2002 (6) TMI 46 - HC - Central Excise

Refund - Mere pendency of the S.L.P. for admission cannot be used as a ground to deprive or postpone the benefits of the order of the CEGAT - petitioner is a commercial establishment. Petitioner is deprived of its liquidity in trade, commerce and business. Such deprivation is bound to cause substantial prejudice to it. Petitioner, therefore, is justified in claiming interest for delayed payments

Summary

Issues Involved:
Claim for refund of excess amount paid during provisional assessment, entitlement to interest on delayed refund, justification for refusing refund pending Special Leave to Appeal (S.L.P.) before the Apex Court.

Analysis:
1. The petitioner sought a refund of the admitted amount on the basis of admitted facts, where the petitioner was allowed provisional clearance to clear goods on payment of duty at an enhanced value. Subsequently, a show cause notice was issued and confirmed against the petitioner, leading to an appeal before the Customs Excise & Gold (Control) Appellate Tribunal (CEGAT), which partially reduced the fine and penalty imposed. The petitioner then requested a refund of the excess amount paid during provisional assessment, which the respondent failed to provide, prompting the petitioner to approach the High Court under Article 226 of the Constitution of India for relief.

2. The primary issue revolved around the refusal of the respondents to grant a refund to the petitioner due to the pendency of the S.L.P. before the Apex Court. The High Court emphasized that the mere pendency of the S.L.P. for admission cannot be a valid reason to deny or delay the benefits of the CEGAT's order. The court highlighted that the respondents should have sought urgent hearing or obtained interim relief promptly if they intended to withhold the refund, especially considering the adverse impact on the petitioner's commercial activities due to the liquidity deprivation.

3. In determining the entitlement to interest on delayed payments, the High Court referred to precedents such as the case of Life Insurance Corporation of India v. Gangadhar Vishwanath Ranade, where it was established that deprivation of liquidity in trade and business should be compensated by awarding interest at a suitable rate within a reasonable period. Citing the judgment in M/s. Goyal Fibres (P) Ltd., the court directed the respondents to refund the refundable amount within 60 days with interest at 6% per annum from the date of payment. Failure to comply would result in an increased interest rate of 10% per annum until the refund is made in full, subject to the outcome of the pending S.L.P. before the Supreme Court.

4. The High Court's final directive mandated the respondents to refund the amount within the specified timeline, failing which a higher interest rate would apply. The judgment concluded by disposing of the petition in accordance with the order, without imposing any costs on either party.