Calcutta High Court
Rajendra Kumar Jain vs Commissioner Of Customs (Port) Kolkata ... on 9 May, 2024
Author: Rajarshi Bharadwaj
Bench: Rajarshi Bharadwaj
A.F.R.
ORDER OD - 12
IN THE HIGH COURT AT CALCUTTA
SPECIAL JURISDICTION (CUSTOMS)
ORIGINAL SIDE
CUSTA/3/2012
RAJENDRA KUMAR JAIN
VS
COMMISSIONER OF CUSTOMS (PORT) KOLKATA & ANR.
BEFORE :
THE HON'BLE JUSTICE SURYA PRAKASH KESARWANI
AND
THE HON'BLE JUSTICE RAJARSHI BHARADWAJ
Date : 9th May 2024.
Appearance:
Mr. Sudhir Mehta, Advocate
Mr. Anurag Bagaria, Advocate
... for the appellant.
Mr. K. K. Maiti, Advocate
... for the respondents.
1. Heard Sri Sudhir Mehta, learned counsel for the appellant and Sri K. K.
Maiti, learned senior standing counsel, assisted by Sri Abhradip Maity,
learned junior standing counsel for the respondents.
2. This appeal was admitted by this Court by order dated 14.06.2012, on
the following substantial question of law:-
2
"Whether the Learned Tribunal is justified in law in not allowing the
interest at the rate of 12 per cent per annum on the refund amount of
pre-deposit?"
Facts
3. Briefly stated, facts of the present case are that on 20 th August 1998, a
sum of Rs.9,93,200/- was seized by the Director of Revenue Intelligence
on the ground that it was liable to confiscation being sale proceeds of
the goods which was liable for confiscation. By order dated 30.11.2018,
the Adjudicating Authority held that the seized cash is not liable for
confiscation but it imposed penalty of Rs.65 lakh upon the appellant
and the aforesaid sum of Rs.9,93,200/- was sought to be appropriated
against the penalty. The appellant preferred an appeal before the
Customs, Excise and Service Tax Appellate Tribunal [for short,
'CESTAT'], in which, by order dated 22nd April 2000, the Tribunal
directed that the aforesaid sum of Rs.9,93,200/- shall be treated as pre-
deposit under Section 129E of the Customs Act, 1962. By order dated
17.12.2002, the Tribunal allowed the appeal of the appellant and set
aside the order of confiscation and penalty. Thus, a sum of
Rs.9,93,200/- held by the respondents as pre-deposit under Section
129E of the Customs Act, 1962 became refundable. Since the amount
was not being refunded by the respondents, therefore, the appellant
filed a writ petition No.1601 of 2005, which was disposed of by order
dated 05.09.2005 directing the respondents to consider the appellant's
claim for refund within three weeks. On 01.12.2005, the Commissioner
of Customs directed refund of Rs.9,93,200/- along with applicable rate
of interest. On 05.01.2006, the Assistant Commissioner of Customs
passed an order for refund of Rs.9,93,200/- and interest @ 6% per
annum amounting to Rs.1,74,803/-. Since the interest was granted @
6% per annum, therefore, the appellant became aggrieved with the
order of the Assistant Commissioner. Consequently, he filed an appeal
before the Commissioner (Appeal) on 21.02.2006, which was dismissed
by the Commissioner (Appeal) by order dated 29.06.2006. Aggrieved,
the appellant filed an appeal before the CESTAT on 19.07.2006, which
was dismissed by the CESTAT by the impugned order dated
24.01.2012. Aggrieved with the order of the CESTAT, the appellant
herein has filed the present appeal on 14.06.2012, which has been
admitted on the afore-quoted substantial question of law.
Submissions
4. Learned counsel for the appellant submits that there was no provision
under the Act providing for rate of interest on refund of pre-deposit.
