Sanjay Agarwal vs The Union Of India
2026 Latest Caselaw 84 Tel

Telangana High Court

Sanjay Agarwal vs The Union Of India on 26 March, 2026

Author: P.Sam Koshy

Bench: P.Sam Koshy

                                      1



IN THE HIGH COURT FOR THE STATE OF TELANGANA AT HYDERABAD


               THE HON'BLE SRI JUSTICE P.SAM KOSHY
                                    AND
        THE HON'BLE SRI JUSTICE SUDDALA CHALAPATHI RAO


                          W.P.No.34652 of 2025


                              Dt. 26.03.2026
Between:
Sanjay Agarwal and another
                                                           .... Petitioners

                                    and

The Union of India Rep. by its Secretary
and two others.

                                                           ...Respondent

O R D E R:

(Per the Hon'ble Sri Justice Suddala Chalapathi Rao)

1. The present Writ Petition has been filed to issue Writ of

Mandamus or any other appropriate writ directing the respondents to

pay the 2nd petitioner interest @ 15% p.a., from the date of deposit till

the date of actual refund of the amount of Rs.74,74,533/- and

Rs.2,04,999/- deposited by the 2nd petitioner through M/s MMTC

Ltd., by way of TR-6 challan Nos.15995 and 15996, dt.17.01.2017.

2. The brief facts of the case are that the petitioner is engaged in

the business of gold and gold jewellery and dealing with export of gold

ornaments and also sales locally. The petitioner alleged to have

purchased gold bullion on payment of cost of bullion gold and that

M/s MMTC Ltd., is the nominated authorized agency appointed by the

Reserve Bank of India for importing gold from abroad, duty free, and

to sell the same to local jewellery manufacturers for the purpose of

preparing ornaments and exporting the same.

3. It is also stated that such imported bullion gold, which is duty

free, will be purchased by local ornaments makers by depositing 125%

of the duty towards security deposit after paying actual cost of the

bullion gold and it is stated that on the threat of the officials of the

DRI that they would seize entire stock of the gold, the officials of the

DRI made the 2nd petitioner to sign a letter dt.06.01.2017 addressed to

MMTC, thereby forcing the 2nd petitioner to pay an amount of

Rs.73,52,953/- towards customs duty and interest thereon of

Rs.3,26,547/- as against the alleged diversion of 25 kgs of gold

sourced from M/s MMTC Ltd. Further, it is stated that a letter

dt.07.01.2017 was addressed by the petitioner to M/s MMTC Ltd.,

requesting not to deposit any amounts towards alleged customs duty

as the DRI was trying to implicate the 2nd petitioner in false cases.

4. Further, it is contended that the said amount of Rs.74,74,533/-

and Rs.2,04,999/- was made on 17.01.2017 by M/s MMTC Ltd., by

way of TR-6 Challan No.15995 and 15996, dt.17.01.2017,

respectively, ignoring the letter addressed by the 2nd petitioner to M/s

MMTC. It is stated that the same was also admitted by the MMTC in

their reply submitted to the adjudicating authority and thereafter, the

DRI issued show-cause notice, dt.31.10.2017, indicting M/s MMTC

Ltd. in the matter of alleged diversion of 25 kgs of duty free gold

purchased without payment of customs duty for selling the same in

the local market and exporting the jewellery out of the locally

purchased gold. The said amounts deposited by the MMTC was

appropriated by the authorities and challenging the order

dt.12.02.2020, passed by the 2nd respondent, the petitioner has filed

appeals before the Hon'ble Customs, Excise and Service Tax Appellate

Tribunal (for short 'the CESTAT'), Hyderabad vide customs appeal

No.30229 and 30230 of 2021 and that the said appeals were preferred

by the petitioner, and MMTC was not party to the said appeal and

seeking a direction to the MMTC to join as appellant, a writ petition

was filed vide W.P.No.15987 of 2023 by the petitioner herein, and the

same was dismissed by this Court, against which SLP(C).No.23282 of

2023 was filed, which was disposed of by reserving liberty to the

petitioner to seek permission to avail of the appellate remedy, before

the competent Court.

5. Thereafter, the 2nd petitioner filed appeal before the CESTAT and

in the said appeal, Miscellaneous Application

No.C/MISC/30290/2025 for impleading M/s MMTC Ltd in the appeal

was filed, but the same was dismissed, and the appeal was taken up

and the 2nd respondent after conducting proper enquiry, allowed the

appeal by setting aside the order dt.20.02.2020 passed by the 2nd

respondent and also ordered refund of the amount deposited. The

relevant portion of the order is extracted hereunder:

"19. At this stage we need to decide about the duty and interest which were paid by the MMTC and which were appropriated in the impugned order. Since we have found that no duty needs to be paid and the impugned order needs to be set aside, the duty and interest need to be refunded. Although MMTC paid duty and interest, PH Jewels claims that it had borne the duty and interest. If that be so, PH Jewels can claim refund of the duty and interest from the department under Section 27 of the Act, which permits both persons who paid duty or interest and the persons who have borne the duty or interest, to claim refund. Needless to say that the appellants would also be entitled to the refund of any pre-deposit made as a condition for these appeals".

6. Drawing a clue from the judgment of the learned CESTAT, the

petitioners contend that as the amounts are paid by the petitioners to

the MMTC, they are entitled for refund of the said amounts and that

though specific requests have been filed before the respondents-

authorities, the respondents are not paying the said amounts, as such

they are constrained to file the present writ petition before this Court.

7. Heard the 1st petitioner (party-in-person), Sri B.Mukherjee,

learned counsel representing the learned Deputy Solicitor General of

India, Sri Dominic Fernandes, learned Senior Standing Counsel for

CBIC for respondent No2, and perused the material on record.

