(Per : HONOURABLE MR.JUSTICE AKIL KURESHI) 1. The petitioner has prayed for a direction to the respondents to pay a sum of Rs.1,97,158/- towards interest at the rate of 12% per annum on a sum of Rs.26,89,186/- for the period between 18.11.2003 till 28.6.2004. The petitioner has also prayed for a further interest at the same rate on such principal claim of interest.
2. The petition arose in the following factual background :
2.1) The petitioner had imported furnace oil under the bill of entries dated 12.8.2003 and 29.10.2003. Such furnace oil was stored in bonded warehouse. The petitioner filed shipping bill dated 6.11.2003 for supply of 875 metric tons of furnace oil from such bonded warehouse as ship store to foreign going vessel. On such clearances, the petitioner was not required to pay any customs duty since the same was to be supplied to a foreign going vessel. However, before such goods could be loaded in foreign going vessel, the officers of Controller Rationing and Director of Civil Supplies, State of Maharashtra, respondent no.5 herein intercepted. The opinion of such officer was that the petitioner was handling such goods without necessary license for storage and transportation of such goods. On such basis the petitioner was prevented from loading the goods in foreign going vessel. A quantity of 543.910 kilo liters of oil was released by the officers of respondent no.5. Upon receipt rewarehoused the same on 4.12.2003. Remaining quantity of 373.031 kilo liters was seized. The petitioner thereupon approached the Bombay High Court and succeeded in obtaining the order for release of such oil. In the meantime, since foreign going vessel had already sailed, the petitioner rewarehoused such remaining quantity also on 12.5.2004. In the meantime, the Customs Authorities believing that, such action of the petitioner in getting the goods released from bonded warehouse for the purpose of export but failing to actually export the same, would breach the provisions contained in section 72 of the Customs Act, 1962, under compulsion on 18.11.2003, the petitioner was made to pay the customs duty of Rs.26,89,186/-. Upon the petitioner rewarehousing the entire quantity of furnace oil by 17.5.2004, the petitioner applied to the Customs Authority for refund of the duty on 20.5.2004. In such application, the petitioner also prayed for interest as payable. Such application was allowed by the Assistant Commissioner(Refund), Customs House, New Kandla by his order dated 28.6.2004. He granted refund of Rs.26,89,186/-. He however, did not make any provision for paying interest thereon. The petitioner thereupon filed appeal before the Commissioner(Appeals) to the extent the Assistant Commissioner had not entertained the petitioner's claim for interest. The Commissioner(Appeals) rejected the appeal by an order dated 6.4.2005. He was of the opinion that in terms of section 27A of the Customs Act, since the refund was sanctioned within three months from the date of application, no interest could be paid.
2.2) The petitioner filed further appeal before the Customs Excise & Service Tax Appellate Tribunal(“the tribunal” for short). The tribunal also rejected the appeal by an order dated 9.3.2007. Tribunal also placed heavy reliance on the provisions of section 27A of the Customs Act to reject the petitioner's appeal. These orders the petitioner has challenged in the present petition.
3. Learned counsel for the petitioner submitted that the respondent no.5 had wrongly intercepted the goods resulting into the petitioner not being able to export the same. The Customs Authorities could not have demanded duty when the goods were in the process of either being exported or rewarehoused under the supervision of Customs Authorities themselves. He submitted that respondent no.5 and Customs Authorities jointly brought about a situation where the petitioner was compelled to deposit large sum of Rs.26,89,186/-. Counsel therefore, submitted that even if the claim of interest is not covered under section 27A of the Customs Act, nevertheless, interest should be paid for the period during which such amount remained in custody of the customs authority.
3.1) Reliance was placed on decision of the Apex Court in case of M/s. Kusum Ingots and Alloys Ltd. v. Union of India and another reported in AIR 2004 Supreme Court 2321 to contend that writ could be issued against respondent no.5 though such office is not located within the territorial jurisdiction of this Court.
