Tata Infotech Ltd. vs Collector Of Customs
2004 Latest Caselaw 205 Del

JUDGMENT

D.K. Jain, J.

1. RULE D.B.

By this writ petition under Article 226 of the Constitution of India, the petitioner, a company incorporated under the Companies Act, 1956 seeks a direction to the respondent, namely, Collector of Customs, New Delhi to refund a amount of Rs.7,08,050/- along with interest thereon.

2. Shorn of unnecessary details, the material facts, leading to these proceedings are as follows:

The petitioner imported computer software vide Bills of Entry Nos.262707 and 262715, both dated 12 November 1990 and 270805 dated 21 December 1990, valued at Rs.28,30,248/-. On 7 February 1991 the Directorate of Revenue Intelligence searched the office premises of the petitioner and detained the said software. The software was formally seized on 12 February 1991 under a reasonable belief that these were liable for confiscation under the provisions of the Customs Act, 1962 (for short 'the Act').

The seized goods were released on 19 December 1991 on provisional basis against a surety and a bank guarantee. A notice was issued to the petitioner on 31 July 1991 to show cause as to why the goods should not be confiscated under Section 111(m) of the Act and why penalty under Section 112 of the Act be not imposed. The petitioner was also required to show cause as to why a customs duty amounting to Rs.6,95,933.94/- be not levied on the subject goods.

Upon consideration of the reply to the show cause notice, filed by the petitioner, the respondent vide his order dated 25 February 1997 held that the subject goods were liable to be confiscated; the petitioner was liable to pay a fine of Rs.5,60,000/- in lieu of confiscation, in addition to the customs duty amounting to Rs.6,95,933.94/-. A further penalty of Rs.2,50,000/- under Section 112(a) of the Act was imposed on the petitioner besides personal penalties on its business manager. It was directed that the said amounts be recovered in terms of the bond executed by the petitioner and by encashing the bank guarantee furnished. Accordingly, the bank guarantee in the amount of Rs.7,08,050/- was encashed by the respondent on 6 May 1997.

Being aggrieved, the petitioner preferred an appeal before the Customs, Excise & Gold (Control) Appellate Tribunal at Mumbai (for short 'the Tribunal'). The appeal was allowed by the Tribunal vide its order dated 21 December 1999.

On receipt of the order of the Tribunal, vide its letter dated 27 April 2000, the petitioner requested the respondent to refund the said amount of Rs.7,08,050/- recovered from them on account of encashment of the bank guarantee. Almost after one year of the filing of the said application, vide their letter dated 22 January 2001 the office of the respondent required the petitioner to furnish evidence regarding deposit of Rs.7,08,050/- in customs account. As desired, vide letter dated 7 March 2001, the petitioner furnished a copy of the bank certificate issued by the State Bank of India dated 2 February 2001, certifying the encashment of bank guarantee issued on behalf of the petitioner, vide bank draft favoring Punjab National Bank A/c customs duty payable at New Delhi. Some other documents were also furnished along with the said letter. Nothing was heard from the respondent till 12 December 2001, when a letter was received from the Deputy Commissioner of Customs (Refunds) asking the petitioner to furnish the following documents:

"(i) Duplicate (importer's original copy) copy of the Bill of Entry.

(ii) Order-in-original of the Tribunal.

(iii) Copy of the bank guarantee; and

(iv) Evidence of deposit of Rs.7,08,050/- with Customs Department."

The documents asked for were furnished by the petitioner with their letter dated 13 February 2002. Thereafter, the petitioner was supplied with a copy of letter dated 21 February 2002 issued by the Office of the Deputy Commissioner of Customs (Refunds) to Deputy Commissioner of Customs (Review) Mumbai, whereby the said office was requested to intimate whether the order of the Tribunal had been accepted by the Department or not. Interestingly, the Office of the Commissioner of Customs also requested the petitioner to find out whether the Department had accepted the order of the Tribunal or not. Vide their letter dated 22 February 2002, the petitioner furnished to the respondent a copy of the report of the Courts Informatics Division of the Supreme Court of India, showing that no appeal had been preferred by the Department against the order of the Tribunal. Despite it all, the petitioner did not get the refund order. Hence the present petition.

3. We have heard Mr. Ramesh Singh, learned counsel for the petitioner and Mr. Alakh Kumar, learned counsel for the respondent.

4. We may note at this stage itself that after the filing of the writ petition and on issue of notice of motion and a direction to the Commissioner of Customs to appear in person along with relevant records, a refund order for the amount claimed by the petitioner was issued. However, no interest for the delay in issue of the refund order has been paid. Thus, the only question which survives for consideration is whether the petitioner is entitled to claim interest for delayed payment of refund amount?