8. It is contended by the 1st petitioner (party-in-person) that though

the learned CESTAT has passed orders permitting the 2nd petitioner to

claim refund under Section 27 of the Customs Act, 1962, in respect of

the amount deposited by M/s MMTC Ltd., towards customs duty

liability and the interest thereon, the respondents have not taken any

steps for granting the consequential relief to the petitioners.

9. It is further contended that the amounts in question were in fact

paid by the petitioners, though the deposit was made through M/s

MMTC Ltd., and therefore the petitioners are the persons who are

ultimately entitled to receive the refund along with interest. It is

further contended that despite the clear observations made by the

learned CESTAT that either the person who paid the duty or the

person who has borne the incidence of duty is entitled to seek refund

under Section 27 of the Customs Act, the respondents have failed to

process and release the amounts due to the petitioners.

10. The 1st petitioner would further submit that the amounts were

deposited as early as on 17.01.2017, and ever since then the

petitioners have been deprived of the use of their legitimate money. It

is thus contended that the continued retention of the said amounts by

the department is arbitrary and unjustified, particularly in view of the

fact that the impugned demand itself has been set aside by the

learned CESTAT.

11. Further, placing reliance on the judgment of the Hon'ble

Supreme Court in Sandvik Asia Ltd. vs. Commissioner of Income

Tax-I, Pune & others 1, the 1st petitioner submits that when the

amounts are wrongfully retained by the authorities for a prolonged

period, the assessee is entitled not only to refund but also to

interest/compensation for such delay. It is thus contended that the

(2006) 2 SCC 508

petitioners are entitled to the amounts deposited and interest thereon

from the date of deposit till the date of actual refund.

12. Per contra, Sri B. Mukherjee, learned counsel representing the

learned Deputy Solicitor General of India appearing for respondent

No.1, contended that the present writ petition is not maintainable

either on facts or in law. It is further contended that the amounts in

question were admittedly deposited by M/s MMTC Ltd., and the said

entity is neither the petitioner nor has it been impleaded as a party

respondent in the present writ petition, and that in the absence of M/s

MMTC Ltd., which is a necessary and proper party to the proceedings,

no effective order can be passed by this Court with regard to the claim

of refund or payment of interest.

13. It is further contended that the order passed by the learned

CESTAT itself indicates that the person who has paid the duty or the

person who has borne the duty may claim refund under Section 27 of

the Customs Act, 1962, by following the procedure contemplated

under the said provision. Therefore, according to the learned counsel,

the petitioners have an effective alternative remedy of filing a proper

refund application before the competent authority in accordance with

law, and without exhausting such statutory remedy, the present writ

petition is not maintainable. Hence, it is prayed that the writ petition

is liable to be dismissed.

14. Sri Dominic Fernandes, learned Senior Standing Counsel for

CBIC appearing for respondent No.2, also contended that the writ

petition is premature and misconceived, as the amounts towards

customs duty and interest were deposited through M/s MMTC Ltd.,

and therefore the said entity is the proper party to seek refund in

accordance with Section 27 of the Customs Act, 1962. It is further

contended that the order of the learned CESTAT only observed that

either the person who paid the duty or the person who has borne the

incidence of duty may claim refund by filing an appropriate

application before the competent authority and that the learned

CESTAT has not issued any direction to the respondents to directly

refund the amounts to the petitioners.

15. It is also contended that the petitioners have not placed any

material on record to show that a proper refund application in

accordance with Section 27 of the Customs Act, 1962 has been filed

and considered by the competent authority. In the absence of such

statutory compliance, the claim for interest or compensation from the

date of deposit till the date of payment cannot be entertained in the

present writ proceedings. It is further submitted that the reliance

placed by the petitioners on the judgment of the Hon'ble Supreme

Court in Sandvik Asia Ltd's case (supra), as the said decision arose

under different statutory circumstances and does not automatically

entitle the petitioners to claim interest in the present case, and

therefore, prayed to dismiss the writ petition.

16. We have given earnest consideration to the submissions made on

behalf of the parties on either side and perused the material on record.

17. Evidently, from a perusal of the order passed in the appeals by

the learned CESTAT, it is event that the amounts towards duty and

interest were deposited by M/s MMTC Ltd, and though the said entity

is a necessary and proper party in any proceedings seeking refund or

interest in respect of the said amount, it has not been impleaded as a

party respondent to these proceedings,

18. Even the observations made by the learned CESTAT clearly

indicate that the person who has paid the duty or the person who has

borne the incidence of such duty may seek refund by invoking the

provisions of Section 27 of the Customs Act, 1962, by filing an

appropriate application before the competent authority.

19. However, in the present case, the petitioners have chosen not to

implead M/s MMTC Ltd., which admittedly made the deposit, as a

party respondent, nor have they placed any material before this Court

to demonstrate that the statutory procedure contemplated under

Section 27 of the Customs Act, 1962 has been duly invoked before the

competent authority. Thus, this Court is of the considered view that

no effective or enforceable direction can be issued in the present writ

proceedings.

20. Another aspect which merits consideration of this Court is that

the order of the learned CESTAT was passed on 08.09.2025, and the

statute provides a remedy of appeal to this Court within a period of 60

days from the date of receipt of the said order. However, it appears

that even before the expiry of the statutory period available for availing

the appellate remedy, the present writ petition has been instituted,

without exhausting the remedies available under the statute.

21. In view of the above findings, we are of the considered opinion

that the instant writ petition is devoid of merits, and it is liable to be

dismissed.

22. Accordingly, the Writ Petition is dismissed. No order as to costs.

As a sequel, miscellaneous applications, if any, pending shall

stand closed.

________________________________ P.SAM KOSHY, J

________________________________ SUDDALA CHALAPATHI RAO, J

26th March, 2026

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