2024 (2) TMI 1146 - HC - Customs

Seeking refund the pre-deposit along with applicable interest - recovery of cash and seizure of goods of foreign origin - contravention of EXIM Policy - seized u/s 110 - seized goods released provisionally upon furnishing a bond and a bank guarantee - confiscation - penalty imposed - whether the petitioner is entitled to the claim of interest on the entire amount deposited by him as redemption fine and penalty ? - HELD THAT - Admittedly, the redemption money and penalty was paid before filing the appeal by getting the bank guarantee encashed vide letter. Admittedly, the Tribunal has set aside the Order-in-Original and granted the consequential benefits to the petitioner. Revenue cannot be permitted to enrich itself at the cost of the petitioner. It may have earned the interest on the redemption and the penalty amount deposited by the petitioner, which amount was ultimately found to be refundable. Relying upon the decision of the Supreme Court, the Division Bench of the High Court in R.H.L. Profiles Ltd. Vs. Commr. Of Cus., Ex. And Service Tax 2017 (4) TMI 1252 - ALLAHABAD HIGH COURT , held that on the amount which was illegally confiscated by the Revenue and ultimately refunded, the assessee-appellant is entitled to interest and the department is under obligation to pay the same. Revenue has retained the redemption money and the penalty amount without any right and therefore in view of the decision of the Hon ble Supreme Court in the case of Tata Chemicals Limited 2014 (3) TMI 610 - SUPREME COURT , we are of the view that respondent is under obligation to grant interest to the petitioner on the whole amount (redemption charges and penalty) and not just on the pre-deposit amount, which was the statutory requirement under Section 129E of the Customs Act, 1962. We accordingly quash the impugned Corrigendum dated 10.02.2023 issued by Assistant Commissioner (Refund) and direct the respondent to refund to the petitioner along with interest at the rate of 6% per annum from the date of the deposit till the date of refund. Respondent is directed to process the refund within two weeks. Petition is disposed of along with pending application.

Summary

Issues Involved:
1. Refund of pre-deposit amount of Rs. 9,30,000/- along with applicable interest.
2. Refund of seized cash amount of Rs. 14,10,990/- along with applicable interest.
3. Quashing of the impugned Corrigendum dated 10.04.2023.
4. Directions to disburse interest amounting to Rs. 7,41,146/- as originally sanctioned.

Summary:

Refund of Pre-Deposit Amount:
The petitioner sought a refund of the pre-deposit amount of Rs. 9,30,000/- along with applicable interest as per CBIC Circular No. 984/08/2014-CX dated 16.09.2014. The Customs Excise & Service Tax Appellate Tribunal (CESTAT) set aside the earlier order and granted consequential benefits, including the refund. The Assistant Commissioner (Refund) initially sanctioned a refund of Rs. 16,71,146/- but later issued a Corrigendum reducing the interest amount, which the petitioner contested.

Refund of Seized Cash:
The petitioner also sought a refund of the seized cash amounting to Rs. 14,10,990/- along with interest. The respondent argued that the seized cash was never deposited with the Government Exchequer and was thus not in the nature of duty, making it ineligible for interest under Sections 27-A and 129-EE of the Customs Act.

Quashing of Corrigendum:
The petitioner challenged the Corrigendum dated 10.04.2023, which reduced the interest amount on the pre-deposit. The court found that the petitioner was not entitled to interest on the entire amount of Rs. 9,30,000/- under Section 129-EE or the CBIC Circular but was entitled to interest on the amount deposited for filing the appeal.

Directions for Interest Disbursement:
The court quashed the impugned Corrigendum and directed the respondent to refund Rs. 9,30,000/- along with interest at the rate of 6% per annum from the date of deposit till the date of refund. The court emphasized that the Revenue could not enrich itself at the petitioner's expense and cited the Supreme Court's decision in Tata Chemicals Limited, which held that interest follows as a matter of course when money is retained without right.

Conclusion:
The court ordered the respondent to process the refund within two weeks and disposed of the petition along with the pending application.