2003 (7) TMI 83 - HC - Customs

Summary

Issues Involved:
1. Arbitrary and illegal withholding of refund.
2. Breach of principles of judicial discipline.
3. Entitlement to interest on delayed refund.

Issue-wise Detailed Analysis:

1. Arbitrary and Illegal Withholding of Refund
The petitioners, a partnership firm, imported consignments of rough marble blocks and were subjected to adverse adjudication orders by the Commissioner of Customs, imposing significant fines and penalties. The petitioners appealed these orders, and the Tribunal reduced the fines and penalties, entitling the petitioners to a refund of Rs. 1.35 crore. Despite a refund order being prepared, the refund was not issued, prompting the petitioners to seek judicial intervention under Article 226 of the Constitution of India. The Court noted that the respondents could not retain the refund amount and directed its deposit with the Court.

2. Breach of Principles of Judicial Discipline
The Tribunal's order reducing the fines and penalties was not honored by the Customs Department, which constituted a breach of judicial discipline. The Court observed that the Customs Department had refunded similar amounts to other claimants without security but discriminated against the petitioners by withholding their refund and demanding a bank guarantee. The Court emphasized that the orders of higher authorities must be followed unreservedly by subordinate authorities.

3. Entitlement to Interest on Delayed Refund
The petitioners sought interest on the delayed refund, arguing that the Customs Department's arbitrary withholding of the refund caused them financial loss. The Court considered the facts and noted that other similarly situated parties had received their refunds without security and that the petitioners were wrongfully deprived of their refund. The Court cited previous judgments, including Shri Balaji Automobiles v. Union of India, and held that the petitioners were entitled to interest for the period of delay. The Court granted simple interest at 6% per annum from the date of the petition until the date of payment, with a provision for increased interest at 10% per annum if not paid within 60 days.

Conclusion
The Court allowed the petition, making the rule absolute with no order as to costs, and directed the Revenue to pay the refund amount with interest as specified.