2020 (2) TMI 1169 - HC - Customs

Demand of interest on the sale proceeds of the auction conducted - respondents submits that the petitioner has no locus standi to file the present Writ Petition under Section 226 of the Constitution of India - HELD THAT - The petitioner became entitled to the amount finally pursuant to the direction of the Tribunal. Section 150 of the Customs Act, 1962 provides a procedure for sale of imported goods and application of sale proceeds thereof - the Section prescribes on the manner in which the proceeds of the sale of the confiscated goods has to be appropriated and adjusted. After adjustment of the proceeds, balance if any, has to be paid back to the owner of the goods. Since there was delay in paying the amount to the owner. Section 150 of the Customs Act, 1962 was amended and the above proviso was inserted vide Section 52 of the Finance Act, 2011 with effect from 08.04.2011. In the present case, imports were made during the month of April 1998. The importer apparently abandoned the goods. Under these circumstances, the petitioner sent repeated representations to the respondents to permit the petitioner to either take back the goods to Hong Kong or to sell the goods to any other buyer in India in accordance with the provisions of the EXIM Policy as in force at the relevant point of time - However, that was not allowed. The Tribunal by its order dated 27.7.1999 remanded the case back to the 1st respondent to consider the issue afresh as the respondents had already auctioned the imported goods. Instead of refunding the balance amount after due adjustment and appropriation the respondents have dragged on the proceedings for over a period of two decades. Therefore, the question is whether the petitioner should now be relegated to work out his remedy in a civil court as was submitted by the learned counsel for the respondents or whether the court can award interest to the petitioner and if so at what rate? - The necessity for filing a suit under Section 9 of the Civil Procedure Code would arise only where there are disputed questions of fact that needs to be established after trial. Such exercise would result in waste of time. The department will also have to be spare its official to appear in Court - there is no point in relegating the petitioner to approach a civil Court for getting interest on such delayed payment and deny the relief. As there are no disputes in the facts and circumstances of the present case I am inclined to take up the case and pass order. The denial of benefit of the notification to the appellant was unfair. There can be no doubt that the authorities functioning under the Act must, as are in duty bound, to protect the interest of the Revenue by levying and collecting the duty in accordance with law - no less and also no more. It is no part of their duty to deprive an assessee of the benefit available to him in law with a view to augment the quantum of duty for the benefit of the Revenue. They must act reasonably and fairly. The 2nd respondent is therefore directed to calculate the interest at the varying rate of interest that was notified and in force for the purpose of refund Section 27H of the Customs Act and determine the interest payable to the petitioner on the delayed payment of ₹ 10.72,624/- calculated at the expiry of six months from the date of sale of the imported goods. The 2nd respondent shall calculate the aforesaid amount within a period of three months from the date of receipt of copy of this order.

Summary

Issues:
1. Entitlement to interest on sale proceeds of auction.
2. Locus standi to file Writ Petition under Section 226 of the Constitution of India.
3. Claiming interest on belated payment not being a duty under Section 27 of the Customs Act, 1962.
4. Application of Section 150 of the Customs Act, 1962 in appropriating sale proceeds.
5. Delay in refunding balance amount to the petitioner.
6. Relegation to file a civil suit for interest on delayed payment.
7. Awarding interest to the petitioner for delay in payment.
8. Calculation and payment of interest by the 2nd respondent.

Analysis:
1. The petitioner sought direction for interest on sale proceeds of auctions conducted in 1998, as directed by the Customs Excise Service Tax Appellate Tribunal. The Tribunal's order specified the amount due to the petitioner and directed payment within a week, identifying the claimant in accordance with law.

2. The respondents contested the petitioner's locus standi under Section 226 of the Constitution of India, suggesting the option of filing a civil suit for interest recovery. The respondents argued that the refunded amount was not a duty under Section 27 of the Customs Act, 1962, hence negating the basis for claiming interest.

3. The application of Section 150 of the Customs Act, 1962 was crucial in appropriating the sale proceeds, with the balance to be refunded to the owner after due adjustments. The delay in refunding the balance amount led to the amendment of Section 150 in 2011, allowing for payment to the Central Government if the balance couldn't be paid to the owner within a specified period.

4. Despite the petitioner's efforts to recover the balance amount through representations and legal proceedings, delays persisted. The Court questioned whether the petitioner should be directed to pursue a civil suit or if interest could be awarded for the delay, considering the absence of disputed facts.

5. Emphasizing fairness and the duty to protect the interests of legitimate claimants under the Customs Act, the Court referenced relevant Supreme Court decisions. The Court highlighted the respondents' failure to act fairly, leading to prolonged litigation for the petitioner.

6. The Court, inclined to award interest to the petitioner for the delay, justified the compensation as rightful restitution that the petitioner would have earned if the payment had been timely. The interest payment was deemed necessary to make up for the lost opportunity of utilizing the withheld amount.

7. Noting that the withheld amount was not a duty, the Court ordered the payment of interest based on the rate prescribed under notification issued under Section 27A of the Customs Act, 1962. The 2nd respondent was directed to calculate and determine the interest payable to the petitioner within a specified timeframe.

8. The judgment concluded by directing the 2nd respondent to calculate the interest at the applicable rate for the delayed payment and ensure the payment to the petitioner promptly. The writ petition was disposed of with the above observations, without imposing any costs on either party.