1990 (1) TMI 75 - HC - Central Excise

Summary

Issues:
1. Entitlement to interest on excise duty refund.
2. Statutory duty of public bodies to pay interest on amounts arbitrarily retained.
3. Period and rate of interest to be awarded.

Detailed Analysis:

1. The petitioner, engaged in torch manufacturing, sought a mandamus for interest on excise duty refunded by the respondents. The dispute arose when the Central Excise Department collected excise duty on brass barrels, an intermediary product, which the petitioner contended was not excisable. The Tribunal ruled in favor of the petitioner, leading to a refund of the duty. The petitioner claimed interest for the period the amount was retained by the respondents post the Tribunal's judgment.

2. The respondents argued that the delay in refund was due to the petitioner's failure to provide necessary documents. However, the court found no evidence supporting this claim. It was established that the respondents unjustly withheld the excise duty amount from 1983 to 1986, despite the Tribunal's clear decision. The court emphasized that public bodies are liable to pay interest when retaining amounts belonging to individuals arbitrarily or unjustly, as established in previous legal precedents.

3. Referring to a Supreme Court judgment, the court held that interest could be awarded for the period the amount was wrongfully retained by the respondents. In this case, interest was granted from the date of the Tribunal's judgment until the refund date. The court determined a reasonable processing time for the refund and awarded interest at a rate of 12% per annum. It cautioned that interest accrual due to failure in refunding duties not leviable should be assessed on a case-by-case basis, without establishing a rigid rule.

4. Ultimately, the court allowed the writ petition, directing the respondents to pay interest to the petitioner at the specified rate for the determined period. The judgment highlighted the importance of accountability in government departments and public sector undertakings, emphasizing the obligation to fulfill statutory duties promptly to avoid unjust withholding of rightful claims.