Earlier, the respondents were not granting refund, but it was pursuant
to the judgment of Hon'ble Supreme Court in Commissioner of Central
Excise, Hyderabad v. ITC Limited 2005 (179) ELT 15 (SC) that the
Central Board of Excise and Customs issued a circular bearing
No.802/35/2004-CX dated 08.12.2004 allowing payment of interest on
delayed refund of the amount of principal deposit. No rate of interest
was provided under the aforesaid circular for delay in refund of pre-
deposit beyond the period of three months. In the aforesaid case of ITC
Limited (supra), Hon'ble Supreme Court granted interest on refund @
12%. In similar circumstances, a coordinate Bench of this Court in
Madura Coats Private Limited v. Commissioner of Central Excise,
Kolkata - IV 2012 (285) ELT 188 (Cal.) has also granted interest @ 12%
per annum on delayed refund of pre-deposit. He further submits that
the amendment in Section 35FF was introduced with effect from May
10, 2008 by Section 85 of the Finance Act, 2008 (18 of 2008) providing
applicability of rate of interest as governed under Section 11BB of the
Central Excise Act. Since in the present matter of delayed refund of
pre-deposit, entire events took place prior to May 2008, therefore, the
appellant is entitled for interest at the rates provided by the coordinate
Bench of this Court in Madura Coats Private Limited (supra) and by
Hon'ble Supreme Court in ITC Limited (supra).
5. Learned counsel for the respondents submits that the aforesaid amount
of Rs.9,93,200/- was not a pre-deposit but it was made pre-deposit by
order of the Tribunal in appeal. Therefore, the appellant is not entitled
for interest @ 12%. He, however, admits that right from the date when
the aforesaid amount was made by the CESTAT as pre-deposit, till the
date of refund on 05.01.2006, there was neither any provision in the
Act nor in any notification providing for rate of interest on the delayed
refund of pre-deposit and it was only pursuant to the order of Hon'ble
Supreme Court and consequential circular issued by the Board that
interest on refund of pre-deposit was being made.
Discussion and Finding
6. We have carefully considered the submissions of learned counsel for the
parties and perused the paper book.
7. The dates, events and facts as afore-noted have not been disputed by
learned counsel for the respondents before us. Thus, it remains
undisputed that the seized cash of Rs.9,93,200/- was made pre-deposit
by order of the CESTAT dated 22.04.2000 under Section 129E of the
Customs Act, 1962. Admittedly, neither there was any provision nor
any notification providing for rate of interest on delayed refund of pre-
deposit. The pre-deposit made on 22.04.2000 was refunded to the
appellant on 05.01.2006. It is pursuant to the judgment of Hon'ble
Supreme Court in ITC Limited (Supra) that the Central Board of Excise
and Customs issued the aforesaid circular dated 08.12.2004 allowing
payment of interest on delayed refund, but this circular also does not
provide rate of interest. Hon'ble Supreme Court in the case of ITC
Limited (Supra), pursuant to which the aforesaid circular was issued by
CBEC, directed for payment of interest @ 12% on delayed refund of pre-
deposit under Section 35F of the Central Excise Act, 1944, which is pari
materia with the provision of Section 129E of the Customs Act.
8. In similar circumstances, a co-ordinate Bench of this Court in Madura
Coats Private Limited v. Commissioner of Central Excise, Kolkata - IV
2012 (285) ELT 188 (Cal.) directed interest @ 12% on delayed refund of
pre-deposit, holding as under:-
"14. We have heard learned counsel for the parties. The petitioner
has moved this Court for clarification and/or modification of the
order limited to specifying the rate of interest which the petitioner
would be entitled to claim on the delayed refund of the pre-deposit
amount of Rs.14.98 crore.
15. While disposing of the appeal this Court held:
"After hearing the learned counsel for the parties and after
going through the materials on record, we find that in this case,
the Hon'ble Supreme Court decided the matter finally on February
24, 2005 and thus, in view of the decision of the Supreme Court in
the case of Commissioner of Central Excise v. ITC Limited,
reported in 2005 (179) ELT. 15, interest was payable for the
period commencing from three months after the final disposal of
the matter till the date of refund and thus, in this case interest
was payable from May 25, 2005. It appears that the Central
Board of Excise and Customs, pursuant to the aforesaid decision
of the Supreme Court, has already issued a Circular Bearing No.
802/35/2004-CX., dated December
16. Therefore, while setting aside the order of the Tribunal below
the Court directed the respondent to pay interest to the appellant in
terms of the circular dated December 8, 2004 on the pre-deposit for
the delayed refund within two weeks.
17. It has been pointed out to us that though the Court had directed
the respondent to pay interest to the appellant in terms of the
aforesaid circular, the petitioner has approached the Assistant
Commissioner who found that the petitionere is entitled to interest @
6% per annum and not 12% per annum as awarded in the judgment
of the Supreme Court in the case of Commissioner of Central Excise
v. ITC Limited (supra) which has been held to be applicable to the
petitioner's case.
18. We have no hesitation to come to the conclusion that the
Revenue is trying to take advantage of the fact that this Court while
referring to the circular that did not mention the rate at which
interest was to be paid to the petitioner considering the period for
which interest was payable by the Revenue to the petitioner i.e. from
May 25, 2005 upto October 11, 2007 i.e. for about 870 days.
