1993 (3) TMI 115 - HC - Central Excise

Summary

Issues:
Refund of cash security deposit along with interest.

Analysis:
The case involved a respondent who was the proprietor of a transport agency and had deposited cash security with the Collector of Customs for the release of trucks and goods detained by Central Excise Officers. The Collector later confiscated the goods and imposed fines and penalties. The respondent appealed to the Tribunal, which set aside the confiscation orders and penalties, granting the respondent entitlement to refund of the security deposits. The respondent applied for a refund, but the Collector did not take any steps. The respondent then approached the High Court for the refund with interest at 18% per annum from the date of deposit. The High Court directed the Customs Authorities to refund the total amount of Rs. 2,08,250/- with interest from 1st November, 1990. The appellant refunded the principal amount but did not pay the interest as directed by the court.

The appellant argued that no interest was payable for delayed refunds as per statute and contended that interest should be calculated from the date of the refund application in February 1991, not from November 1990. The Court disagreed, stating that interest was not statutory but an obligation when the collection was unauthorized and illegal. The Court highlighted that until the order of confiscation, the cash deposits retained their character as security deposits, and the Customs Authorities were obligated to invest them in interest-earning investments. The Court emphasized that the delay in refund was unjustified and that interest had to be paid as compensation for the loss suffered due to the delay.

The Court rejected the appellant's argument that interest should only run from the date of the refund application, stating that the application was not a condition precedent for refund. The Court held that the appeal was misconceived, and the interest had to be paid as directed by the lower court. The appeal was dismissed, and the interest was to be paid by a specified date.