5. We are constrained to observe that the instant case reflects an indifferent and callous attitude of the respondent in dealing with its assesseds. It also shows the mind-set of those who are actually involved in the processing of such claims. The reason is not far to seek but we refrain from taking a judicial notice of it and leave it to the Central Board of Excise and Customs (for short 'the Board') to look into the matter and take appropriate action. When such instances come to the notice of the Board, it is duty bound to take remedial measures, particularly, when instructions issued by it are ignored with impunity.

6. In this very regard, it is pertinent to note that being aware of the considerable delays in disposal of refund claims and to avoid payment of interest, the Board had itself issued instructions to its officers to expedite the refund/rebate claims. For the sake of ready reference, the circular issued on 2 June 1998 is reproduced here-under:

"Expeditious disposal of refund/rebate claims.

It has been observed by the Board that there is considerable delay in disposal of refund/rebate claims. You may recall that the provisions have been made in the Central Excise Act, 1944 to grant interest if the refund claim is not sanctioned within 3 months from the date of receipt of the application. In view of this, it is absolutely necessary that the refund claims should be disposed of within three months.

2. In this regard, the Board's directions are as follows:-

(a) Responsibility should be fixed for not disposing of the refund/rebate claims within 3 months from the date of receipt of application.

(b) No refund/rebate claim should be withheld on the ground that an appeal has been filed against the order giving the relief, unless stay order has been obtained. It would be the responsibility of the concerned Commissioner to obtain stay order expeditiously where the orders passed by the Commissioner (Appeals) or CEGAT suffer from serious infirmities and it involves grant of heavy refunds.

(c) No refund or rebate claim should be withheld on the ground of augmentation of revenue in order to achieve the targets.

3. It should be ensured that the Board's aforesaid directions are followed scrupulously by all officers."

7. Thus, the circular recognised in principle the liability of the Government to pay interest on the excess amount paid by an assessed and retained by the Government. It is obvious that the circular was issued in view of the insertion of Section 27A in the Act in year 1995, which provides for payment of interest by the Government not below 10% (now 5%) and not exceeding 30%, as may be fixed by the Central Government, if the duty ordered to be refunded is not refunded within three months from the date of the receipt of the application for refund. It is evident that the Board's circular has had no effect on its functionaries.

8. From the factual scenario, projected above, it is clear that the claim of the petitioner for refund of the amount realised by the respondent on encashment of bank guarantee is not contested. As noted above, the principal amount, so recovered, has been refunded to the petitioner on filing of the present writ petition. It is, therefore, axiomatic that after the appeal of the petitioner was allowed by the Tribunal in their favor, there was no justification whatsoever not to refund the excess customs duty recovered. As noted supra, even Board's circular dated 3 June 1998 clarifies that the refund is not to be withheld on the ground that an appeal is filed against the order giving relief to an assessed unless a stay order has been obtained.

Admittedly in the present case no appeal had been preferred by the respondent. The bank guarantee was encashed by the respondent and, therefore, the petitioner was not under any obligation to obtain information with regard to the credit of the said amount in respondent's account or to find out whether the respondent had challenged Tribunal's order, as they were required to do vide respondent's letters dated 22 January 2000 and 22 December 2001. Yet the information sought was furnished along with documentary evidence as far back as on 7 March 2001 and again on 13 February 2002. More than one year elapsed even thereafter but the respondent did not think it fit to respond to petitioner's request. In the reply affidavit filed on behalf of the respondent, no answer is furnished as to why this inordinate delay in issue of refund order took place. Nothing has been brought on record by the respondent to explain this delay. It is, therefore, to be presumed that despite the Board's circular and Section 27A of the Act, the authorities concerned, in their own wisdom, did not think the matter to be so urgent as to immediately respond to petitioner's request and promptly issue the refund order. Nonetheless, it shows a disdainful and recalcitrant attitude of the respondent.

9. Under the circumstances, we are of the considered view that in the present case, the respondent has withheld the refund of Rs.7,08,050/-, which became due to the petitioner on the passing of the order by the Tribunal on 21 December 1999, without any rhyme or reason and, therefore, they are liable to pay interest to the petitioner.

10. Resultantly, the writ petition is allowed; rule is made absolute and the respondent is directed to pay to the petitioner simple interest at the rate of 12% per annum on the afore-mentioned amount of refund for the period from the date of the order of the Tribunal till the date of the actual payment of the principal amount. The interest amount shall be paid within a period of four weeks from today. The petitioner shall also be entitled to costs, quantified at Rs.10,000/-.

A copy of this order shall be sent to the Chairman, Central Board of Excise & Customs, North Block, New Delhi for information and necessary action at his end.