Bombay High Court
Union Of India vs Metal Distributors Ltd. on 18 March, 1992
Equivalent citations: 1993ECR343(BOMBAY), 1992(60)ELT196(BOM)
Author: Sujata Manohar
Bench: Sujata V. Manohar
JUDGMENT Mrs. Sujata Manohar, J.
1. This is an appeal by the Union of India, the Collector of Customs and Others against a judgment of the learned Single Judge dated 14th September, 1984 under which he has directed the appellants to pay to the respondents a sum of Rs. 9,65,297.22 being interest at the rate of 12% per annum on the sum of Rs. 77,52,145.72 which was an amount withhold by the appellants without the authority of law. The writ petition was filed only for recovery of interest on the said amount of Rs. 77,52,145.72.
2. The respondents during the period commencing from 15th October, 1979 to 7th May, 1980 imported 764 MTs. of Alloy Steel Scrap pursuant to various contracts which were entered into between the respondents and the foreign suppliers. In respect of Alloy Steel Scrap so imported the appellants filed 26 bills of entry for clearance of these goods for home consumption. According to the appellants the goods imported by them were covered by Tariff Entry No. 73.03/05 and they were liable to pay basic Customs Duty at the rate of 30% + 5% auxiliary duty and Rs. 225/- per M.T. as countervailing duty. The appellants, however, purported to classify the goods under Tariff Entry No. 73.15 and/or 73.17/19 and called upon the respondents to pay basic customs duty at the rate of 220% + 5% auxiliary duty plus a countervailing duty at the rate of Rs. 325/- per M.T. As a result the respondents were required to pay a total amount of Rs. 1,29,23,037.77. The appellants also imposed a fine of Rs. 13,20,500/-.
3. Between November, 1981 and January, 1982 the respondents filed 26 refund applications claiming a total refund of Rs. 1,03,73,203.17. The respondents contended that this was excess duty recovered without any authority of law. They also claimed a refund of this amount with interest at the rate of 18% per annum from the date of payment till repayment. They also claimed a refund of the fine of Rs. 13,20,500/-.
4. Between 5th January, 1983 and 17th February, 1983 the appellants granted to the respondents a refund of Rs. 77,52,145.72 in respect of 17 applications pertaining to 17 bills of entry.
5. The respondents filed a Writ Petition No. 622 of 1982 in this court for refund of the balance amount of Rs. 26,35,853.14 with interest at the rate of 18% as also for the refund of the fine of Rs. 13,20,500/-. The learned Single Judge of this court by his judgment and order dated 5th/6th July, 1983 allowed the writ petition and directed the appellants to refund the said amount with interest at the rate of 12% per annum for the period commencing from the date of filing of the refund application till the date of repayment. In appeal a Division Bench of this court granted to the present respondents interest at the rate of 12% per annum from the date of payment till the date of recovery. [Metal Distributors Ltd. v. Union of India, 1988 (33) E.L.T. 321]. The Division Bench has observed that the duty which was recovered was without authority of law and in the face of the conduct of the department in not refunding what was due to the importer, it cannot be appreciated why the importer should be deprived of the interest from the date of payment till the date of filing of the refund applications. The Division Bench also said that it was the discretion of the trial judge to decide as to what should be the rate of interest and for the reasons set out therein the Division Bench decided not to interfere with the discretion exercised by the learned Single Judge in granting interest at the rate of 12% per annum.
6. The present Writ Petition No. 2547 of 1983 has been filed thereafter for recovery of interest at the rate of 18% on the amount of Rs. 77,52,145.72 which was refunded by the appellants to the respondents between 5th January, 1983 and 17th February, 1983. By the impugned order the learned Single Judge has granted interest on this amount at the rate of 12% per annum from the date of payment till recovery.
7. The appellants submit that they have voluntarily refunded this amount to the respondents and hence no interest should be order to be paid on this amount. It was also submitted by the appellants that a claim only for interest should not be entertained under Article 226 of the Constitution.
8. It is quite clear that the appellants had recovered the sum of Rs. 77,52,145.72 without the authority of law and realising this, they have themselves refunded this amount to the respondents. There can be no dispute, therefore, that the amount of Rs. 77,52,145.72 was recovered and retained by the appellants for a period of about 1 1/2 years without the authority of law. In a given case, whether an aggrieved party requires to be compensated, not merely by repayment of the amount so withheld, but also by payment of interest is a matter of discretion for the court. Even when interest is awarded, the rate of interest will also be a matter of discretion for the court. Undoubtedly the discretion will have to be exercised looking to all the circumstances of a given case.
9. In the present case, the amount involved is a large amount of Rs. 77,52,145.72. It is an accepted position that this amount was recovered without the authority of law. The lone redeeming feature in the present case is that the appellants have granted refund on the refund applications without the respondents being required to come to Court for that purpose, as they were required to do in the case of the balance amount. As against this, the fact remains that the respondents were deprived of the use of this amount for a period of 1 1/2 years. In the case of the balance amount, the Division Bench of this court granted interest at the rate of 12% per annum. The same rate of interest has been granted by the learned Single Judge in the present case. We do not, therefore, think that it would be proper for us to interfere with the exercise of discretion by the learned Single Judge as well as by the previous Division Bench in granting interest at the rate of 12% per annum.
10. It was submitted by Mr. Lokur that there is no provision under the Customs Act, 1962 for interest being paid in such circumstances. The present petition, however, is under Article 226 of the Constitution for the purpose of securing compensation for retention of the amount without the authority of law.
11. It was pointed out by Mr. Mehta, learned counsel for the respondents, that even such a claim for interest can form the subject matter of a petition under Article 226. He drew support for his argument by pointing out the provisions of Sections 3 and 4 of the Interest Act, which also contemplate a claim being made only for interest even though the principal amount may have been received by the claimant. He also pointed out the provisions of Section 4 under which in circumstances specified in that Section the court can allow reasonable interest although no rate of interest may have been agreed upon between the parties or may have been provided by statute. Of course, these sections have no application here. They are relied upon merely as illustrations of cases where only a claim for interest can be made. In the present case, interest is claimed to put a party whose money is retained without the authority of law, in the same position he would have occupied, had his money not been so retained. A court while exercising discretionary powers under Article 226 would, in a given case, be entitled to award interest if this is necessary in order to bring about an equitable result.
12. In the present case, however, as we have set out earlier, the appellants themselves granted refund of the amount in question. In our view, a reasonable time should be allowed in such circumstances to the appellants to examine the clam and decided whether refund should be granted to the respondents or not. In our view four months' time would be a reasonable period for this purpose. Retention of the amount beyond four months, however, invites some compensation to the party deprived. We, therefore, modify the order passed by the learned Single Judge as follows :
13. In respect of each of the payments which constitutes the subject matter of the total refund of Rs. 77,52,145.72, no interest shall be paid for a period of 4 months from the date of payment of the amount concerned by the appellants. That amount will bear interest at the rate of 12% per annum thereafter until the date of repayment. With this modification the appeal is dismissed.
14. No order as to costs.