2008 (7) TMI 382 - HC - Customs

Interest on Delayed Refund held that - it is apparent that there is a serious lapse on the part of the respondent herein and the said lapse is sought to be covered up by suggesting to the petitioner to approach a different authority only on the basis of the amount having been credited under a different head of account at New Delhi. The respondent authority should not forget that in so far as the petitioner is concerned, DGCEI is merely a limb of the Central Excise Department of Union of India and the attempt to shift the entire burden on the customs department was not only not warranted, but as observed hereinbefore, dishonest. The petitioner cannot be denied legitimate relief only on the basis of accounting entries, which is an internal matter of the respondents. - Hence, the interest payment, which is made as directed hereinbefore, shall in the first instance be made by the respondent department and thereafter the Chief Commissioner of Central Excise shall ensure that the said amount is recovered from the respondent herein so as to ensure that the exchequer is not put to loss.

Summary

Issues Involved:
1. Legitimacy of the refund claim of Rs. 7.50 lakhs.
2. Entitlement to interest on the refunded amount.
3. Jurisdiction and responsibility of the respondent authority.
4. Conduct and administrative delay by the respondent authority.

Issue-wise Detailed Analysis:

1. Legitimacy of the Refund Claim of Rs. 7.50 Lakhs
The petitioner claimed a refund of Rs. 7.50 lakhs, which was allegedly recovered by the Directorate General of Central Excise Intelligence (DGCEI) officers between 18-6-2001 and 15-9-2001. The respondent argued that the amount was voluntarily deposited by the petitioner. The Commissioner (Appeals) and the Tribunal both upheld that the amount was illegally paid to the credit of the Central Government and ordered its refund. The Tribunal emphasized that the Revenue had no authority to keep the deposit without initiating proceedings to confirm the duty due.

2. Entitlement to Interest on the Refunded Amount
The petitioner sought interest on the refund from 10-8-2001. The Commissioner (Appeals) ruled that the petitioner was not entitled to interest under the Central Excise Act or the Customs Act. However, the court noted that after the Tribunal's order on 30-11-2007, the respondent should have refunded the amount promptly. The court ruled that from 1-1-2008, the amount should bear interest at 5% per annum until actual payment, rejecting the respondent's argument that interest should only be computed after a 90-day statutory period.

3. Jurisdiction and Responsibility of the Respondent Authority
The respondent authority argued that the refund claim pertained to a drawback and not excise duty, suggesting the petitioner approach customs authorities. The court found this stance incorrect and dishonest, highlighting that the DGCEI is a limb of the Central Excise Department, and the respondent should have processed the refund claim. The court criticized the respondent for administrative delays and misguidance.

4. Conduct and Administrative Delay by the Respondent Authority
The court noted significant administrative lapses by the respondent authority, including a nearly four-year delay without initiating any legal steps and a two-year delay in responding to the refund claim. The court found the respondent's conduct in handling the refund claim to be dishonest and an attempt to shift responsibility unjustly. The court directed the respondent to pay the interest and suggested recovering the amount from the responsible officer to avoid loss to the exchequer.

Conclusion
The petition was allowed, directing the respondent to pay interest at 5% per annum from 1-1-2008 until actual payment. The court criticized the respondent's conduct and administrative delays, emphasizing the need for accountability within the Central Excise Department.