2020 (7) TMI 652 - HC - Central Excise

Principles of unjust enrichment - Refund alongwith interest - Assistant Commissioner passed order holding that the petitioner was although entitled for refund, but directed that the said amount may be credited in the account of the Consumer Welfare Fund instead of crediting it in the account of the petitioner - HELD THAT - The presence of the Assistant Commissioner is directed, who had passed the order not refunding the amount to the petitioner, but on the insistence of Mr. Bhatt that better sense may prevail on the officers and amount would be fully paid to the petitioner within 24 hours, we adjourn this matter for day after tomorrow i.e. 29.07.2020. We further provide that the interest of 6% would be payable up to the date when the amount was credited in the account of the Consumer Welfare Fund. However, after that date the petitioner should be entitled to higher rate of interest say 18% till the date of actual payment and the excess amount of interest so paid to be recovered from the officers found responsible for not making payment in time after due inquiry by the Department. The petitioner should be entitled for costs of the petition which could be fixed at ₹ 1,00,000/-. This amount may also be recovered from the erring officers after due enquiry - On the next date i.e. 29.07.2020 in addition to the amount of refund with admissible interest the respondents would come prepared with drafts / cheques for the proposed additional interest and costs. Subject to hearing the counsel for the parties we will pass appropriate orders regarding additional interest and costs. Let this matter be listed on 29.07.2020.

Summary

Issues:
Refund of excess amount held by Assistant Commissioner despite Tribunal's order; Withholding refund due to Department's appeal; Justification for withholding payment; Direction for immediate payment; Interest rate on delayed payment; Recovery of excess interest from responsible officers; Petitioner's entitlement to costs.

Analysis:
The High Court addressed the issue of the refund of an excess amount held by the Assistant Commissioner despite the Tribunal's order. The Court noted that the CESTAT had allowed the petitioner's appeal, directing a refund of a specific amount along with interest. However, the Assistant Commissioner withheld the refund, directing the amount to the "Consumer Welfare Fund" instead of the petitioner's account. The Court found this action unjustified, especially after the Commissioner (Appeals) allowed the petitioner's appeal and remitted the matter for payment. The Court emphasized that withholding payment based on future events or assumptions was not acceptable, especially considering the petitioner's need for funds as a private limited company.

Regarding the withholding of the refund due to the Department's appeal, the Court rejected the Department's reasoning for not making the payment. The Department had filed an appeal against the Tribunal's order, but the Court found this to be an insufficient reason to delay the refund. The Court emphasized that the Assistant Commissioner's actions seemed to be based on extralegal reasons and that the refund should not be withheld due to the mere possibility of a future appeal.

The Court directed immediate action for the payment of the refund, expressing dissatisfaction with the delay by the Assistant Commissioner. It provided specific instructions for the payment, including the calculation of interest. The Court ordered that interest at a rate of 6% would be payable until the amount was credited to the Consumer Welfare Fund, after which a higher rate of 18% would apply until the actual payment date. Additionally, the Court stated that any excess interest paid would be recovered from the officers responsible for the delay after an inquiry by the Department.

Furthermore, the Court ruled that the petitioner was entitled to costs of the petition, which were fixed at a specific amount. The Court specified that this amount could be recovered from the erring officers after a due inquiry. The Court scheduled a follow-up hearing to ensure compliance with its orders and directed the Assistant Commissioner to be present with an explanation if full compliance was not achieved by the specified date.