Gujarat High Court
Hrmm Agro Overseas Pvt Ltd & vs Union Of India & 2 on 13 November, 2017
Author: Akil Kureshi
Bench: Akil Kureshi, A.Y. Kogje
C/SCA/7042/2016 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
SPECIAL CIVIL APPLICATION NO. 7042 of 2016
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HRMM AGRO OVERSEAS PVT LTD & 1....Petitioner(s)
Versus
UNION OF INDIA & 2....Respondent(s)
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Appearance:
MR PARESH M DAVE, ADVOCATE for the Petitioner(s) No. 1 - 2
NOTICE SERVED for the Respondent(s) No. 1
PRIYANK P LODHA, ADVOCATE for the Respondent(s) No. 2 - 3
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE A.Y. KOGJE
Date : 13/11/2017
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. The petitioners have prayed for a direction for release of sum of Rs.10 lakhs and the Bank Guarantees of Rs.10 lakhs each, totalling to Rs.20 lakhs given by the petitioners to the Department.
2. Facts in short are as under:-
2.1 The petitioners were in the process of exporting "Basmati" rice. The Department had dispute about the description of the goods and therefore, did not permit export. Eventually, the adjudicating authority by Page 1 of 6 HC-NIC Page 1 of 6 Created On Mon Nov 13 22:57:23 IST 2017 C/SCA/7042/2016 ORDER an order dated 25.05.2012, confiscated the goods, but offered redemption fine of Rs.10 lakhs and also imposed penalties of Rs.10 lakhs each on the company as well as on the Director. The petitioners challenged this order of the Commissioner before the Tribunal. In the meantime, the petitioners deposited the sums of Rs.10 lakhs of redemption fine and provided for Bank Guarantees of Rs.10 lakhs each to cover penalty component. The Tribunal by a judgment dated 19.02.2013, allowed the appeal and reversed the order of the adjudicating authority. As per this judgment of the Tribunal, there was no confiscation of goods and therefore, no redemption fine. Even penalties stood set aside.
2.2 The petitioners therefore wrote to the Department on 01.04.2013 and requested the Department to release the sum of Rs.10 lakhs of redemption fine deposited by the petitioners. Since there was no response to this request, the petitioners once again wrote to the Department on 12.10.2013 and thereafter, on 13.02.2016. The petitioners received no response to any of these letters, upon which the present petition came to be filed on or around 23.04.2016. Eventually, the Department refunded the sum of Rs.10 lakhs on 18.07.2016 pursuant to an Order in Original dated 15.07.2016, in which the authority though granted refund of the amount, Page 2 of 6 HC-NIC Page 2 of 6 Created On Mon Nov 13 22:57:23 IST 2017 C/SCA/7042/2016 ORDER did not provide for any interest thereon and released Bank Guarantees on 29.08.2016, after filing of the petition.
3. In view of the facts noted above, the main prayer of the petitioners for refund of sum of Rs.10 lakhs and releasing of the Bank Guarantees, no longer survives. Counsel for the petitioners, however, submitted that the Department had no reason to withhold the amount and releasing of the Bank Guarantees for indefinite period of time after the judgment of the Tribunal. He therefore, pressed for interest on both the sums.
4. On the other hand, learned Advocate Mr.Lodha for the Department opposed the petition contending that there is no provision contained in the Customs Act, 1962 for granting interest under such circumstances. Further, the Department had preferred appeals before the High Court against the judgment of the Tribunal. Some of the appeals are still pending. He relied on the decision of the Supreme Court in case of Union of India & Ors. Vs. E.Merck (India), reported in (1998) 9 SCC, 412, to contend that no interest be paid.
4. Facts are virtually undisputed. The petitioners deposited sum of Rs.10 lakhs by way of Page 3 of 6 HC-NIC Page 3 of 6 Created On Mon Nov 13 22:57:23 IST 2017 C/SCA/7042/2016 ORDER redemption fine pursuant to the order of the adjudicating authority and also offered Bank Guarantees to cover penalties. The Tribunal, having reversed the order of the adjudicating authority by its judgment dated 19.02.2013, the petitioners became entitled to refund of Rs.10 lakhs and release of Bank Guarantees. As per the settled law, it may be open for the Department to challenge the said judgment before the higher Court, but cannot avoid implementation of the Tribunal's order for an indefinite period without stay being granted by the Higher Court. In the present case, as on date, admittedly, no stay has been granted. Within a reasonable time after the judgment of the Tribunal, therefore, the Department was expected in law to implement the directions, which would result into refund of sum of Rs.10 lakhs deposited by the petitioners and releasing of Bank Guarantees. Though the petitioners reminded the Department on numerous occasions, this was not done for over three years. The Department must pay interest on the sum of Rs.10 lakhs deposited by the petitioners to the extent of delay in refunding the same. On the Bank Guarantees, we do not see any case for granting interest since the petitioners were not made to deposit the same with the Department.
5. Merely because the Customs Act, 1962 does not Page 4 of 6 HC-NIC Page 4 of 6 Created On Mon Nov 13 22:57:23 IST 2017 C/SCA/7042/2016 ORDER make any provision for granting interest under such eventuality, would not mean that the Court, in exercise of writ jurisdiction, cannot direct the Department to pay the same. When the facts are gross, to ensure refund of the amount years later without interest would be doing injustice. The judgment of the Supreme Court in case of E.Merck (India) supra, was rendered in entirely different fact situation. It was a case where the refund claim was covered under Section 11B of the Central Excise Act. Section 11B makes specific provision for grant of refund under the situations covered therein. The assessee had approached the High Court directly, which had granted refund with interest. The Supreme Court noticed that no foundation for such direction was led and no statutory provision was pointed out for granting refund with interest.
6. In the result, the petition is disposed of with a direction to the respondent to pay interest at the rate of 8% per annum upon completion of period of three months from the date of judgment of the Tribunal till actual payment of refund. There shall be no interest on the Bank Guarantee component. This exercise shall be carried out latest by 31.12.2017.
(AKIL KURESHI, J.) Page 5 of 6 HC-NIC Page 5 of 6 Created On Mon Nov 13 22:57:23 IST 2017 C/SCA/7042/2016 ORDER (A.Y. KOGJE, J.) SHITOLE Page 6 of 6 HC-NIC Page 6 of 6 Created On Mon Nov 13 22:57:23 IST 2017