2022 (6) TMI 930 - HC - Customs

Refund of amount deposited during Investigation - Payment was voluntary or under Coercion / Threat - Benefit of partial exemption from CVD - Seeking for declaration and striking down the word excisable in the phrase used in the manufacture of excisable goods appearing in Column No.3 of Sr. No.107 of the Notification No.50/20170-Cus. dated 30th June 2017 - violative of Article 14 of the Constitution or not. HELD THAT - Coercion is committing or threatening to commit any act forbidden by the Indian Penal Code or detaining or threatening to detain, to the prejudice of any person whatever, the property of another - Coercion has to be pleaded and proved. Respondents officials had visited the premises of the petitioner during the investigation. The larger issue is involved in the writ petition. The petitioner has challenged the Notification which the petitioner claims that the partial exemption under Sr.No.107 of Notification No.50/2017-Cus. dated 30 th June 2017 r/w. Concessional Rate of Duty Rules, 2017 is available for Denatured Ethyl Alcohol used for manufacture of Ethyl Amine. The law permits payment of amount on the basis of own ascertainment of duty during the investigation and prior to the service of notice. The question is payment made by the petitioner of Rs.2.5 Crores is voluntary or involuntary. For concluding the existence of coercion greater degree of proof would be required. It is trite that the respondents cannot employ coercion during investigation. The question is whether the payment is made under coercion. The payment of Rs.2.5 Crores is supported by the letter of the petitioner. The letter is issued by the petitioner to the respondents along with payment. The covering letter presented with the payment of Rs.2.5 Crores as made by the petitioner to the respondent consequent to the search proceedings on 9th February 2021 suggests that the petitioner accepts the issue raised by the officers of the DRI and as a token of cooperation on ongoing investigation, the petitioner submits the demand draft of Rs.2.5 Crores and requested the respondents to consider the said payment towards differential duty liabilities - The draft letter prepared by the petitioner is not forwarded to the respondents wherein the petitioner wish to contest the issue on merit. We are not inclined to consider the request of the petitioner for refund of the amount at this interim stage. The said relief can be considered at the time of final disposal of the petition - The deposit of Rs.2.5 Crores would be subject to final outcome of the petition.

Summary

Issues:
1. Challenge to the phrase "used in the manufacture of excisable goods" in a notification.
2. Eligibility for partial exemption from payment of BCD for imported Denatured Ethyl Alcohol.
3. Validity of forcible collection of Rs.2.5 Crores without show cause notice.
4. Coercion and voluntariness of the payment made by the petitioner.
5. Entitlement to refund of the amount during the pendency of the writ petition.

Analysis:
1. The petitioner challenged the phrase "used in the manufacture of excisable goods" in a notification, claiming it violated Article 14 of the Constitution. They sought partial exemption for imported Denatured Ethyl Alcohol not used for manufacturing excisable goods. The petitioner also contested the validity of the forced collection of Rs.2.5 Crores without due process.
2. The petitioner argued that the payment of Rs.2.5 Crores was made under coercion, supported by internal communications and a draft letter expressing reluctance to make the payment. The petitioner claimed the respondents did not rebut the coercion allegations and forced modifications to the letter. They sought a refund during the pendency of the petition.
3. In response, the respondents contended that the payment was voluntary, citing a letter from the petitioner accepting the duty liability and signaling intent to pay. They argued that the petitioner made the payment based on their own assessment of the duty and that no coercion was exerted.
4. The court considered the concept of coercion under the Indian Penal Code and the need for it to be pleaded and proved. It noted the larger issue of the notification's challenge and the question of whether the payment was voluntary or involuntary. The court highlighted the requirement for a greater degree of proof to establish coercion.
5. Ultimately, the court found it difficult to conclude on coercion at the interim stage. It declined the petitioner's request for a refund, stating that the relief could be considered at the final disposal of the petition. The court emphasized that the deposit of Rs.2.5 Crores would be subject to the final outcome of the case.