3.2) With respect to claim of interest, counsel relied on following decisions :
1) Sandvik Asia Ltd. v. Commissioner of Income Tax I, Pune and others reported in 2006(2) SCC 508.
2) Vipor Chemicals Pvt. Ltd v. Union of India reported in 2002(146)ELT 511(Guj.).
3) S.K. Dua v. State of Haryana and another reported in (2008) 3 Supreme Court Cases 44.
4. On the other hand on behalf of the Customs Authority, it was submitted that the refund claim was sanctioned and refund actually paid within three months from the date of application of the refund. No case for paying interest therefore, arises.
5. Having thus heard learned counsel for the parties, we find that in the present case the Customs Authorities bonafidely holding a belief that in terms of section 72 of the Customs Act, the petitioner was required to deposit the customs duty on the goods cleared for export from the bonded warehouse since the same could not be supplied to the foreign going vessel. On such premise the authorities insisted on the petitioner depositing the customs duty. Section 72 as is well known provides for collection of customs duty under certain circumstances including where any goods in respect of which a bond has been executed and which have not been cleared for home consumption or exportation are not duly accounted for to the satisfaction of the proper officer. In the present case the goods were cleared from the warehouse for export. Such goods however, could not be exported because of dispute between the petitioner and respondent no.5. The Customs Authorities therefore, cannot be faulted for having proceeded under section 72 of the Act. As soon as the dispute was cleared and the petitioner rewarehoused the goods, the petitioner's application for refund was promptly and readily accepted. Thus there was neither any delay nor any mala fide on part of the customs authorities in retaining the customs duty. In fact, the petitioner has rightly neither alleged delay nor mala fide on part of the Customs Authority. It is of-course the case of the petitioner that Customs Authority could not have collected duty under such circumstances. However, this is entirely different from suggesting that the action of the respondent authorities was actuated by mala fides.
6. Insofar as respondent no.5 is concerned all that the petitioner had stated in the present petition is that said authority passed an invalid order preventing the petitioner from loading the goods in a foreign going vessel. No further averments and allegations have been made against the said authority. No demand of interest for damages came to be made against said authorities before filing the present petition.
7. Under the circumstances the petition has to be examined in light of the statutory provisions applicable. Undisputedly, section 27 of the Customs Act governs the petitioner's claim for refund of the duty. Section 27A of the Act pertains to interest on delayed refunds and provides inter-alia that if any duty ordered under section 27(2) of the Act is not refunded within three months from the date of receipt of application under sub-section(1), such applicant shall be paid interest at the rate as may be prescribed by the Government From the date immediately after expiry of three months from the date of receipt of such application till the date of refund of the duty. In the present case, admittedly well within three months from the application, refund of duty was paid to the petitioner. In that view of the matter authorities were correct in holding that no question of payment of interest arose. It is true that under certain extraordinary circumstances when the Courts have found that refund was withheld either for a long period of time, mala fide or for some other reason, interest is paid looking to the special circumstances. Three of such judgements have been brought to our notice. We may record these judgements at this stage.
8. In case of Sandvik Asia Ltd.(supra), the Apex Court granted interest on interest of income-tax refund when it was found that the interest was not paid for years together without any valid justification.
9. In case of Vipor Chemicals Pvt. Ltd, this Court granted interest on rebate claim even in absence of statutory provision, when it was found that the authorities had acted mala fide.
10. In case of S.K. Dua(supra), the Apex Court granted interest on delayed payment of retiral dues when it was found that there was a delay of nearly four years for releasing such payment. The Court noticed that there were no statutory provisions occupying the field. In that view of the matter, it was observed that even in absence of statutory rules, administrative instructions or guidelines, an employee can claim interest under Part III of the Constitution relying on Articles 14, 19 and 21. Ratio laid down there in therefore, cannot apply in the present case.
11. In the result, the petition fails. Same is dismissed. Rule is discharged.
(Akil Kureshi,J.) (Harsha Devani,J.) (raghu)