the petitioner s account, the details of which should be disclosed within next one week - petition allowed.

Summary

Issues:
- Customs Authorities' failure to refund anticipated duty and penalty amount to the petitioner.
- Dispute over the lease of aircraft to Kingfisher Airlines leading to detention of crafts.
- Adjudication by CESTAT resulting in setting aside of penalty and confiscation of engine.
- Claim for refund of penalty amount, redemption of fine, and interest by the petitioner.
- Customs Authorities' objections and delay in refunding the amounts due.
- Applicability of Circulars regarding refund procedures and timelines.
- Directives for refunding penalty and redemption fine along with interest to the petitioner.

Issue 1: Customs Authorities' failure to refund anticipated duty and penalty amount to the petitioner.
The petitioner was aggrieved by the Customs Authorities' reluctance to refund the amount calculated towards anticipated duty and penalty, which they claimed was due to them. The authorities were accused of putting up baseless objections and withholding the reimbursement of the amounts rightfully belonging to the petitioner.

Issue 2: Dispute over the lease of aircraft to Kingfisher Airlines leading to detention of crafts.
The petitioner had previously approached the Court regarding the lease of its aircraft to Kingfisher Airlines, which resulted in the detention of some crafts. The Court had directed the petitioner to furnish a bank guarantee and deposit a sum with the Customs Department for the release of the aircraft, subject to certain conditions. The petitioner was later permitted to re-export the aircraft by payment of a specified amount.

Issue 3: Adjudication by CESTAT resulting in setting aside of penalty and confiscation of engine.
The CESTAT accepted the petitioner's plea and set aside the penalty and confiscation of the engine, although it upheld the denial of exemption, making the petitioner liable for duty payment. The petitioner then applied for a refund of the penalty amount, redemption of fine, and interest, leading to the current dispute over the Customs Authorities' inaction and demands for additional documentation.

Issue 4: Claim for refund of penalty amount, redemption of fine, and interest by the petitioner.
The petitioner sought a refund of the penalty amount, redemption fine, and interest following the CESTAT's decision to set aside the penalty and redemption fine. The petitioner argued that they were entitled to the refund, citing relevant Circulars outlining the modalities for returning pre-deposits in such cases.

Issue 5: Customs Authorities' objections and delay in refunding the amounts due.
The Customs Authorities raised objections and demanded additional formalities from the petitioner before processing the refund, leading to delays and prolonging the issue unnecessarily. The petitioner's right to a refund was deemed to have accrued upon the CESTAT's decision, and the formalities insisted upon were considered unjustified.

Issue 6: Applicability of Circulars regarding refund procedures and timelines.
The Court referred to Circulars outlining the procedures for refunding pre-deposits in cases where penalties are set aside by appellate authorities. The Circulars emphasized the timely return of such deposits and warned of adverse actions in case of delays beyond the specified period.

Issue 7: Directives for refunding penalty and redemption fine along with interest to the petitioner.
In light of the circumstances and the petitioner's foreign status, the Court directed the Customs Authorities to refund the penalty and redemption fine amounts, along with interest, to the petitioner's account within a specified timeframe. The Court clarified the procedures for remitting the amount, especially if the petitioner did not have an account in India.