19. The decision of the Supreme Court in the case of Commissioner
of Central Excise v. ITC Limited (supra) as regards refund of amount
deposited under Section 35F was governing the field as the Supreme
Court has upheld the direction for payment of interest and quantified
it to be @ 12% per annum. The issue before the supreme Court was
whether the pre-deposit made as a pre-condition for the hearing of
the appeal under the Central Excise Act, 1944 was, on the assessee
being ultimately successful, refundable to the assessee with interest
as there was no provision in the Central Excise Act for payment of
interest on such refund. It is in the course of hearing before the
Supreme Court that the Learned Solicitor General after taking
instructions made a statement that the Central Board of Excise and
Customs proposes to issue a circular in connection with the payment
of interest on all such pre-deposits. At the time a draft copy of the
proposed circular was handed over to the Supreme Court there was
no rate of interest specified in the proposal and, therefore, the
Supreme Court awarded interest @ 12% per annum. Therefore,
when this Court directed the respondent to pay interest to the
appellant in terms of the Circular Bearing No. 802/35/204-CX.,
dated December 8, 2004 on the pre-deposit of the delayed refund
within two months from today it has to be construed that this Court
meant the rate of interest which was awarded by the
Supreme Court in the case of Commissioner of Central Excise
v. ITC Limited which was the rate quantified by the Supreme
Court in absence of any statutory provision in the said Act.
20. Therefore, in view of the fact that the period for which
the petitioner is entitled to interest on the pre-deposit of the
delayed refund was the same as in the case of Commissioner
of Central Excise v. ITC Limited (supra) parity demands that
the petitioner is also entitled for interest 12% per annum.
21. In so far as the contention of the Revenue that the Central
Government is the only authority to fix the rate of interest and that
Section 35FF was brought in by providing rate of interest on
payment of pre-deposit delayed refund and quantified the rate of
interest to be the same as in Section 11BB would not apply to the
petitioner's case as Section 35FF has been introduced in the Act by
way of an amendment inserted with effect from May 10, 2008 by
Section 85 of the Finance Act, 2008 (18 of 2008). Therefore, we
clarify that the petitioner is entitled to interest @ 12% per
annum on the amount of refund. We direct that such interest
shall be paid by the respondent/Revenue within two months of the
date of this order."
9. Learned senior standing counsel for the respondents now states that
the Government of India, Ministry of Finance (Department of Revenue),
New Delhi has issued a notification No. 70/2014/Customs (N.T.) dated
12.08.2014 in exercise of powers conferred under Section 129EE of the
Customs Act, 1962 fixing the rate of interest @ 6% per annum for the
purposes of the said Section and, therefore, the same rate of interest is
applicable. We do not find any substance in this submission of learned
senior standing counsel for the respondents. Reason is that the said
notification is dated 12.08.2014. The rate of interest on delayed refund
of pre-deposit shall be governed by the law laid down by Hon'ble
Supreme Court in ITC Limited (supra) as well as a coordinate Bench of
this Court in Madura Coats Private Limited (supra) till a statutory
provision in the Act was enacted and a notification was issued
thereunder providing for rate of interest on delayed refund of pre-
deposit. With effect from the date on which the provision came in the
statute, it shall hold the field and the rate of interest shall be governed
by it. Since the period in question is prior to the notification providing
for rate of interest on delayed refund of pre-deposit, issued under the
Act, therefore, the case of the appellant shall be governed by the law
laid down by the coordinate Bench of this Court in Madura Coats
Private Limited (supra).
10. For all the reasons afore-stated, the appeal is allowed, the impugned
order No. A-34/KOL/2012 dated 23.01.2012 in Customs Appeal
No.C/A/231/2006 [Shri Rajendra Kumar Jain v. Commissioner of
Customs (Port), Kolkata] passed by the Customs, Excise and Service
Tax Appellate Tribunal, East Zonal Bench, Kolkata is hereby set aside
and it is held that the appellant is entitled for payment of interest @
12% on the delayed refund of the amount of pre-deposit, which shall be
paid by the respondents to the appellant within one month from the
date of production of a certified copy of this order. The substantial
question of law is answered in negative i.e. in favour of the appellant
and against the respondents.
(SURYA PRAKASH KESARWANI, J.)
I agree.
(RAJARSHI BHARADWAJ, J.)
S. Kumar
