2006 (12) TMI 7 - HC - Central Excise

Interest Alleged that delayed refund of amount deposited pending investigation Department claim interest of 15%on the premise delayed payment of duty Adjudicating authority granted interest and strictures against responsible officer

Summary

Issues Involved:
1. Quashing the impugned order dated 20-8-2002 by the Settlement Commissioner.
2. Refund of the balance amount of principal deposit along with interest.
3. Compliance with Circulars issued by the Ministry of Finance regarding refunds.
4. Initiation of disciplinary action against defaulting officers for delay in refund.

Issue-wise Detailed Analysis:

1. Quashing the Impugned Order:
The writ petition prayed for quashing the impugned order dated 20-8-2002 passed by the Settlement Commissioner, Principal Bench, New Delhi. The Settlement Commission had settled the case with the following terms:
- The correct duty liability of Rs. 32,63,032/- was appropriated from the deposit of Rs. 3 crores made during the investigation.
- Immunity was granted to the applicant for offences under the Customs Act, 1962, read with the IPC.
- Immunity from fine and penalty under the Customs Act, 1962.
- No interest was chargeable under Section 28AB of the Customs Act as the duty became payable before the insertion of the section.

2. Refund of the Balance Amount of Principal Deposit Along with Interest:
The respondents filed CM 13551/2006 seeking a direction for the petitioner to refund Rs. 2,67,36,968/- along with interest. The respondents had filed a refund application on 10-4-2003, which was followed up by letters, but the petitioner did not respond. The court noted the evasive conduct of the petitioners and highlighted that no stay had been granted, making the refund justifiable. The court directed the personal presence of the Commissioner of Customs for further proceedings.

3. Compliance with Circulars Issued by the Ministry of Finance Regarding Refunds:
The court referred to Circular No. 802-35-2004-CX., dated 8-12-2004, which mandated the return of pre-deposits within three months of the disposal of appeals in the assessee's favor. The court emphasized that delays beyond three months would be viewed adversely, and disciplinary action would be initiated against defaulting officers. The court noted that the refund application filed on 10-4-2003 had not been disposed of, and the petitioners had not filed a reply to the present application.

4. Initiation of Disciplinary Action Against Defaulting Officers for Delay in Refund:
The court expressed regret over the petitioner's inaction and highlighted that the refund should have been made within three months of the impugned order dated 20-8-2002. The court referred to several judicial pronouncements supporting the claim for interest on delayed refunds. The court directed the petitioner to comply with the circular dated 8-12-2004 and initiate disciplinary action against the concerned officers. The petitioner was ordered to pay costs of Rs. 25,000/- to the Prime Minister's Relief Fund and file a report on the action taken against the delinquent officers.

Conclusion:
The court allowed CM 13551/2006, directing compliance with the circular regarding refunds, initiation of disciplinary action against defaulting officers, and payment of costs. The court emphasized the importance of adhering to statutory and judicial mandates for timely refunds and the consequences of non-compliance.