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TMI Blog2010 (6) TMI 814X X X X Extracts X X X X X X X X Extracts X X X X ..... of $18 millions. On 26th September 2001, the respondent seized the rig and directed the petitioner to deposit ₹ 10 crores in cash and give a bond for ₹ 50 crores pending investigation. 3. On 3rd October 2001, the petitioner filed Writ Petition No.2023 of 2001 before this Court impugning the aforestated directions of the Customs. However, this Court refused to interfere with the seizure memo and extended the time to deposit by four weeks. On 31st October 2001, the petitioner deposited ₹ 10 crores and gave a bond of ₹ 50 crores pending investigation. 4. On 8th January 2002, the respondent issued a show cause notice to the petitioner. On 25th June 2002, the Commissioner of Customs passed an order confiscating the rig and demanding differential duty of ₹ 29,45,19,056/together with interest @ 24% and imposed penalty of ₹ 29,45,19,056/. The Commissioner, however, rejected the respondent s claim for certain value additions. 5. Being aggrieved by the Commissioner s order the petitioner and the respondent filed Appeals before the Central Excise and Sales tax Appellate Tribunal (CESTAT), Mumbai. By a common order and judgment dated 30th June 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e respondent and again requested for the cancellation of the bond and return of ₹ 10 crores along with interest. The petitioner by their letter dated 20th May 2005 addressed to the respondent inter alia recorded that the documents showing the deposits of ₹ 10 crores are already with the respondent on their record and once again enclosed the same.Three months after the order dated 14th February 2005, passed by the Hon ble Supreme Court, dismissing the Appeal filed by the respondent against the order of CESTAT dated 30th June 2003, the respondent by its letter dated 17th May 2005 addressed to the petitioner, for the first time sought to be satisfied regarding unjust enrichment. 9. In the meantime, in April 2005, the petitioner filed a Miscellaneous Application under section 144 of CPC read with rule 41 of the Customs, Excise And Gold Control Appellate Tribunal (Procedures) Rules, 1982 before the CESTAT Mumbai seeking refund of ₹ 10 crores together with interest. At the request of the respondent, the said Application was adjourned from time to time and finally fixed for hearing on 5th September 2005. The Tribunal, by its order dated 5th September 2005, allowed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... seeking directions against the respondent to refund the said amount of ₹ 10 crores alongwith interest. However, this Court directed the petitioner to file a substantive petition. In view thereof, the present petition is filed in September, 2006. 16. During the pendency of this Writ Petition i.e. on 13th October 2006, the respondent returned the security deposit of ₹ 10 crores to the petitioner without interest. The Writ Petition is therefore now confined only to the payment of interest by the respondent to the petitioner on the said security deposit of ₹ 10 crores. Submissions : 17. It is submitted on behalf of the petitioner that the present Writ Petition was filed for the purpose of both, the refund of principal amount of ₹ 10 crores as also interest thereon. It is clear from the list of dates and events that the respondent malafide and deliberately refused to give refund together with interest, even though they had lost before every single forum. It was only after filing the present Writ Petition and during its pendency, that the respondent refunded the principal amount of ₹ 10 crores. However, the respondent has wrongly and illegally not p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation whatsoever in not refunding the amount of ₹ 10 crores with interest after the order of the Commissioner was set aside by the Tribunal on 30th June 2003 and no stay was obtained from the Hon ble Supreme Court for more than a year. In any event, there was no justification in not making payment of the amount together with interest after the Supreme Court dismissed the Appeal filed by the respondent on 14th February 2005. The action of the Assistant Commissioner in not returning the amount of ₹ 10 crores together with interest is contrary to the direction and order of the Tribunal dated 5th September 2005. It is also contrary to the specific direction given by this Court vide its interim order dated 22nd December 2005, that if the appeal filed by the department against the order of the Tribunal dated 5th September 2005 is dismissed, the amount of ₹ 10 crores would be returned together with interest. The action on the part of the respondent is therefore totally contemptuous, malafide, discriminatory and illegal. The order of the Assistant Commissioner is contrary to the rule of law and in clear disregard to the aforesaid orders. Since the respondent had no defen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the proceedings by way of Writ Petition under Article 226 of the Constitution of India would not be maintainable in the present case. However Mr. Jetly has submitted that interest as claimed by the petitioner is not payable to them by the respondent under Section 27A of the Customs Act, 1962 since the proceedings on the issue as to whether the petitioner has passed on their liability of the said sum of ₹ 10 crores to ONGC (unjust enrichment) were pending and the issue was disposed of in favour of the petitioner by an order of the Tribunal on 10th April 2006. He has submitted that under the circumstances as set out in the affidavit filed on behalf of the respondent dated 12th February, 2007, the respondent is willing to pay interest to the petitioner on the said sum of ₹ 10 crores @ 6% pa from 10th April 2006 when the CESTAT finally decided the issue of unjust enrichment in favour of the petitioner. Conclusion: 25. In view of the aforesaid, the only issue which we are required to determine is the date from which the petitioner is entitled to receive interest on the said deposit of ₹ 10 crores. According to the petitioner, they are entitled to receive interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner or Customs] under the foregoing provisions of this subsection shall, instead of being credited to the Fund, be paid to the applicant, if such amount is relatable to( a) the duty and interest, if any, paid on such duty paid by the importer or the exporter, as the case may be, if he had not passed on the incidence of such duty and interest, if any, paid on such duty to any other person; ............................ ............................ 27A. Interest on delayed refunds.If any duty ordered to be refunded under subsection (2) of section 27 to an applicant is not refunded within three months from the date of receipt of application under subsection (1) of that section, there shall be paid to that applicant interest at such rate, not bellow five percent. and not exceeding thirty per cent. per annum as is for the time being fixed by the Central Government, by notification in the Official Gazette, on such duty from the date immediately after the expiry of three months from the date of receipt of such application till the date of refund of such duty: 27. Section 27 of the Customs Act 1962 therefore entitles any person to claim refund of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... incidence of such duty and interest has not been passed on by the applicant to any person. However, in such a case the amount of refund shall be deposited to the Consumer Welfare Fund and not handed over to the Applicant. The same is required to be handed over to the Applicant only after he shows that he has not transferred the incidence of such duty and interest to any other person. 29. Section 27A of the Customs Act, 1962 provides for interest on delayed refunds. Though as stated above in subsection (2) of Section 27, no time limit is prescribed for an Assistant or Deputy Commissioner of Customs to pass an order after receiving an Application seeking refund under Section 27 and though the opening part of Section 27A reads: If any duty ordered to be refunded under subsection (2) of section 27 to an applicant is not refunded within three months..... gives an impression that interest on delayed refunds is required to be paid only if an order of refund is passed under subsection (2) of Section 27, such interpretation would not be correct since the said section does not further provide that interest shall be paid to the Applicant after three months from the date of the refund order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal by the Department is reduced to ₹ 10,000/interest would be payable for the aforesaid period only on the amount of ₹ 10,000/. (b) the interest will be paid at the rate fixed by the Board as simple interest. Interest on interest is not payable. (c) no interest is to be paid on any refunds of fines or penalties; the provision has been made for payment of interest only on delayed refund of duty amounts. (d) it is to be clearly noted that interest if any would be payable on the amount of duty to be refunded arising only from proceedings initiated under section 27 i.e. where an application for refund has been filed. (Source :Customs Act by S.R. Roy VoI 1999 Edition pages 189 to 190) Similar view is taken by the Division Bench of the Gujarat High Court in Afrique Tradelinks Pvt. Ltd.Vs. Union of India (2002) 2 GLR 667. 30. In the case at hand, the amount of ₹ 10 crores was deposited by the petitioner with the respondent on 31st October 2001 pending investigation. On 25th June, 2002, the Commissioner of Customs passed an order inter alia demanding differential duty of ₹ 29,45,19,056/together with interest @ 24% and imposed penalty of & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount of ₹ 10 crores to the petitioner, thereby depriving them of their right to make use of their funds. 32. As held by the Division Bench of this Court in Swaraj Mazda Ltd. Vs. Union of India 2009 (235) E.L.T.788 to which one of us (V.C.Daga, J.) is a party, in the absence of any finding within a period of three months from the receipt of an Application seeking refund under Section 11B of the Central Excise Act, 1944, that the said Application is incomplete and cannot be termed as an Application under Section 11B of the Central Excise Act, 1944, (Section 27 of the Customs Act, 1962 in the present case), the liability to pay interest to the petitioner after expiry of a period of three months from the date of receipt of the Application dated 9th July, 2003 cannot be denied by the respondent. It will not be out of place to mention that an SLP which was preferred by the Revenue from the above judgment was dismissed by the Hon ble Supreme Court by its order dated 22nd March, 2010. 33. Even after the Hon ble Supreme Court, by its order dated 14th February, 2005, dismissed the Appeal filed by the respondent challenging the Order dated 30th June, 2003 passed by CESTAT, the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner s Application dated 9th July, 2003. The respondent not only failed to respond to the Application filed by the petitioner within three months of receiving the same, but also neglected to refund to the petitioner the amount of ₹ 10 crores on one pretext or the other and thereby deprived the petitioner the legitimate use of their funds. The aforestated conduct of the respondent cannot be overlooked since by doing so the purpose of introducing Section 27A to the Customs Act, 1962 and issuance of circulars from time to time to enable the assessees to get their refunds on time and thereby discourage the respondent from delaying grant of refunds to the assessees would certainly be defeated. Under the circumstances, we pass the following order: ORDER The respondent shall pay to the petitioner interest @ 6 % p.a. on the sum of ₹ 10 crores from 9th October, 2003 to 12th October, 2006 on or before 15th August, 2010, failing which the respondents shall be liable to pay interest @ 10% p.a. w.e.f. 16th August, 2010 till payment in full and final. Rule is accordingly made absolute in terms of the above order with costs quantified in the sum of ₹ 10,000/. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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