2010 (9) TMI 199 - HC - Customs

Interest - interest at 18% between the date of seizure and the date of refund - on the cash amount and bank drafts seized by the respondent - on the belief that they were liable for confiscation under Section 121 of the Act Held that - no right entitling payment of interest on delayed refund under the Act

Summary

Issues:
1. Claim for interest on seized cash and bank drafts.
2. Maintainability of the writ petition.
3. Principles of res judicata.
4. Prohibition under Section 40 of the Central Excise Act, 1944.
5. Alternative remedies available to the petitioners.

Issue 1: Claim for interest on seized cash and bank drafts
The petitioners filed a writ petition seeking interest at 18% on the cash amount and bank drafts seized by the respondent. The cash and drafts were ordered to be released by an adjudication order, but no interest was awarded. The petitioners argued that the respondent should pay interest for the period of unlawful seizure. However, the Commissioner held that the request for interest was not raised before and during the appeal process, thus denying the claim for interest.

Issue 2: Maintainability of the writ petition
The respondent contended that the writ petition was not maintainable since the petitioners had alternative remedies available, such as filing a civil suit for recovery of interest or appealing against the Joint Commissioner's order. It was highlighted that the petitioners did not pray for interest during the appeal process, and therefore, the claim for interest at this stage was deemed barred under the Code of Civil Procedure.

Issue 3: Principles of res judicata
The respondent argued that the dismissal of a previous writ petition by the petitioners indicated their acceptance of the Joint Commissioner's order, invoking the principles of res judicata. However, the court held that the dismissal of the previous petition would not operate as res judicata since the adjudication order for refund was issued after the filing of the earlier writ petition.

Issue 4: Prohibition under Section 40 of the Central Excise Act, 1944
The respondent cited Section 40 of the Central Excise Act, 1944, which prohibits suits or proceedings against the Central Government or its officers for acts done in good faith under the Act. It was argued that since the seizure was based on legal powers, no malafides could be attributed to the respondent, thus rejecting the petitioners' claim for interest under this provision.

Issue 5: Alternative remedies available to the petitioners
The court emphasized that the petitioners had alternative remedies to claim interest, either through an appeal before the Commissioner or by filing a civil suit. Citing legal precedents, the court highlighted that a writ petition solely seeking a refund of money is not ordinarily maintainable, and parties should resort to civil courts for such claims. The court dismissed the writ petition, stating that the claim for interest on delayed refund could not be maintained under the circumstances presented in the case.

In conclusion, the court dismissed the writ petition, citing legal principles and precedents that guided the decision. The petitioners were advised to pursue alternative remedies available to them for claiming interest on the seized cash and bank drafts.