Bombay High Court
Metal Distributors Ltd. And Another vs Union Of India And Others on 1 January, 1800
Equivalent citations: 1994(48)ECC114, 1984(18)ELT269(BOM)
JUDGMENT
1. The dispute in this petition filed under Article 226 of the Constitution of India lies in a very narrow compass andthe prayer made by the ppetitioners is for an amount of Rs. 9,65,297.22 towards the interest for wrongful retention of an amount of Rs. 77,52,145.72 by the respondents in the following circumstances :
2. During the period commencing from October 15, 1979 to May 7,1980, pursuant to the contracts entered into between foreign suppliers and the petitioners, the petitioners imported 764 Metric Tones of Alloy Steel Scrap. Upon importation of the goods, the petitioners filed in all 26 Bills of Entries with the Customs authorities for clearance of the goodss for home consumption. The goods were described on the Bills of Entries as "Alloy Steel Scrap" assessable to customs duty under Tariff Entry 73.03/05. The ppetitioners are liable to pay basic customs duty at the rate of 30% ad valorem, auxiliary duty at the rate of 5% and countervailing duty at the rate of 225/- per Metric Ton. The Costoms Department purported to classify the goods under Tariff Heading 73.15(1) and 73.15(2) and in some cases under Tariff Item 73.17/19(1) instead of 73.03/05. The petitioners were, therefore, required to pay total duty of Rs. 1,29,23,037.77. The Customs authorities also imposed a fine of Rs. 13,25,500/- upon the petitioners.
3. Between November 1981 and Junuary 1982, the petitioners filed 26 refund application before the respondents claiming refund of an amount of Rs. 1,03,73,203.17. The petitioners claimed that this amount was recovered as excess duty by the respondents without any authority of law and the petitioners are entitled for refund of the said amount along with the interest at the rate of 18% from the date of recovery till date of repayment. The petitioners also demanded the refund of fine of Rs. 13,25,500/-. The respondents granted 17 applications in respect of 17 Bills of Entries between the period January 5, 1983 and February 17, 1983. The total amount refunded was Rs. 77,52,145.72. The respondents did not intimate to the petitioners about their claim for interest on this refund amount. The respondents also did not pass any order in respect ofthe remaining refind application.
4. The petitioners were, therefore, compelled to file Writ Petition No. 622 of 1983 in this Court under Article 226 of the Constitution of India for refund of an amount of Rs. 26,35,853.84 along with interest at the rate of 18% plus the amount of Rs. 13,20,500/- which was recovered as fine from the petitioners. The petition was heard by Mr. Justice Bharucha on July 5, 1983 and the learned Judge allowed the petition and directed the respondents to refund the amount as claimed by the petitions. The learned Judge directed the respondents to rfund the amount along with interest all the rate of 12% for the period commencing from the date of filing of the refund application till the date of repayment. The learned Judge held that the respondents have unjustly and unwarrantly retained the petitioner's moneys. The learned Judge observed;
"it would be idle to ignore the fact that business concerns, such as the petitioners , operate upon advances from Banks and pay interest at rates exceeding 12%. Being deprived of the use of moneys due to them is bad enough : there seems to me no good reason to make them forego interest at a reasonable rate. This is a case where it is fit and proper that the respondents should be ordered to pay to the petitioners interest at the rate of 12% per annum."
The respondents preferred Appeal NO. 731 of 1983 to challenge the correctness of the judgment of the learned Single Judge but the appeal was summarily dismissed on October 5, 1983 in respect of 9 Bills of Entries and was admitted only in respect of remaining 7 Bills of Entries where a partial refund has been allowed. The application made on behalf of the respondents for leave to appeal to the Supreme Court was turned down.
5. The petitioners therefore addressed letter dated August 30, 1983, to the Collector of Customs pointing out the decision of the learned Single Judge and demanding interest at the rate of 12% on the amount of Rs. 77,52,145.72 which was refunded to the petitioners without the petitioners requiring to approach the Court. The petitioners filed written submissions and the Assistant Collector of Customs by letter dated October 13,1983 informed the petitioners that the claim of interest cannot be granted because the case does not fall strictly within the meaning of Section 27 of the Customs Act, 1962. The refusal of the respondents to grant interest has given rise to the filing of the present petition on November 10, 1983.
6. Shri Dhanuka, learned counsel appearing in support of the petition, submitted that the excess duty was recovered by the respondents without any authority whatsoever between June 1981 to August 1981 and therefore, applications were filed for refund between November 1981 to January 1982. The respondents refunded the amount of Rs. 77,52,145.72 almost one year thereafter i.e. between January 1983 and February 17, 1983. Shri Dhanuka submits that the entire consigment consisted of 764 Metric Tons and in respect of some of the Bills of Entries out of 26 filed by the petitioners, this Court has directed the respondents to refund the amount along with interest at the rate of 12% from the date of refund application till the date of repayment and there is no rational or logic why the same rule should not be applied in respect of the remaining refund applications. In my judgment, the submission is correct and deserves acceptance. As mentioned hereinabove, the learned Judge has pointed out that the petitioners operate by securing advances from the Banks and are required to pay interest at the rate in excess of12% per annum and there is no reason why the petitioners should not be awarded that rate of interest when the amount was wrongfully retained by the respondents.
7. Shri Dalal, learned counsel appearing on behalf of the Department, submitted that the amount was refunded to the petitioners without even requiring them to appear before the Department and that clearly establishes the bona fids of the Department. The submission has no merit because the amount was refunded without even hearing the petitioners beecause the recovery was entirely illegal and unsustainable. Shri Dalal was unable to assign any reasons even in such a case, for not granting refund for a period over one year. In case, the respondents realised that the recovery of duty was erroneous, then the refund application should have been granted forthwith and the Department need not have taken a period of one year to refund the amount. There is no excuse for retention of this amount and, therefore, there is no reason why the petitioners should not get this amount with interest. Shri Dalal relied upon paragraph 18 of the judgment of the Supreme Court in the case of M/s. D. Cawasji and Co., etc., etc., v. State of Mysore and another but it is difficult to appreciate for what purpose the reliance is placed on this part of the judgment. Shri Dalal suggested that the claim of interest was not granted by the Department to the petitioners while awarding refund of amount and, therefore, the petitioners should have made the claim in the earlier petition. I enquired from the learned counsel as to what prejudice is caused to the respondents by not making such a claim in the earlier petition, and the learned counsel has no answer. The refund amount was paid by the Department to the petitioners even before filing the petition any by now directing the respondents to pay the amount of interest on that refund amount from the date of refund application to the date of repayment would cause no prejudice whatsoever to the respondents on the ground that such a demand should have been made in the earlier petition.
8. Shri Dalal finally submitted that the claim for interest should not be entertainedd in a petition filed under Article 226 of the Constitution of India and, more so, when the action of the respondents in recovering the duty was not mala fide. The submission has no merit because in the earlier petition filed under Article 226 of the Constitution of India, interest was awarded in favour of the petitioners and the petitioners are merely requesting the Court to apply the same rule in respect of the refund amount paid earlier. In my judgment, it would not be open to decline this request in view of the earlier judgment. The petitioners, therefore, are entitled to the relief sought.
9. Accordingly, the rule is made absolute in terms of prayer (a) and the respondents are directed to pay the amount Rs. 9,65,297.22 as calculated by the petitioners and the calculation is set out at Ex. "C" to the petition. The respondents shall pay the amount within a period of four weeks from today. In the circumstances of the case, there will be no order as to costs.